WILMINGTON — The City of Wilmington is reviewing the restrictive covenant mandating its surplus properties at 305, 315 and 319 Chestnut Street be sold under the condition of them containing a grocery store after the initial developer pulled out of the purchase late last month.
Cape Fear Holdings is no longer moving forward with its $1.7-million purchase of the city-owned property, as first reported by the Wilmington Business Journal this week.
The LLC’s co-founder, Vin Wells, told the outlet “the timing for this opportunity was not aligned.”
READ MORE: Downtown grocery store official, appraiser and mayor talk merits of the deal
ALSO: Food co-op still devoted to opening grocery store despite funding withdrawal
According to a spokesperson for the city, Cape Fear Holdings notified the city of its decision on Nov. 25.
Cape Fear Development, a division under Cape Fear Holdings, is behind the newly opened Project Grace, a public-private partnership redeveloping the downtown library and Cape Fear Museum. The company first floated the idea of a downtown grocery store as potentially part of its ground-floor redevelopment.
In its bid for the property, Cape Fear Holdings included a restrictive covenant limiting the properties’ principal use to a retail grocery supermarket for at least 10 years. The downtown area has long been considered a food desert and the grocery store would have alleviated that.
The covenant also applied to any other developers submitting upset bids against Cape Fear Holdings, but it is unclear whether it will remain in effect now.
Upon being asked about it, city spokesperson Amy Willis replied: “Moving forward, City staff is pursuing a master downtown plan to ensure the City is using its holdings in the most strategic way that benefits the city’s future needs.”
Formerly city administrative offices, the three parcels were declared surplus in February 2023 following the city’s $68-million purchase of the Skyline Center, now the central location of city hall and city offices. As with other surplus properties, the money gleaned from the Chestnut Street properties was intended to offset the debt on the Skyline Center.
When no bids had been received in the following year, the city demolished the building at 305 Chestnut in November 2024; staff claimed a vacant parcel could be more desirable to buyers.
Cape Fear Holding’s proposal was announced in early December 2024 and the properties went through the upset bid process, though none were received. The bid was officially awarded to Cape Fear Holdings later that month.
While making good on the city’s commitment to bring a grocery store downtown, the city and county were involved in another plan to bring a food co-op to the city’s Northside. This project was disrupted when the news of the Chestnut Street grocery came about, despite city staff claiming the surplus sale would have no negative impact on the co-op.
The co-op is a joint partnership between the city, which provided land to the venture at 10th and Post streets, and New Hanover County, which committed to funding the store’s construction. However, the county struggled to find the funding for the co-op for the first few years of the group’s existence until The New Hanover Community Endowment offered to fill in the funding gap with a $6.7 million grant in February 2024. A couple months later, the county allocated $2.5 million and a $1.5-million cashflow cushion to its bottom line for the first five operating years The store was projected to open in 2026.
In March 2025 budget discussion, county commissioners let it slip that the co-op’s grocery store was on pause. The food co-op notified the county two months earlier that it wanted to pause work on design, permitting, and rezoning so it could reevaluate its business model in the wake of a big-box grocery store moving in a few blocks away.
In an April Zoom call with stakeholders, the co-op’s CEO, Cierra Washington, shared her team was looking into potentially relocating the store to an area with higher foot traffic and adding a hot food option to attract meal-seekers along with grocery shoppers.
Then in June, it was revealed at another county commissioner meeting that The Endowment has pulled its grant from the project. The county then cut its funding commitment during budget negotiations.
The Endowment would eventually issue a different, smaller grant to Growing Resilience, a nonprofit that oversees the food co-op — $320,000 for the group’s community dinners, while also supporting the team’s work toward the grocery store. Washington told Port City Daily after the award that the co-op was still committed to opening a store on the Northside.
Port City Daily reached out to Washington Friday asking if the falling through of the Chestnut Street grocery affected its plans moving forward; no response was received by press.
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