By: Micah Maidenberg, Crain’s Chicago Business

An organic grocer that plans an ambitious expansion across the Midwest has inked deals for two more Chicago-area stores as it prepares to move its headquarters to Downers Grove from Phoenix.

Fresh Thyme Farmers Market signed a 15-year lease for its first store in the city, at 2500 N. Elston Ave., a busy retail corridor between Bucktown and Lincoln Park, company President CEO Chris Sherrell confirmed. The firm also is opening a store in a former Dominick’s in Crystal Lake, he said.

As its expansion ramps up, the grocer will shift its headquarters this spring to southwest suburban Downers Grove, bringing about 100 corporate and management jobs, Sherrell said. Fresh Thyme Market leased 30,000 square feet in the Corridors III building at 2650 Warrenville Road for the new office.

The headquarters move will allow the firm to stay close to Midwestern markets, where it hopes to open 100 stores over the next six years, including 18 in Chicago and the suburbs, Sherrell said. A spokesman for Atlanta-based Columbia Property Trust, which owns the 222,000-square-foot office building, confirmed the lease but declined to comment further.

CHANGING FOOD LANDSCAPE

Backed by executives at Michigan retail behemoth Meijer, Fresh Thyme is part of a new wave of companies transforming the local grocery landscape.

Along with Plum Market and Mrs. Green’s Natural Market, Fresh Thyme caters to health-minded shoppers by offering big selections of natural and organic food. Whole Foods Market and Mariano’s, meanwhile, are aggressively moving to protect and boost their market share, and Trader Joe’s has opened stores as well.

“I think there will be some strong and stiff competition with, let’s say, the Whole Foods of the world, but I think the real siphoning is going to be from the remaining players in the middle market,” including Jewel-Osco and independent grocers, said Mari Gallagher, principal at Mari Gallagher Research & Consulting Group, a Chicago-based food consulting firm.

WILL COMPETE ON PRICE

Sherrell, who once operated a Phoenix-based natural food chain called Sunflower Farmers Market, said his firm will differentiate itself by competing on price.

“We’re a natural, organic specialty store and we’ve got a unique mix,” he said, noting Fresh Thyme carries conventional food in addition to organic items. “We bring that to the public as a value.”

He expects the Elston store, which will comprise 28,000 square feet, to open by October 2015 or else in the first quarter of next year. The firm likes the location because of its density: “One main thing we looked at is just the rooftops, and population-wise this is probably our highest density (location) of all the stores we’ve signed to date.”

“It’s a good, in-fill spot,” said Allen Joffe, principal at Chicago-based Baum Realty Group, who isn’t involved in the deal.

Steven Schwartz, president and CEO of Chicago-based Midtown Athletic Clubs and the owner of the empty Elston Avenue store where Fresh Thyme will open, said the space was last occupied by electronics retailer TigerDirect, which closed a couple of years ago. The building spans 33,000 square feet, meaning Midtown has another 5,000 square feet to lease.

‘A STORE WORKS IN THIS AREA’

Midtown operates its namesake tennis and health club at the northwest corner of Fullerton and Elston avenues, just south of the forthcoming grocery.

“We know a store works in this area,” Schwartz added, noting that years ago Fresh Fields operated a shop in the Elston Avenue building before Whole Foods acquired that chain. “It’s good for us because we’re health-conscious and our customer is a health-conscious person. It’s also convenient for them to go to the club and then do their shopping.”

Midtown is trying to find a tenant for a vacant 22,000-square-foot former Staples store adjacent to the future Fresh Thyme.

Fresh Thyme operates a store in Deerfield and one in Mount Prospect. It has signed leases for seven more in places like Downers Grove, Naperville and Joliet.

The firm plans to open an approximately 29,000-square-foot store in the former Dominick’s at 5340 U.S. 14 in northwest suburban Crystal Lake, according to Mark Lee, director of real estate at Berengaria Development, a Milwaukee-based company that has a contract to buy the former Dominick’s and has a lease with Fresh Thyme.

Lee declined to comment on how much the venture his firm is part of will pay for the 66,000-square-foot Crystal Lake property, which is owned by an affiliate of Farmer’s Best Market, an independent grocery chain in Northlake. The Farmer’s Best affiliate bought the building from Dominick’s parent Safeway last summer for $3.2 million, according to a report in the Northwest Herald.

Farmer’s Best executive Nick Merikas said he decided to sell the property after deciding he wouldn’t open one of his stores in the former Dominick’s building.