The transformation of the former Penn Daw Plaza shopping center into a mixed-use community has landed an anchor retail tenant, allowing the development to move forward.

German discount grocer Aldi signed on for 20K SF with Combined Properties for the South Alex project in the Alexandria section of Fairfax County.

The developer is currently working on its financing deals and expects to break ground by Q3, Combined Properties CEO Katherine Bonnafé told Bisnow. The project will include 400 apartments, 41 townhouses and has another 24K SF of retail space in addition to the grocery store.

"We think that offering value-priced food to tenants is going to be a real amenity," Bonnafé said. "Then being able to lease off a quality anchor like Aldi, we're really confident in and excited about the service-level retail we'll be able to attract."

The deal, first reported by the Washington Business Journal, comes after negotiations for The Fresh Market to anchor the project fell through. Bonnafé said the North Carolina-based chain was bought by a new capital source that forced it to re-evaluate its strategy in the D.C. market.

Combined is working on a similar project at the Fairfax Circle Shopping Center, where it signed Giant as a 54K SF anchor in August. Bonnafé said it is within weeks of closing the financing deal for that project, which is planned to include 400 multifamily units, and hopes to break ground as soon as March.