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Kroger says it has offer for Mari-Mac site

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By Bennett Horne

Kroger has informed Los Alamos County officials that it has a potential buyer for the Mari-Mac property located between Central Avenue and Trinity Drive, the cornerstone of which is the vacant building that used to be occupied by Smith’s Food and Drug.

The county council heard the good news from Deputy County Manager Steve Lynne at its work session held Tuesday night at the fire station in White Rock.

“They have received an offer to purchase their entire interests in the Mari-Mac Center,” said Lynne. “They are currently going through their process of evaluation and underwriting, basically their due diligence in evaluating the offer. Hopefully they’ll have some substantial progress sometime in the next 90 days.”

Lynne said Kroger is not saying who the buyer is until the evaluation and underwriting process is completed.

One obstacle being faced by any potential buyer is the issue of covenants at the Mari-Mac location.

“At some point there was discussion of housing,” said Lynne. “There’s an association set of covenants that cover uses for the Mari-Mac site, so a developer can’t come in and do anything they wanted just because they own it. I don’t believe that housing currently is one of the permitted uses on the property.”

The county had also requested an update on Kroger’s plans for the two pads located in front of the new Smith’s Marketplace, as well as tenant prospects for the vacant spaces on the north side of that parcel.

Lynne said Don Burnett, who is Kroger’s corporate real estate manager, had indicated the corporation is planning on sending a written response, but that hasn’t been received yet.

“We’re interested in getting that response,” Lynne told the council. “I think having something in writing would certainly make it a lot more clear.”

Lynne did say that Kroger does not plan to build out the pad sites “just based on speculation.”

As part of the initial development phase Kroger was required to do the initial anchor store, which is Smith’s Marketplace, as well as an initial 10,000 square feet, some of which remains vacant.

“Don did clarify that they are actively marketing both the active built spaces as well as the two vacant pad spaces,” Lynne said. “They continue to indicate that their cost structure, both because of their corporate structure and the ground lease, requires higher costs which continues to create difficulty in finding new tenants.”

Councilor Susan O’Leary, who called the site “a really important parcel in our community” because it is “strategically significant” as far as its location at the entrance of the downtown area, said she was not only encouraged to hear of a possible buyer, but also that communication about the sites was coming from Kroger.

“I’m encouraged by the attention we’ve gotten from Kroger this year, having them come speak to us and giving us the opportunity to share our concerns about their progress with these parcels, particularly the Mari-Mac property,” she said.

O’Leary went on to ask the council to provide feedback on the issue, as well as recommending that County Manager Harry Burgess hire a design firm to produce several plans for each parcel, plans that the county could discuss with Kroger, as well as any potential buyers, which, in turn, would help future developers work hand in hand with the county’s strategic plan.

“I think it gives the county the opportunity to have some say in how this property is developed,” she said. “Sometimes it really helps to have a picture and a concept created that allows developers to consider the options and to know the strategic plan of the community they’re working in.”

She added, “It would allow us to have a more robust discussion with them about the possibilities and ways to participate and help achieve an option that’s strategic to the county.”

The cost for designs would be approximately $10,000 to $15,000, which O’Leary called “an investment,” adding, “And this is the time to do it.”

Council Chair David Izraelevitz disagreed with the idea, saying he saw no value in spending that amount to hire a design firm.

Discussion will continue on this matter later this month when Joanie Ahlers, the Los Alamos County economic development administrator, will have an opportunity to meet with Barnett at the International Council of Shopping Centers’ real estate convention.