EthnicGrocer.com is seeking to sublease its 50,000-square-foot offices in Chicago and is shopping for a 10,000-square-foot site elsewhere in the city, according to Crain's Chicago Business
. The company's current lease is a hot topic in Chicago real estate circles because the city pledged in February 2000 to set aside $2.4 million in tax-increment financing (TIF) funds as collateral in case EthnicGrocer defaulted on the rent. The set-aside essentially acted as a security deposit, keeping the Internet grocer from moving to California after one of its investors balked at a request for a multimillion-dollar security deposit and threatened to relocate the company. Founded in 1999 by two students at Northwestern University's Kellogg Graduate School of Management, the company originally was an online retailer of ethnic foods and spices. It has since expanded beyond groceries, and operates four Web sites, three of which cater to specific ethnic groups-Hispanic, Chinese and Indian. Kanwar Singh, general counsel at EthnicGrocer
, told CCB
the company is simply looking at its options; the move is being considered because management is cutting costs and focusing on turning a profit at its existing Web sites. It has already scrapped plans to continue expanding by launching new sites targeting additional ethnic groups. EthnicGrocer's Mr. Singh claims that his company is healthy. In August, it raised $41 million, with most of that from new investors.
Copyright November 2000, Crain Communications Inc.