Whole Foods might not be coming to Keystone at the Crossing after all.
Residents of the Driftwood Hills neighborhood sued the city in February after it approved a zoning change allowing developer Paul Kite to build a Whole Foods grocery, plus as many as 30 condominiums, on the northwest corner of 86th Street and Keystone Avenue.
As residents push on with their effort to block that zoning decision, Whole Foods is exploring other sites, including one in nearby Nora, for its first Indianapolis location, according to sources familiar with the discussions.
Kite, of Zionsville-based PK Capital LLC, could not be reached, and a representative of the Austin, Texasbased retailer was noncommittal about sites.
"It would be my understanding that [building a store in Indianapolis] is something we are looking into," said spokeswoman Kate Klotz.
Kite's attorney, Thomas Michael Quinn, said early this year that Whole Foods wanted to build at the Keystone site. However, sources said, Kite has been unable to sign the grocer to a lease, despite obtaining a permit March 1 to grade the land in Whole Foods' name.
Kite has a contract to purchase the 13-acre site from Gabriel, David and Abraham Farahan, three brothers who also own the Royal Gallery of Rugs at the Fashion Mall at Keystone at the Crossing.
But a legal obstacle stands in the way of transferring ownership. A small parcel within the site is not listed in property records as having an owner. Parties would need to resolve who's responsible for paying taxes on it before Kite could complete its purchase.
Gabriel Farahan referred questions about the land to his attorney, Zeff Weiss of Ice Miller, who did not return a call for comment.
"I heard that the whole thing has become a train wreck," said Ruth Hayes, president of the Nora-Northside Community Council Inc., an umbrella organization of neighborhood groups in the area.
Whole Foods, whose reputation as a mecca for organic and natural food lovers has made it the nation's hottest grocery chain, announces its store-opening plans every quarter during earnings conference calls. It didn't mention an Indianapolis store on its May 3 call, and won't have another until early fall.
Whole Foods plans to open as many as 20 stores in the next year, Klotz said. It has 180 stores in the United States as well as two in Canada and one in London. The chain has been on a growth tear the past five years, expanding from 126 stores and $2.3 billion in sales in 2001 to 175 stores and $4.7 billion in sales in 2005.
In Indianapolis, the chain is considering other options beyond the Keystone site, sources said. One alternative site under consideration is just west at 1365 E. 86th St. The location is adjacent to the Monon Trail on the south side of 86th, across from the Wild Oats and Target in Nora Plaza. Part of the site has a building that used to house a Blockbuster video store.
The location boasts an average household income within three miles of nearly $85,000. That's roughly $4,000 more than the Keystone location, according to a demographic profile prepared for IBJ by the local office of St. Louis-based Colliers Turley Martin Tucker.
Roughly 66 percent of people living within a mile of the location are collegeeducated. On its Web site, Whole Foods lists a "large number of college-educated residents" as one requirement for new store locations.
"The location that [Whole Foods is] going to look for, like most groceries, will be for a high-profile intersection with good traffic counts, easy ingress and egress and visibility," said Bill French, a retail broker with Colliers.
The location has all three, with easier access than the Keystone site, which would not have access from 86th Street. Retail brokers don't think the site's proximity to Wild Oats, which also specializes in natural and organic food, would deter Whole Foods from picking it.
Neighbors make pitch
Seven miles to the east, the Binford Redevelopment & Growth Group is trying to lure Whole Foods to a parcel on the southeast corner of the intersection of 71st Street and Binford Boulevard.
"Our demographics are just as good as their demographics," said Jane Lommel, the organization's president.
Indeed, the site has a higher average household income within one mile than the other sites by a wide margin-$81,000, compared with $53,000 across from Nora Plaza and $69,000 at Keystone. More than 73 percent of residents within a mile of the location are collegeeducated, a higher percentage than at any of the other sites.
It also has quick highway access to Interstate 465, meaning it easily meets another of Whole Foods' requirements-200,000 people within a 20-minute drive.
Within a three- or five-mile radius, however, the demographics aren't as good as at the other locations, with average household income dropping to $71,000 and $65,000, respectively.
Yet neighborhood leaders hope their enthusiasm tips the grocer's decision in their favor. More than 300 people showed up at a pep rally March 23 to show their support for bringing a Whole Foods to the intersection.
Lommel videotaped the event and sent the footage to the grocer's real estate representatives. A similar community effort in Washington, D.C., helped lure a Whole Foods to a less-than-prime site, Lommel said.
"[The addition of Whole Foods] would make us a destination," she said. "It would boost nearby retail and commercial development."
Indianapolis-based Landmark Properties Inc. owns the parcel where Whole Foods could locate and is in favor of making it available to the grocer, Lommel said. Landmark President Brian Pahud did not return a call for comment.