The Palisades Safeway closed in May and the property is now targeted for a new building with mixed retail and 120 to 130 units for people with such ailments as Alzheimer’s.

The Trammell Crow Company, via a long-term lease, took control of the MacArthur Boulevard site on May 31. Site planning is in its early stages, but no grocery is being considered, according to Trammell Crow’s Eric Fischer.

GONE GROCER: A June drizzle falls on the MacArthur Boulevard building where Safeway operated until May, closing after nearly 70 years at the site. Photo Credit: John Bray

Fischer, who lives in D.C. and directs the company’s national health care work, said talks with Safeway about development options lasted the better part of a year and “we worked extensively with Safeway to explore grocery options.” But the grocery business in the area has “changed dramatically”, with plans by Wegmans for a store at the old Fannie Mae site just south of Van Ness and Wisconsin Avenue and by Trader Joe’s for a store on Wisconsin near Glover Park, Fischer said.

“From our perspective, the site just can’t support any grocery retail,” Fischer said.

Asked about the reason for the Palisades store closure, a Safeway spokesperson, Beth Goldberg, stated in an email, “Like all retailers, we are constantly evaluating our store operations and determining how we can improve our profitability. While closing a store is always a tough decision, it will enable us to invest in other areas of our business.”

Fischer declined to elaborate about the terms of the “ground lease.” “This is the way Safeway chose to structure the deal,” he said. “We’re operating under a confidentiality agreement with Safeway.”

A grocery store at the site was built and opened in the early 1940s, purchased by Safeway in 1952, and expanded in 1956 and the 1960s, according to a D.C. Historic Preservation Office summary. Safeway closed its Tenleytown store several years ago, making way for expansion of Georgetown Day School. Goldberg did not respond to a question about the future of its Wisconsin Avenue store in upper Georgetown. But the company sent coupons to people in Foxhall Village, calling the Safeways on Sangamore Road and Wisconsin Avenue “Your Local Safeway”.

The Palisades Safeway closure action involves a complex cast that goes far beyond the Palisades. Grocery conglomerates Safeway and Albertsons were merged in 2015 under AB Acquisition, the private owner of Albertsons and controlled by investors led by Cerberus Capital Management. In a five-year deal linked to the Safeway merger, the company agreed to pay Cerberus and the investor consortium an annual management fee of $13.8 million, with the fifth-year payment being made at the end of 2018, according to the Albertsons annual report filed in February with the Securities and Exchange Commission. Cerberus management includes Stephen A. Feinberg, co-founder and co-CEO and ex-Drexel Burnham Lambert financier, and Dan Quayle, chairman of Cerberus Global Investments and former President George H. W. Bush’s vice president.

Fischer, whose own company is a subsidiary of the global real estate services company CBRE, said the Palisades site has been controversial, noting that a previous development concept had been “eviscerated, blown up, destroyed” by some people that “just opposed anything.”

A “severe shortage” exists for residential care for people with ailments such as Alzheimer’s and Parkinson’s, Fischer said, “not only in greater D.C. but in particular that market.”

“It’s our goal to create a continuing care retirement program that has a heavy emphasis on independent living, assisted living and ‘memory care’, Fischer said. He said project advantages include low impact on the community, no impact on schools and a very beautiful design. He did not specify the size of the building.

Nearby, Trammell Crow is managing construction of MedStar Georgetown University Hospital’s new tower. Fischer said the company also is developing a project at the site of the McMillan Park Reservoir Historic District at First and Michigan, work that has been tied up in court. Other company projects in the D.C. area have included multi-family developments and a condo project in Foggy Bottom that is anchored by a Trader Joe’s.

“We deeply want to work with the community,” Fischer said. “We do not want to have a tough relationship.”

Fischer has met with Palisades community members and intends to hold more meetings as project plans proceed. He said he is focused now on making sure the site is safe, secure and clean. He said he had expected a “smoother transition” of the property. He noted that over the weekend, as June began and the company assumed site responsibility, clean up of trash dumped at the site was required. “We’re very focused on cleanliness and pest control and trying to ensure that building is locked down,” Fischer said. “It will not become a problem for the community.”