The busy Interstate 880 corridor, lately a red-hot magnet for retail development, is about to heat up even more.

A late-summer announcement by Albertson's Inc. that it is selling a 62-acre site adjacent to the Marina Boulevard interchange with I-880 has generated plenty of interest from myriad developers. The site houses the grocery chain's Bay Area distribution center and headquarters for its 183-store Northern California division, which is being folded into the Southern California division to create a statewide entity that will be based in Fullerton in Orange County.

Further north along the freeway corridor in Oakland, a new Wal-Mart store is scheduled to open in the spring, while The Home Depot debuted in June.

Albertson's won't completely leave the site until 2006, but there's still plenty of interest. Quyen Ha, an Albertson's spokeswoman in San Leandro, has said the company will close all its operations in San Leandro sometime during that year, moving its distribution center functions to an expanded facility in Vacaville.

A spokeswoman at the company's Boise, Idaho, headquarters did not return phone messages seeking comment on what Albertson's officials would like to eventually see on the East Bay site.

But developers are champing at the bit, excited about the potential for a highly visible, well-located parcel along a corridor rapidly running out of sizable chunks of buildable land.

"Serious interest in the site has been expressed by well-capitalized real estate investment trusts and institutional-grade investors," said Luke Sims, the city of San Leandro's business development manager. "We've already had a fair amount of inquiries."

Although retail development on the site is a distinct possibility, it's not a foregone conclusion. It sits across the freeway from popular Marina Square, an outlet shopping center anchored by Nordstrom Rack, Eddie Bauer, Old Navy and Marshalls.

"The city is remaining open minded about the site," Sims said. "We are considering proposals from a number of different real estate interests, but we're trying to stay as open about it as possible. We will work with Albertson's and whatever (developer) is chosen to come up with a master plan for this piece of land."

Sims said housing is the only type of development city officials do not want to see on the site, although he hastens to add that the San Leandro City Council has yet to take an official position on the site's use. It would have to be rezoned to be converted to retail, or anything besides its present industrial designation.

"We really see that area as part of our business district," Sims said. "Residential would not be appropriate because of its proximity to the freeway and it would be isolated, surrounded by industrial businesses. Conventional wisdom would say there will probably be a shopping center on that site, but we are a long way from a decision."

Other options include office buildings or industrial uses. Because at least some of the facilities used by Albertson's are considered state-of-the-art, there's the possibility that another grocery chain or other food-related business would be interested in taking it over in its present form.

"Some investors have told us it is a gem of a facility, a unique asset that can't readily be duplicated elsewhere," Sims said. "And the cost of doing so elsewhere would be tremendous."

A spokesman for one of Albertson's biggest rivals, Safeway Inc., did not return a call seeking comment as to whether the Pleasanton-based grocery chain might be interested in the site. It already operates a mammoth distribution facility in Tracy.

Sims described present use of the Albertson's property as "underutilized," ranging from the cutting-edge cold storage building to several older structures used for "secondary activities" by the grocery chain. There used to be a meat-processing plant and bakery on the site when the facility was owned by Lucky Stores, which was bought by Albertson's in 1999.

"The property has developed in piecemeal fashion over the years," Sims said. "Parts of it are not being used to their potential."

Commercial brokers familiar with the I-880 corridor say there's been plenty of buzz from the development community about the parcel.

Solomon Ets-Hokin, retail specialist with San Francisco-based Terranomics Retail Services, said because of its visibility from I-880, which carries more than 200,000 vehicles a day, retailers and developers will be salivating over the site.

"Retail developers absolutely love those sites with great freeway visibility and access," Ets-Hokin said, adding that densely developed urban freeway parcels fetch between $20 and $30 a foot.

Sims said an ideal retail development on the Albertson's property would include both tenants with a regional draw, as is the case at Marina Square, and those geared more to nearby residents, such as restaurants, a theater and a grocery store.

"There is really a limited supply of those services in that part of our city today," he said. "For the most part, people have to go downtown for those kinds of activities now. It would be wonderful to see a full-service grocery store in that part of town."

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