New upscale outlet mall in Eagan expected to lure visitors, inspire other development

The once desolate landscape around Jensen's Food & Cocktails in Eagan is filling in, a change owner Doron Jensen views as satisfying and long in coming.

It's been more than 10 years since the city began clearing dozens of businesses from the 65-acre Cedar Grove area, until Jensen's restaurant and a bowling alley were the only ones left. The economic slump and legal battles over the city's use of eminent domain stymied efforts to redevelop the ghost town south of Hwy. 13 and east of Cedar Avenue.

"There were times I wished I was on the relocation list," Jensen said.

Now an upscale outlet mall with more than 100 stores peddling Calvin Klein, Coach, Polo Ralph Lauren and other brands is set to open next door. The first of its kind in the Twin Cities, it's projected to draw as many as 4 million visitors a year.

"In a way, it's kind of a payoff for the long wait," Jensen said. He's spent about $1 million on improvements to his restaurant and has added lunch service to capture the shopping crowd.

A large outlet mall wasn't part of the original plan to remake Cedar Grove, which had disintegrated as a commercial district after a new freeway routed traffic away and other retail centers sprouted elsewhere.

But city leaders say Twin Cities Premium Outlets wound up fitting their goals to help transform Cedar Grove — the former home of a dowdy strip mall and a hodgepodge of small merchants — into a destination with a well-ordered mix of retail, housing, hotels and public gathering places.

Now upscale apartments — the first in Eagan since the mid-1990s — are going up just behind Jensen's restaurant on the former site of a poultry-processing business. Construction of a hotel, the city's first since 2002, is expected to start this summer.

Together with the mall, those projects are boosting Cedar Grove's taxable market value from $27 million to $175 million. More increases could come as developers snap up remaining vacant parcels. Last week Ryland Homes presented a plan for 50 upper-end townhouses on either side of the mall.

"What they've wound up with is pretty unique," said John Shardlow, a Twin Cities development consultant. Early plans included a large office building and far less retail.

"It's arguably better that the redevelopment didn't get started before the recession and then stopped," he said. "They could have wound up with a partially completed project that was doomed to stagnation."

Proximity to the airport and the Mall of America drove Paragon's interest in Cedar Grove, said Kelvin Antill, a partner in the development firm. Nationwide, outlet centers have emerged as popular destinations for out-of-town and international visitors. The developers say the outlet mall will complement, not compete with, the Mall of America, which draws about 40 million visitors a year. The two shopping centers are connected by the Red Line, the metro area's first freeway-based fast busway.

The Eagan outlet center will have about the same number of stores as Paragon's other malls, but will occupy about half the acreage. The city, Paragon and Morrissey Hospitality Cos. are sharing the cost of a parking ramp with 1,550 spaces for the mall and hotel. That cut down the size of the mall's parking lot, preserving more space for development.

"We knew we wanted an intense mix of uses," said Mayor Mike Maguire. "And what we didn't want was something with a sea of gray asphalt."

The outlet mall figures prominently in an amped-up marketing campaign by Eagan's Convention & Visitors Bureau. The bureau has doubled the number of states where it advertises and added the Winnipeg area. It also is promoting the city at more national travel industry trade shows.

Bureau President Brent Corey said it's too soon to measure an increase in hotel bookings related to the mall because groups usually make travel arrangements a year or more in advance. "The spike we expect will come in 2015 and beyond," he said.

The 123-room Hilton Home2 Suites will be Morrissey's first foray into hotel ownership. The company manages hotels, including the St. Paul Hotel.

Morrissey said the outlet center was important, but not the only reason for his interest in the site. In addition to mall shoppers, he's expecting to draw hotel guests doing business with companies like Thomson Reuters and Blue Cross and Blue Shield of Minnesota.

Eagan's large employers could spark a rapid lease-up of the new apartment building, Shardlow said. "There's got to be some people who are interested in living closer to where they work rather than doing the long commute," he said.

Hohenstein believes the 192-unit Flats at Cedar Grove will be a test case for upscale apartments in Eagan and surrounding communities. The rental housing boom that began in the downtowns has just begun to arrive south of the river, and the apartments at Cedar Grove will be the first in Eagan in about 20 years.

"It will teach us and the market more about projected need," Hohenstein said. The city could see more interest from apartment developers for projects in the city if the Flats fills up quickly, he said.

The Flats and another project underway in a different part of the city are aimed at a range of renters — young professionals, families and empty nesters ready to move out of their houses. Maguire said it's important for Eagan to offer a wide variety of housing.