Empty space is rapidly disappearing at Woodbury's Valley Creek Mall, which is experiencing a resurgence led by two tenants that are expanding and by stores that have recently moved in.

That mirrors what is happening with retail and commercial properties throughout Washington County's largest city as landlords and tenants reinvest in their properties rather than start new construction.

Woodbury had only one new commercial building in 2011, a rebuilt McDonald's on Wier Drive. But the city issued more than 110 permits for lease improvements and additions totalling $15 million. More than 43 businesses spent $50,000 or more sprucing up their spaces, according to a report that soon will be released by the Woodbury Community Development Department.

"We have seen a steady increase in the number of lease improvements and we are very happy with all the reinvestment that is going on," said Janelle Schmitz, Woodbury's planning and economic development director. "Economically, it is cheaper to move into [or fix up] an existing space, and we've been seeing that happen. Occupancy rates have been high lately."

That is evident at Valley Creek Mall and an adjacent annex where 11 storefronts were vacant a year ago. Since then, a video game outlet, pet store, and kitchen cabinet and remodeling shop have opened. When a real estate office moved out and a dance studio relocated, Frattalone's Ace Hardware seized the opportunity to take over its former neighbor's space and double the size of its store.

Also, a SNAP Fitness soon will enlarge its gym. And a restaurateur is near signing a lease that would fill the mall's last major unoccupied space. If that happens, the center at 1750 Wier Drive on the west side of Interstate 694 would near capacity, said Kathy Bayliss, senior property manager for Wellington Management, Inc.

"We are really happy with activity at the mall," she said. "2011 was a good year. We've had a lot of increase in occupancy."

Bayliss said the 38-year-old mall has become attractive to tenants because of competitive rental rates -- $15 per square foot according to Wellington's web site -- along with its proximity to Woodwinds Hospital and the rebuilding of the McDonald's across the street. "There is more activity on this side of town," Bayliss said.

The epicenter of activity at the indoor mall has been at Frattalone's. A paper banner stretching along the corridor tells customers that Woodbury's only traditional hardware store will grow by 6,400 square feet when renovation is completed in February. The project includes adding floors, ceilings, bathrooms, counters and more 10,000 new items, such as housewares. The expansion will have enough room to display snowblowers, grills and lawn mowers inside the store instead of the hallway.

"We've been waiting for two years to expand," said store owner Mike Frattalone. "The mall has lots of walkers, and it has a good vibe. I don't doubt that the mall will be completely occupied by the end of the year."

The annex next door, also managed by Wellington, already is full. Two stores, Kitchens of Woodbury and My Buddy's Pet Place, opened in the past few months.

Key's Cafe has long been one of Valley Creek's main attractions, but the mall also is home to a LifeWay Christian book store, a Warner Stellian appliance store, the Tropical Ballroom and the Minnesota School of Cosmetology. Hi-Score Video joined the lineup in November. Bayliss said the store that buys, sells and trades video games and movies in Maplewood participated in a Toy and Game Fair at Valley Creek Mall last fall. Business was so good that owners decided to open a location right across from Key's.

"We thought, 'let's try Woodbury,'" said manager Michael Mueller. "Key's is a good place for traffic."

SNAP Fitness is snapping up an additional 1,150 square feet, including prime real estate on the mall's main corridor. Owner Deanna Bruneau said the recent burst of activity at Valley Creek made it the right time to add cardio machines, a changing room and a stretching area, and gain much-needed visibility in the process.

"A lot of people don't even know we are here," said Bruneau, who runs the fitness center with her husband, Joe. "We will have visibility to a whole new group of people."

Wellington last updated the mall's interior about five years ago and redid the parking lot in 2009, Bayliss said. Woodbury's Schmitz said such improvements do help attract or keep tenants. Frattalone's just signed a 30-year lease extension.

"It was never a down mall," Frattalone said. "It was like you have a smile, but a couple of missing teeth. Now we have one big beautiful smile."

Tim Harlow • 651-925-5039 Twitter: @timstrib