Edina firm plans to invest $3M in St. Cloud's Midtown Square mall

ST. CLOUD – A Minnesota investment group is planning to breathe new life into a dated and half-vacant mall on the city's west side.

Edina's Brait Capital purchased Midtown Square mall, a 225,000-square-foot building less than a mile from Crossroads Center mall, in December for about $8 million. The mall was built in the mid-1980s and, at its height, housed a well-trafficked Old Country Buffet, a bustling driver's license office and several retail stores.

But like malls across the country, foot traffic has declined over the past decade as customers increasingly spend money online. Other businesses such as the Sta-Fit gym and Kay's Midtown Cafe — an offshoot of the popular greasy spoon Kay's Kitchen in neighboring St. Joseph — also have recently closed their doors at the mall.

"That had a tremendous negative effect on the building," said Hassan Nurie, managing partner with Brait.

The mall still houses a few retail stores and a sports bar, but much of the occupied space is used by nonprofits and health services, as well as several branches of state offices such as the Minnesota Department of Health and state Department of Labor and Industry.

"This particular property has already been transformed in that there's not as much retail as there once was. It has a lot of business professional and medical tenants," Nurie said. "Malls have to adapt, so this is where the potential to change the use to something else really starts to make sense."

While plans are far from finalized, Brait is planning to invest at least $3 million in improvements to the property and is open to rethinking how the space is used. The 50% vacancy rate allows the new owners to create spaces anywhere from 500 square feet to more than 30,000 square feet for possible future tenants, Nurie said.

"We have the potential now with some of these large vacancies to really change the look and feel of this property by bringing in a large medical, storage or other nonretail user that wants to be in this building," he said.

Brait has acquired similar large malls with low vacancy rates in other markets across the country and successfully transformed them into busy spaces with indoor sports complexes, storage and flex industrial uses. A similar project could happen in St. Cloud, Nurie said.

Kingshuk Mukherjee, chair of the Global Business Leadership Department at College of St. Benedict/St. John's University, said the mall's previous owners were trying to slowly move away from a retail focus, but the pandemic drastically reduced the need for in-person workspaces.

"At the time, they were trying to make it into office space, and then COVID hit and that changed everything," Mukherjee said.

While he is not familiar with specific plans for Midtown Square mall, Mukherjee said he thinks malls can still be relevant — even with the rise in online shopping — because they provide spaces for the community to come together. Mukherjee suggested the new owners create experience-based amenities to draw people in.

"The mall needs to be more of an experience than just buying and selling," he said.

One of the first changes the new owners are making is adding a new restaurant, which will be announced this year.

"It's a successful restaurant in the Minneapolis area with three locations," Nurie said. "They're opening two more locations and one of them is going to be here."

The mall, at 3333 W. Division St., is on the city's main east-west road and is just east of Hwy. 15, the main north-south route through the region.

"There's great traffic on Division Street with over 33,000 cars per day, great visibility," Nurie said. "It presents an ideal opportunity for someone who is looking to come into the market, and with our flexibility, there's potential to make some significant changes."