Safeway Stores Inc., of Pleasanton, Calif., has agreed to lease a proposed supermarket space at a planned $9 million retail center in the Hillyard area of northeast Spokaneand close a nearby store, developer Jim Gallaugher says.


Gallaugher, who is managing member of a Seattle-based development company called Real Property Investors LLC, says the companys representatives are meeting with city building officials about the project and hope to obtain a building permit by year-end. He says construction of the retail center could start early next year, and the 55,000-square-foot Safeway supermarket could open next fall.


The development is proposed for 10.5 acres of land at the northwest corner of Market Street and Garland Avenue. That parcel is cater-cornered from a Safeway store that would shut down when the new supermarket opens, Gallaugher says.


Real Property Investors hasnt closed on the purchase of the 10.5 acres yet, but Gallaugher says it expects to do so after the building permit has been issued. This summer, the company agreed to buy the parcel from Spokane-based Northwest Development Inc., a limited partnership owned by William S. Morin, Carter Dullanty, and members of their families.


In addition to the Safeway store, the retail center would include about 25,000 square feet of retail space next to the supermarket and also have three outlying development pads. Gallaugher says the company currently is negotiating with other prospective tenants besides Safeway, but he declines to name them until they sign leases.


Jim Quigley, of Kiemle & Hagood Co., is the leasing agent for the planned Hillyard retail center.