Is downtown Minneapolis retail going downhill?

  • Article by: JACKIE CROSBY and SUSAN FEYDER , Star Tribune
  • Updated: January 14, 2008 - 10:50 AM

Business and city leaders are shopping for ways to make the business district a don’t-miss destination, but the losses of Borders, Crate & Barrel and Williams-Sonoma, among other stores, are the latest setback.

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Badiner Jewelers, a family-owned business on the skyway level of IDS Center, is closing after more than seven decades in downtown Minneapolis.

Photo: Glen Stubbe, Star Tribune

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In the coming weeks, downtown Minneapolis will wave goodbye to half a dozen retailers.

Badiner Jewelers is liquidating at the IDS Center after more than seven decades downtown. Borders bookstore, unable to sublease its store, is abandoning the Block E development it was supposed to help anchor.

National retailers that opened their first area stores downtown decades ago are packing up to focus on the suburbs. Williams-Sonoma closed this weekend . Crate & Barrel will shutter by month’s end.

What gives?

“It doesn’t feel good right now,” said Frank Guzzetta, CEO of Macy’s North and one of downtown’s top cheerleaders. “We’re kind of cleaning up the old stuff, and now we just gotta get the inspiration to get it moving again.”

The business community and city leaders are grappling with ways to breathe life into a downtown retail core that has lost 22 percent of its retail business since 2000.

In the fall, the Minneapolis Downtown Council, with a consultant’s plan in hand on how to activate street life, hired a retail recruiter.

The city of Minneapolis, meanwhile, just completed a draft of its 10-year comprehensive plan. It includes ways to entice more businesses and improve transit and parking to make shopping more convenient.

“We’re an inch away from having a great downtown and an inch away from continuing to go downhill,” said longtime downtown Minneapolis resident Ray Harris, who developed Calhoun Square in the early 1980s. “The pieces of the puzzle are there. But we need some bold private-sector leadership to pull them together.”

Like many downtowns across America, Minneapolis for the past decade has been steadily losing business to suburban malls, where parking is free, shoppers don’t have to leave bread crumbs to navigate through skyways and there are no extra Minneapolis taxes.

“It concerns us terribly that a lot of the stores seem to be vacating,” said Boyd Purdom, 72. He and his wife, Dixie, 71, retired to a downtown condo after living in St. Cloud for three decades, and they do nearly all their shopping nearby.

“We moved here for the life of the city,” he said. “I hope the city’s got a plan to somehow try to keep them here.”

Retailers go where shoppers — especially those with money — live, work and play.

As of 2006 some 32,000 people lived downtown, an increase of almost 18 percent since 2000, according to Maxfield Research Inc. Yet only a fourth of them live within walking distance of the goods and services in the business district, according to a study commissioned by the Downtown Council. Some 160,000 people work downtown.

When men’s clothier Len Druskin opened in Gaviidae Common last year, Courtney Smallbeck, co-owner of women’s boutique Drama, wanted to be there, too. Rent for her street-level store, which opened in October, is twice as much as at her Uptown one. She changes her mannequins every 36 hours, trying to catch the eye of the throngs covering the same daily route. “There’s a sense of urgency with this crowd,” she said. “They don’t have a lot of time to shop.”

5 department stores, 1 MOA

Downtown has been in trouble before. At its peak downtown had five department stores — J.C. Penney, Donaldsons, Dayton’s, Young Quinlan and Powers.

Young Quinlan, Powers and Penneys closed in quick succession in 1985 and 1986. Now some of the bigger stores downtown — including Target, Marshalls and Saks, which converted its department store to an outlet one — focus on value-conscious shoppers.

The Mall of America, which opened in Bloomington in 1992, has also stolen some of downtown’s glamour. While it didn’t sound the death knell for downtown as some had feared, it did coincide with a steady exodus of national chains that has continued for 15 years.

The vacancy rate for retail space downtown last year was 19.4 percent, down slightly from 2006. But that follows a steady increase over several years, according to figures compiled by Bloomington-based United Properties. In 2000, the rate for downtown space was just 10.5 percent.

That contrasts with the Twin Cities overall, which had a retail vacancy rate of 6.9 percent last year, about the same as in 2001, United said.

Stefanie Meyer , United vice president for retail leasing, said the dip in downtown vacancies last year was caused by a sprinkling of new arrivals, including Len Druskin and Brooks Brothers, which left the IDS Center for the Mall of America in 1992 but opened a City Center store.

But those openings have only made up some of the ground lost in recent years from store closings at City Center, Gaviidae and Block E. The 2005 closing of the TJ Maxx store on the lower level of the IDS Center put 60,000 square feet of space on the market that still hasn’t been filled.

IDS general manager Jim Durda said there have been discussions with some retailers, including Best Buy, about leasing some of the former TJ Maxx store. He declined to comment on speculation that Ann Taylor will relocate from Gaviidae Common to the Williams-Sonoma space.

Retail downtown has evolved from destination shopping to stores that serve people who work and live downtown. Developments in the pipeline largely are geared to residents. An apartment and retail complex proposed for 222 Hennepin Av. will have a Whole Foods Market. Zenith, a condominium complex under construction near the new Guthrie Theater, has leased its first floor to a health clinic.

Some of the biggest progress downtown in recent years has come from new bars and restaurants, including Fogo de Chão and restaurants in and near the new Guthrie, and new hotels including the Chambers and Westin Minneapolis.

Nightlife usually plays a bigger role than stores for people moving downtown, said Barbara Brin, a Coldwell Banker Burnet agent who has sold condos in several downtown developments. “The average person is not going to care whether they live five blocks from a Crate & Barrel,” she said.

What could the future hold?

Dreams of Nordstrom dance in the heads of city leaders and property managers. Macy’s Guzzetta, who helped spark a renaissance in Washington, D.C., retail while CEO of Hecht’s, continues to woo the upscale retailer even as Nordstrom makes plans to open at Minnetonka’s Ridgedale Center.

City officials are trying to welcome stores, such as Best Buy, more used to building in the suburbs. “We’re saying, big box is welcome,” said Mike Christenson, the city’s economic development director. “What does it look like? Target. It’s got glass on the street, it’s attractive, the parking lot’s busy, the store’s busy.”

Ann Wimmer, who ran her own consulting firm and has worked at Gabberts and Nordstrom, came to the Downtown Council in November with the sole purpose of working with building owners and merchants to find the right stores for the right location.

Her first order of business: Keep momentum alive on Hennepin Avenue by creating an arts hub sprinkled with complementary retail. She’s not overly concerned by the recent departures. “Changes are natural in retail,” she said. “We don’t need to get overtaken with fear.” jcrosby@startribune.com • 612-673-7335sfeyder@startribune.com • 612-673-1723

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