When Knollwood Plaza opened nearly 60 years ago in the budding suburbs west of Minneapolis, the event was hailed by crooner Rosemary Clooney, Gov. Orville Freeman and two U.S. senators — one of them Hubert Humphrey.

In recent years, Knollwood Mall — as it's known today — has languished in spots.

But now, its New York-based owner is pumping $32 million into the Hwy. 7 icon with plans to turn it into a regional "power center." That's retail parlance for a shopping center anchored by a series of larger box stores facing the street (and parking), as opposed to an enclosed mall with smaller shops anchored by big department stores.

The extensive renovation involves the demolition of the existing interior mall concourse and is expected to be complete by the end of the year, according to the owner, Rouse Properties. The former food court area will be retained and reconfigured to accommodate a small, enclosed common area with a few stores.

The idea, Rouse said in an e-mail statement, is "to make Knollwood more contemporary and appealing to both high-profile prospective retailers and the local customer base."

The company has not released the names of new retail or restaurant tenants, however.

Construction at the Knollwood shopping center has blocked off large sections of the parking lot, making it inconvenient for some shoppers.

"All these changes really need to occur; Knollwood is pretty dated," said Minneapolis retail consultant Jim McComb. "The existing tenant mix doesn't have the horsepower to support an internal mall, so it all makes sense."

Most of the work appears to be occurring on the western stretch of the mall between Kohl's and TJ Maxx HomeGoods. Some of the tenants, including the Foss Swim School, will remain, while others, such as Dress Barn, already have departed. Established big boxes on the eastern side of the mall, including Cub Foods, DSW (Designer Shoe Warehouse), and Old Navy will stay as well. And there are already signs of spiffed-up stores, including a new Applebee's restaurant and an AT&T Wireless store.

A new 11,500-square-foot outbuilding is also being constructed near the corner of Hwy. 7 and Aquila Avenue S. — space for a Panera Bread restaurant with a patio and drive-through, as well as two smaller as-yet unnamed retailers. (Panera is relocating from its current spot in the mall.)

The mall remains open despite a flurry of construction at the site, and a patchwork of signs instructing often-befuddled shoppers and motorists where to walk and park.

"This is a little inconvenient," said Rigel Johnson, earlier this week, as she paused outside the Old Navy store. "But I'm coming from Golden Valley, so it's really convenient, and everything I want is here or nearby."

Minh Tran, an employee at the Perfect Nails salon now inside the mall, said "construction has affected business." He said the salon may move to new space in the renovation, but wasn't sure where.

Rouse Properties is betting that St. Louis Park and its well-heeled neighbors will prove an attractive draw to prospective tenants. In marketing materials, the company calls Knollwood an "ideal infill location for existing retailers" already established in the Twin Cities. A Rouse spokesman declined to elaborate further.

The company is also touting the area's lucrative demographics, including an average household income of $93,000 — a figure that is 44 percent greater than the U.S. average. In addition, more than 265,000 people work within a five-mile radius of the mall, creating a strong base of would-be shoppers.

Still, Knollwood faces some stiff retail competition. Ridgedale Center in Minnetonka is currently in the midst of a major overall that will result in a new Nordstrom department store — only the second one in Minnesota, and a renovated Macy's store. In addition, the Shops at West End in St. Louis Park has drawn a particularly strong slate of restaurants to its site, just off Interstate 394.

In a statement, Rouse officials said the redevelopment is "part of our ongoing effort to create an exceptional shopping and social experience … We are working to completely reposition Knollwood into what we believe will be one of the premier grocery-anchored power centers in the greater Minneapolis area."

Knollwood's previous owner, Chicago-based General Growth Properties, spun off 30 retail properties as Rouse Properties in 2012. Knollwood was part of that portfolio and is Rouse's only property in Minnesota.

Janet Moore • 612-673-7752