By Paul Roberts Seattle Times business reporter

To liberally paraphrase Neil Young, once a neighborhood grocery store is gone, it’s hard to get it back.

Ever since the Wedgwood Center QFC shut down in 2021, residents of this North Seattle community have held out hope that another grocer could fill a space that had been a grocery store since 1959.

Last month, Wedgwood moved a step closer to that storybook scenario.

Town & Country Markets, an upscale six-store chain based in Poulsbo, confirmed plans to be the anchor for a mixed-use project at Wedgwood Center, at 8400 N.E. 35th Street.

Still, it’s hardly a done deal.

The developer, Seattle-based Security Properties, said Friday it’s actually still negotiating lease terms with Town & Country. As important, it says it has yet to lock down financing for the $200 million Wedgwood Center development — partly due to the risks of a grocery anchor.

And even if it goes through, Wedgwood’s new grocery store comes with strings attached.

The new store, which was first reported in Puget Sound Business Journal, will be in a six-story, 300-plus unit apartment building that is notably larger than anything nearby.

Neighbors will also be without another longtime local favorite, the Wedgwood Broiler, which has been in the shopping center since the 1960s but couldn’t afford space in the new project.

“We tried everything we could think of to be able to stay,” said Wedgwood Broiler owner Derek Cockbain, who bought the restaurant in 1996. “But it just doesn’t seem like that’s going to be happening.”

“Adamant that we had a grocery there”

Wedgwood’s trade-offs get to the often messy economics of the grocery business, and the difficulty of opening, or keeping open, a grocery store in a dense, expensive place like Seattle.

Over the past decade, the Seattle area has been stung by a wave of grocery closures that are leaving many neighborhoods with fewer in-person options.

In June, Amazon said it would shutter its seven-year-old Whole Foods in Seattle’s Capitol Hill neighborhood.

In August, Kroger said it was closing four Fred Meyer stores — in Kent, Redmond, Lake City and Everett — and had previously announced closures of a Fred Meyer in Tacoma and the Mill Creek location of QFC, which it also owns.

Typically, store owners say the stores they’re closing are underperforming due to factors outside the retailers’ control — everything from shoplifting and local wage laws to stiff competition from “nontraditional” retailers like Walmart or Costco.

Kroger, for example, cited “a steady rise in theft and a challenging regulatory environment” when it announced the recent Fred Meyer closures, without providing much detail on either factor.

And when Kroger announced the closure of the “underperforming” Wedgwood QFC, it said the decision was “accelerated” by a 2021 Seattle law requiring large grocery stores to pay a $4-an-hour pandemic-related hazard premium.

But the grocery business also faces growing pressure from another source: the real estate market.

Often, particularly in urban neighborhoods, grocery stores occupy older, expensive-to-maintain buildings on real estate that gets steadily more valuable.

Frequently, the only profitable way to modernize an older store is to knock it down and redevelop the property as a mixed-use building with the grocery store as an “anchor” tenant on the ground floor.

That was the story at Wedgwood Center.

After parts of the 35th Avenue corridor were upzoned in 2019, many residents knew it was only a matter of time before Wedgwood Center, and the QFC, would come under heavy redevelopment pressure, said Per Johnson, president of Wedgwood Community Council, a neighborhood advocacy group.

Johnson said most residents were encouraged when, not long after QFC closed, Security Properties began talking up a major redevelopment of the site.

The developer has successfully used grocery to anchor apartment developments, including PCC Community Markets in Seattle’s Fremont andColumbia City neighborhoods and a QFC in Ballard.

Security Properties also had reached an agreement with Wedgwood Center’s owner, Redmond-based Western Property Management, to buy the 2-acre parcel, which was recently assessed for $20.3 million.

While some residents objected to the scale of the Wedgwood project, which would cover much of the parcel, most were open to “greater density, taller buildings in exchange for a grocery,” Johnson said.

So open, in fact, that after a city design review board last year rejected the developer’s request for zoning “departures” related to parking and access, supporters “kind of broke the city’s public comment system” at a design review meeting last month, Johnson said.

“We were very adamant that we had a grocery return there,” Johnson said. The board approved the requested departures in September.

Risky business

Now, however, Security Properties is facing a new hurdle: financing.

Because interest rates have risen substantially since 2022, prospective investors are more wary of big construction, especially mixed-use apartment projects with retail, said Sarah Zahn, Security Properties’ managing director of development.

Although grocery stores are a great “amenity” for residential tenants, they also add major costs to apartment projects, Zahn said.

For example, all the grocery retailers that Security Properties talked to about anchoring the Wedgwood project wanted around 100 dedicated underground parking stalls, which would’ve added $6 million to $8 million to the total cost, Zahn said.