MIAMI-Plans for Downtown's first major grocery store located at MDM Development Group and MetLife's Metropolitan Miami mixed-use project have been canceled. Whole Foods has pulled out of its commitment to open a 45,000-square-foot store at the site on SE Second Avenue, according to a report by the South Florida Business Journal.

"Over the past two years, the scope of the downtown Miami project has changed from its initial design," Whole Foods' Florida region told GlobeSt.com in a statement. "After a thorough review, Whole Foods Market has determined that this project no longer fits with our current business model for new store development."

MDM Development sent GlobeSt.com a statement that they "respect Whole Foods' decision, and will look to continue an open dialogue with the organization with the goal of a possible relationship in the future." The organization also stated that they plan to stick to their original goal of having an agreement in place with a food market when that component of the project breaks ground at the end of 2009.

Local experts disagree on whether the decision had something to do with the thousands of unsold condos in Downtown Miami and have conflicting opinions on what the effect the retailer's exit from the project will have on the area. "This is more tenant-specific than region specific," says Greg Masin, retail broker with Cushman & Wakefield of Florida. "It's fairly well documented that Whole Foods was on a rapid expansion, that their construction costs of developing individual units was higher than anticipated, that they have been digesting a large merger and that sales of organic products have stalled in today's economic environment. What may have changed is the retailer's willingness or ability to move forward today. The location is no less relevant today than it was when Whole Foods originally underwrote the site."

Thousands of vacant condo units in the Downtown area may also have the provider of natural and organic foods worried about the population base needed to support the store, says Marc Strauss, vice president of investments and senior director for Marcus & Millichap's national retail group. There could even be a ripple effect on other retailers who were looking to locate in the area, he tells GlobeSt.com.

"Some of the ancillary companies that like to be in the vicinity of grocery and food stores will now think twice because there won't be the traffic of people shopping there," says Strauss. "When you see a major retailer pulling back, you'll see others backing away, too," he adds.

Neisen Kasdin, chair of Akerman Senterfitt's land use and entitlements practice group and vice chairman of the Miami Downtown Development Authority, does not believe the area will be greatly affected by the change in plans. "It is only a short matter of time before Downtown will have a new supermarket because there is a tremendous residential population here," Kasdin says, adding that there are probably 10,0000 new residents that were not around two years ago.

Regardless of what the news is today regarding Whole Foods' decision to pull out of MDM's project, Masin advises against discounting the retailer's Downtown Miami location. "Whole Foods is still one of the best candidates to occupy those premises and there is a possibility that even though they've stated that they don't want to move forward today they may still be willing to move forward in the future," he says. "In today's environment, all retailers are looking at their existing and future obligations and figuring out where to best expend their capital. Everything is on the table for examination and a potential renegotiation."

Just two months ago Met 2, a major component of the Metropolitan Miami project to include 750,000-square-feet of class A office space and 358 hotel rooms, secured a $250-million construction loan through a group of banks including Bank of America, Wachovia Bank, HSBC Bank USA, RBC Bank and Bank of Scotland. Additional planned development at the site includes Met 1, a 447-unit condominium tower; Met 3, a 696-unit condominium tower featuring a 24-Hour Fitness; and Met Square, an urban center including a 13-screen movie theater, restaurants and shopping.