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Pappagallo joins Three Rooms and Whymsy as they exit the Galleria

Posted by: John Ewoldt under Retail Updated: January 13, 2014 - 2:22 PM

Update to earlier post: Pappagallo women's boutique joins Three Rooms and Whymsy in leaving the Galleria in January. It will close at the end of the month and re-open Feb. 1 in a new location at 6133 Kellogg Ave. S. in Edina. Pappagallo was one of the Galleria's original stores, opening in 1973.

Britton Goetze, a member of the ownership team at Pappagallo said that in a meeting with mall officials in September, Hines was more than doubling the store's monthly rent. "The rent was raised so much that it was intolerable. It was impossible for us to stay there," Goetze said in a voicemail.

Whymsy apparel boutique closed earlier in January. Three Rooms, a tenant for 33 years, will close at the end of the month in the Galleria, which was sold to Hines Global REIT in 2012 for $127 million.

Some are wondering if the Galleria is reducing its commitment to local retailers now that the mall is no longer locally-owned.

Patty Burrets, co-owner of Three Rooms, tried unsuccessfully to re-locate to a smaller footprint within the Galleria, but nothing was available. She feels that the Galleria is leaning toward national retailers rather than local ones. Still, she admits that her store was partly a victim of Pottery Barn and Crate & Barrel, which sell home decor at price points often below Three Rooms' prices.

"[Former owner] Warren Beck was instrumental in keeping the local focus," she said.

Another local store that left the Galleria last year is StyledLife, but more than 25 locals are staying put, including Len Druskin, Oh Baby, Trail Mark, Twill, Hammer Made, Ampersand, Scandia Down, Pumpz and Fawbush's. Nearly 40 percent of the mall's tenants are local.

Tom Lauer, co-owner of the Que Sera and Oh Baby retail stores, had a Que Sera location in the Galleria until owners and the previous management agreed not to renew leases with Que Sera, A Pea in the Pod and Schmitt Music. He moved Que Sera to downtown Excelsior. "When Warren [Beck, former Galleria owner] was running it, he was conscious of keeping the local mix but I can't get into the head of Hines," he said. "I don't know if we can reach any conclusions, but I am not concerned," he said.

The mall has to weave a delicate balance as it tries to nab retailers that are exclusive to Minnesota before the Mall of America does. National or locally-based, it's survival of the fittest for any retailer, said Dick Grones, principal of Cambridge Commercial Realty in Edina. "The local tenants have plenty of pressure from national retailers that want to be there," he said. "It's survival of the fittest."

Grones isn't convinced that the new owners are cold to the local retailers. Even former owners were ruthless with all their tenants, local or otherwise. "If you're not at the top of your game, you're going," he said. But Grones did say that as bigger national tenants push for larger spaces, it will put pressure on smaller local ones.

While the local emphasis has always made the Galleria unique, the new ownership and the closing of some local stores bears a watchful eye. Stay tuned.

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