According to Waterstone Retail, developers of the Southgate Shopping Center on Rte. 1, McKinnon's Market & Super Butcher Shop will take over the old Shaw's Supermarket space.
The family-owned grocery store is expected to be open for business by Memorial Day weekend.
McKinnon's has been in operation since 1946, and is known for its selection of meats, along with its large variety of seafood, produce, deli, baked goods, gourmet wine and cheese, prepared foods and groceries.
It will be the fourth location for the company owned by brothers Carl and Ed Penta.
The brothers said they have been looking for another location in New Hampshire since opening one in Salem.
"The Salem store was very well-received by its customers, and we recognized the opportunity to open our next store in the growing trade area of the Seacoast, in close proximity to neighborhoods with healthy demographics," according to a joint statement. "Additionally, Portsmouth is known as an area where people really appreciate good food, and we think the customers will love what we have to offer."
In addition to Salem, the grocery chain also has stores in Danvers and Everett, Mass.
When it opens, the Southgate store will be 40% larger than its counterpart in Salem and will feature an expanded seafood area as well as a full-service bakery with fresh bread baked on premises, a gourmet wood-fired pizza oven, a large variety of prepared foods, and an extensive beer and wine selection.
Construction is already underway inside the 36,251 s/f store, according to Josh Levy, managing partner for Waterstone Retail.
The 1969-era shopping center was purchased by Needham-based Waterstone Retail in 2007. Shaw's Supermarkets closed the store at the former Southgate Plaza shopping center in February 2008. Phase one of the center's face-lift began in 2009.
Josh Levy, managing partner for Waterstone Retail, said the old space will grow from its current footprint of 165,000 s/f to 225,000 s/f and will include 27,000 s/f of to-be-built specialty store space on the north side of the property.
"The remaining 25,000 s/f of expansion area could conceivably be combined with existing vacancy to accommodate an additional anchor store as market demand increases," Levy said.
"Southgate is a familiar and well-located shopping center, but it needs to be brought back to life," Levy said. "We're putting it through a major transformation to create a more inviting, walkable, family-friendly environment. This will be an exciting shopping and dining destination for years to come, and McKinnon's is the catalyst for this transformation."