Balducci's Reconsiders Store in Penn Quarter

By Ylan Q. Mui
Washington Post Staff Writer
Wednesday, July 12, 2006

The gourmet grocer Balducci's is once again thinking about opening a store in the Penn Quarter neighborhood of Northwest Washington after city officials agreed to increase financial incentives for the deal and area residents prodded the company with e-mails.

Co-chief executive Peter Krieger said the chain expects to make a final decision within two months. The store had been slated to open this summer near Verizon Center. But company executives backed out in April, saying they wanted to concentrate on existing stores rather than open new ones.

"We are reinvestigating the project," Krieger said. "The demographics of that area are potentially in line with what Balducci's customers represent."

The District is also sweetening the deal. The city originally offered to waive the store's real estate taxes for 10 years and the sales taxes on its construction materials, said James Duncan, regional vice president of JPI, the Texas-based developer handling the project. That offer still stands, and District officials said they were negotiating additional incentives, though they declined to give specifics.

Downtown Washington has seen a residential boom in recent years, particularly in the bustling Penn Quarter area. Yet grocery stores remain scarce. There is a Giant Food on Eighth Street NW between O and P streets and a new Safeway planned for Fifth and K streets NW, but residents say those locations are difficult to reach without driving.

Duncan said a traditional supermarket would not fit into Balducci's proposed 21,000-square-foot location on Seventh Street NW between D and E. Instead, he sought an upscale grocer to cater to the area's well-off residents.

Susan Linsky, a special assistant to the deputy mayor for economic development, said several other national grocery chains are interested in the space. If the Balducci's deal falls through again, she said, the city hopes to have a new deal completed by spring. Balducci's still holds the lease for the site.

"There's too many people who moved downtown who thought there would be a grocer there," she said.

Meanwhile, residents have waged their own Save Balducci's campaign and flooded the chain with e-mails, said Jo-Ann Neuhaus, executive director of the Penn Quarter Neighborhood Association, who helped lead the effort. She called the market one of the "missing pieces" of the area.

Duncan said he was shocked when the grocer pulled out of the deal three months ago. He met with Balducci's executives again last month but was hesitant to predict any future moves.

"While we would certainly welcome them back . . . you just can't guess which way they're going to go," he said.

Balducci's is owned by Bear Stearns Merchant Banking, which in 2004 bought the chain, part of the Sutton Place Group, for $50 million. It operates four stores in the Washington area.

© 2006 The Washington Post Company