The Mall of America's best-performing retail segment is the luxury sector, and when it completes its new three-story addition next year, it wants high-end tenants at the front door.
Level 1 of the new structure, set to open in August 2015, will become the main destination for shoppers seeking pricey apparel and other luxury items and has already attracted interest from such retailers, the mall's development chief told members of the NAIOP commercial real estate trade group this week.
"The first level right now is focused on those kinds of tenants, so what we're really doing is creating a kind of luxury district," said Kurt Hagen of Triple Five Group, the mall's Canadian owner.
"We have some luxury tenants in the mall today, but they're scattered around. This will really focus them in one location and will add several high-end tenants that don't exist in this market today. We're really excited about where leasing is going on Level 1."
Each of the three new floors in the addition will boast 26,000 square feet. It's part of a larger, $325 million "Phase 1-C" expansion that also includes a JW Marriott hotel and a seven-story office tower, known for now as the Offices @ MOA.
Maureen Bausch, the mall's executive vice president of business development, said luxury retailers appeal the most to the approximately 40 percent of mall shoppers who come from beyond the immediate region.
"The category that is doing best today is the high-end luxury, especially among international tourists," she said. "For instance, our Nordstrom store is No. 3 in the entire chain for couture clothing. We think there's a lot more room to grow in that area."
Another guiding principle in lining up tenants for the new space is filling gaps in the MOA's current retailing mix, which now numbers 520 stores and 60 dining spots. Thus, the second level of the addition will zero in on a pair of areas in which Hagen said the mall is currently lacking.
"Level 2 is going to take one of two leasing directions," he said. "We might go with home furnishings, which really doesn't exist in the mall today. We've got a home furnishings 'junior anchor' that we're working on, and if we end up doing that deal, I think that will drive the rest of the second level, centering it around that same theme."
Another possibility is men's apparel, which the MOA also doesn't have much of currently.
"We are very light on retail for men, and that market is emerging in the United States, finally, after many, many years," Bausch said. "Men are shopping for themselves more, so we see that as a possible direction on Level 2."
Rounding out the addition on the third level will be the mall's new food court and a 16,000-square-foot ballroom for the JW Marriott Hotel.
An updated food court, Hagen said, is badly needed. It would replace the current edition, which is among the dwindling number of throwbacks to the MOA's original 1992 concept.
"The existing food courts at Mall of America are 22 years old, and the design theme at that time was, 'Line up your food court tenants and put a thousand seats out in a big open area,' " he said. "That's not the way it is today. There will be much more intimate seating pockets and softer seating, and there will be a better selection, with higher-end tenants and better quality."
Meanwhile, the hotel ballroom will answer another need that has become more apparent after last year's opening of the Radisson Blu hotel on the mall's south side.
"One thing we learned real fast with Radisson Blu is that is we wish we had twice as much meeting space as we do," Hagen said. "And bigger spaces. We now simply can't accommodate large groups of 1,000 people or more. We'd have made [the Level 3] ballroom 25,000 square feet if we would have had the room to do so."
Don Jacobson is a freelance writer in St. Paul and former editor of the Minnesota Real Estate Journal.
