Dash Point Metropolitan Market in Federal Way will officially close Dec. 31.

The upscale grocery store, which opened in August 2004, will cease operations due to a five-year shortfall in sales. A corporate news release issued Wednesday stated that Metropolitan Market is poised for record sales next year at its six other locations across the region. A new store with 125 jobs will open in Kirkland in 2010. The 65 employees at the Federal Way store have all been offered continued employment at other locations, said CEO Terry Halverson.

“There will be no work stoppage for everyone there who wants to stay with us,” he said. “We really hate to leave the area, but it’s something we had to do.”

Metropolitan Market is the anchor store at Dash Point Village, a group of small businesses at South 312th Street and Dash Point Road. The store has earned honors as a favorite grocer among residents, and has assisted local charity efforts such as the annual FUSION arts festival.

However, the Federal Way location was the “lowest-volume store out of six stores,” Halverson said.

Dan Altmayer, financial advisor at the adjacent Edward Jones office, said the news was a surprise to nearby merchants who benefited from walk-in traffic created by Metropolitan Market.

“We’re very disappointed to see them leave,” Altmayer said. “It’s frustrating when you lose a great retailer you considered a partner.”

Federal Way Chamber CEO Tom Pierson said businesses that have survived the struggling economy so far are benefiting from the closure of competing businesses.

“To me, it’s a bit shocking a business that size at this point has to make a dramatic change like that,” Pierson said of Federal Way’s Metropolitan Market. “I hadn’t heard anything about them being in trouble.”