King Soopers president Russ Dispense said he likes the location of the old University of Colorado Hospital but can't make a grocery store work under the current redevelopment plan from Fuqua Development.
The grocer was expected to be an anchor tenant for the mixed-use development on the 28-acre site of the former hospital.
"We continue to be interested in this site," Dispense said. "But due to the constraints of the current site plan, we didn't feel like we could create a functional store that would meet our customers' expectations and be reflective of this unique Denver neighborhood."
One of the grocer's problems with the site plan was that it proposed to locate the store's parking lot across the street from the store itself, potentially causing conflicts between shoppers and motorists.
The news comes as a blow to neighbors who fought against a proposed Walmart and had been ecstatic with the King Soopers announcement.
Walmart pulled out of the project last year after a campaign by neighborhood activists who were concerned about the impact of having the giant retailer in the area. The development plan proposes a mix of retail, restaurants and housing for the site that has been vacant since the hospital moved to the Fitzsimons Campus in Aurora in 2007.
City officials said in November that Fuqua Development was negotiating with King Soopers to take Walmart's place. It's too soon to tell whether King Soopers' departure will delay or even derail the redevelopment, city and neighborhood officials said.
"There's a certain level of anxiety that exists until the project moves forward," said Laurie Bogue, president of the Bellevue-Hale Neighborhood Association.
But Bogue said she and others are convinced that Atlanta-based Fuqua and its equity partner, Lionstone Group of Houston, are motivated to proceed and will make the development work despite King Soopers' pullout.
Denver City Councilwoman Jeanne Robb said the council is unlikely to approve a proposal for $21 million in
city-sponsored tax-increment financing without more detail on exactly how the project will be built out.
Robb said she would like to see more housing than has been proposed by Fuqua.
A representative for Fuqua did not respond to requests for comment.
"The economics just didn't make sense," University of Colorado president Bruce Benson said of the plan for the King Soopers store.
He said issues included the exposure that King Soopers wanted; a problem with how Albion Street runs through the property; and street-versus-underground parking.
"It's something you're not in control of. You're talking the city, the City Council, neighborhood groups — it's not an easy deal," Benson said. "We're going to get there — it just takes a long time."
