Young-skewing retailer H&M will fill 10 percent of Calhoun Square's retail space as Uptown's "downtown" adds tenants in a sluggish commercial market.
The addition of hip fashion retailer H&M to Calhoun Square this fall should give the distinctly urban shopping center -- Uptown's very own downtown -- a needed jolt of commerce in what is still a sluggish retail economy in the Twin Cities.
The Calhoun Square location will be the Swedish retailer's fifth outpost in Minnesota -- a vast 23,000-square-foot bilevel store featuring apparel and accessories for women, men and children. H&M will assume a large footprint in the 27-year-old shopping center -- just over 10 percent of its retail space.
"I am psyched," said Shawn Northrup, a Minneapolis resident who was shopping in Uptown one recent sunny afternoon. "H&M is a good deal, definitely a step in the right direction for Calhoun Square."
Located at the bustling intersection of Lake Street and Hennepin Avenue, Calhoun Square was once seen as a trend-setting nexus of Twin Cities retail. But over the years, the nation's biggest shopping mall opened 10 miles away, key stores departed, including Borders bookstore, Odegard Books and Heartbreaker (now a block away), the center was sold at least four times and economic recessions came, went and returned.
That's not altogether different than the challenges faced by other shopping centers in the Twin Cities. But a recent report by real estate firm Cushman & Wakefield/NorthMarq indicates that the retail market remained fairly stable in the first half of 2012, posting a small increase in the vacancy rate to 8.9 percent, up slightly from the end of 2011. "While the vacancy rate remains higher than perhaps desired, the Twin Cities market has seen an increase in activity from landlords, tenants and developers," the report concludes.
Those who track Calhoun Square say its fortunes are looking up with the impending arrival of H&M, plus recent additions CB2, featuring modern home decor, and apparel retailer Timberland. Also new are dining hotspot Primebar and an LA Fitness club. Current vacancy rates are unavailable for the center, but a quick spin through the Square indicates a fair amount of empty space.
Chad Macy, vice president and leasing specialist for Jones Lang LaSalle, which manages Calhoun Square, says the H&M deal plus a few others in the pipeline that he can't yet reveal will bring its occupancy rate to about 92 percent.
"Uptown is one of the most diverse and eclectic markets in our area, it skews younger and upwardly mobile," Macy said. "We really think H&M fits incredibly well with our surroundings."
But not everyone is awaiting H&M's arrival with bated breath. Several retailers in the area pointedly declined to discuss the new development. Others say they wish the space would be set aside for an independent retailer that would complement stalwart tenants Kitchen Window and Bay Street Shoes -- not an international chain that can be found at Southdale and other local malls.
Mary Magers, manager of Magers & Quinn Booksellers, an independent bookstore across the street from Calhoun Square, said "As long as H&M doesn't displace anyone, I'm fine with it. I've come to accept that if you add some non-local stores to the mix, it helps drive traffic for everyone."
Minneapolis retail expert Jim McComb agrees. "Landlords look for retailers with proven concepts to drive traffic," he said. "Some retailers like Kitchen Window can do that, but it's tough to find other local retailers out there with that kind of track record. The truth is, there aren't that many."
Stuart Ackerberg, a Minneapolis developer who recently opened the $45 million Mozaic mixed-use development in Uptown, said it's hard to know how H&M will fare there. "The demographic is so diverse, you have young teens to people in their 60s.
"Uptown can be very fickle for retailers; the Gap left and so did the Limited," he said. "The perception was that if a customer wanted to go to those stores, they'd drive to Southdale or the Mall of America. But I think H&M is a little more unique." (Calhoun Square customers still largely depend on an adjacent pay parking ramp.)
H&M spokeswoman Nicole Christie described the store's target demographic in an egalitarian way: "Fashion-conscious consumers of all genders and ethnicities."
The retailer (also known as Hennes & Mauritz) has been on an expansion tear since landing in Manhattan 12 years ago. Today, it has 2,500 stores worldwide, with 245 in the United States. The "fast-fashion" concept it embraces -- affordable and trendy goods that quickly move from catwalk to the retail sales floor --has proven remarkably recession-proof. For the six-months ending May 31, H&M's profit increased 16 percent.
"H&M is a perfect fit for that community," said Russ McGinty, a retail broker with North Central Commercial Real Estate in Maple Plain. "It's young, it's trendy, you have a lot of singles and young married couples, it's an area that's a little more eclectic than most."
Janet Moore • 612-673-7752