The Nicollet Mall mainstay’s new owner says the retail complex needs a freshening.
Long after the lunchtime throng had settled back into their cubicles, Gaviidae Common II was quiet one recent weekday afternoon, almost eerily so.
But the new owner of the downtown Minneapolis shopping center, on Nicollet Mall between S. 5th and 6th streets and anchored by the now-shuttered Neiman Marcus store, has plans to freshen up the space. Currently, only 57 percent of the retail center is occupied, including the lower level that once featured Morton’s steakhouse.
California-based KBS Real Estate Investment Trust III bought the signature Minneapolis property this month as part of a $118.1 million deal that included the adjacent 40-story RBC Plaza office building.
The seller was Brookfield Properties Inc., a New York-based real estate firm that is divesting its Minneapolis real estate. Late last year, Brookfield sold City Center and the former International Multifoods Tower to a San Francisco firm, Shorenstein Properties, for about $207 million. Brookfield, however, still owns Gaviidae I, anchored by the Saks Fifth Avenue Off Fifth store, and the actual Neiman Marcus building.
KBS intends to spend $3.8 million to retool the retail and restaurant options at Gaviidae II and spruce up the RBC Plaza lobby. When the deal was announced, KBS regional president Rodney Richerson said it’s a good time to “rethink the four-story retail section.”
Michael Druskin, CEO of Len Druskin boutiques, said he’d prefer to see more unique retailers with compelling merchandise inhabit Gaviidae II, where he operates two stores bearing the Druskin imprimatur.
“I hope people living downtown support downtown by coming here to shop, ” he said. “But it’s up to us to make sure our offerings are compelling and what people are looking for.”
Retail at Gaviidae II, which also includes Ann Taylor, Talbots and R.F. Moeller Jewelers, is now on the street and skyway levels. And the State Fare food court — popular with time-pressed office workers on a budget — spans the fourth floor.
Changes for restaurants
That will likely change. KBS said this week it is looking at different options for the food court and a more-suitable location for the restaurant tenants. Some of them could relocate to the first two floors.
The new owner is also looking to attract a mix of fast-casual restaurants, white-tablecloth dining and service retail offerings to primarily serve tenants in the RBC Tower, plus other downtown workers.
The street-level entrance off Nicollet Mall — also known as “Minnesota’s Main Street” — and the lower-level valet parking entrances will be given a “more contemporary, professional look” which will “carry up through the skyway level,” KBS said in an e-mail statement, which noted, “Right now, many of the colors and finishes are dated and in need of a face-lift.”
KBS said it will hire an architect to create better flow lines between the RBC Plaza office tower lobby and Gaviidae’s Nicollet Mall entrance. This may involve filling in part of the Gaviidae atrium between the ground floor and the lower level to create a direct pathway between the two.
The wall between the RBS lobby and Gaviidae could either be modified, or glass walls erected to create visual openness and continuity. A fitness center may be located on the lower level.
On the third and fourth floors, KBS plans to create a large block of open office space that could be built out for traditional use by multiple tenants, or it may attract businesses looking for an open footprint.
The streetscape and Nicollet Mall address provide “an urban vibrancy” and, with up to 60,000 square feet of leasable space, it’s the largest contiguous block of office space on the Mall, KBS said.
Complex opened in 1989
Gaviidae II was built on a site once occupied by a J.C. Penney store. In the late 1980s, city officials and the captains of retail decided to court more-upscale stores downtown — those not found in the suburban Dales surrounding the city center. Gaviidae — Latin for loon — opened in phases beginning in 1989.
“Gaviidae was built to reinforce the idea of downtown Minneapolis as a shopping destination, ” said Jim McComb, a Minneapolis retail consultant.
The project was subsidized in part by the city. In 2009, Brookfield paid $29.4 million to repay one of three loans the city’s development agency made between 1987 and 1991 for Gaviidae.
But when the Mall of America opened in 1992, “it had an impact on all the malls all over the Twin Cities, not just Gaviidae, ” McComb said.
The Neiman wing of Gaviidae tended to suffer more because the northern stretch of Nicollet Mall was a little lonelier, with less foot traffic. After years of rumors, Neiman Marcus closed on Jan. 31.
More changes on Nicollet
Now, the northern section of downtown appears to be perking up with the development of several luxury apartment buildings within a block or two of Gaviidae II, as well as the existing light-rail station at S. 5th Street and Nicollet Mall.
Minnetonka-based Opus Development Corp. plans a $100 million, 26-story apartment tower just across 5th Street from the former Neiman store. About 250 apartments are slated for the historic Soo Line Building at 5th Street and Marquette Avenue S., and a few blocks away on East Hennepin Avenue and 2nd Street, Ryan Cos. U.S. is building a $70 million luxury apartment building that will be anchored by a Whole Foods grocery store. Xcel Energy Inc. is expanding its downtown headquarters with a second building on Nicollet Mall between 4th and 5th streets.
Minneapolis officials are also hopeful that Gaviidae II will be revitalized. “The city has a strong interest in the future of the buildings and seeing them remain a center of activity for workers, visitors, and a growing residential population,” said city of Minneapolis spokesman Matt Laible, referring to Gaviidae II.
Meanwhile, Gov. Mark Dayton has proposed a $25 million investment to reconstruct Nicollet Mall, a project that — if funded — should help to spark the shopping spine’s historically sleepier northern spur.
Janet Moore • 612-673-7752