St. Louis Park housing/retail project has a restaurant, two clinics and a nail salon.
"We were a multifamily company building retail, and that was petrifying," Bader said, adding, "especially during a time when retail was dry."
But the Ellipse in St. Louis Park, a housing/retail project started in 2009, is fully leased. In addition to having 132 upscale residential apartments, it has landed solid tenants.
By early last year, Tu's Nail Salon, a Partners in Pediatrics health clinic and a Viverant physical therapy clinic filled three smaller spaces. And in June, the development found its crown jewel: Mill Valley Kitchen, a Northern California-style restaurant that will anchor the development.
But the road to getting the Ellipse filled wasn't easy. Bader's family business, based in St. Louis Park, has been developing apartments, condos and single-family homes in the Twin Cities for more than 30 years. But it had little experience with storefront retailers.
The Great Recession was also in full swing, meaning retail landlords were being socked by plummeting rents and tenants were demanding concessions. Plus, the Ellipse was dealing with an odd configuration. The floor plan for its four retail spaces was to include a curving public plaza at Minnetonka Boulevard and France Avenue.
Bader said he and retail broker Michael Finkelstein of the Ackerberg Group kept going over projections on the revenue they could expect from the retail component, and they weren't too happy with what they were seeing.
"Retail rents kept going down, down, down, and it was kind of depressing," Bader said.
Coupled with tight financing, expectations for the retail space were low.
But things actually weren't as bad as they seemed. The Ellipse had two big things going for it: It offered new-construction apartments at a time when demand for such units was just starting to skyrocket, and it occupied a well-known location at the site of a former neighborhood institution, Al's Bar.
Both factors drove interest in the development and made it easier to find the kind of neighborhood-service retail tenants able to pay rents needed to make the project work, Bader said.
Ahead of projections
The upshot after all the initial worries and obstacles: Bader Development's 2012 projected net operating income on the Ellipse retail space is $120,000 more than what it was expecting in its 2009 calculations.
"That's because we were expecting some of these spaces to be vacant for two or three years," Bader said. "The fact that it got 100 percent leased up within six months of opening helped tremendously."
Since then, accolades for the Ellipse have poured in, including a 2011 Minnesota Shopping Center Association STARR Award for best design and aesthetics in a newly constructed retail space under 20,000 square feet.
Don Jacobson is a St. Paul-based freelance writer. He can be reached at 651-501-4931.