MOA makeover finally making progress

For two decades, the Mall of America has contemplated its much-anticipated second act.

But a tough economy has caused mall officials to scale back on some ambitious ideas that have been floated over the years. Instead, new development has occurred in smaller steps -- including an Ikea store in 2004, and an upscale Radisson Blu hotel that is now taking shape on the Bloomington megamall's southern flank.

What's next? Mall owner Triple Five Group has opted for a second hotel, a medical office featuring a Mayo Clinic wellness outpost, more shops and restaurants, and underground parking. Tangible steps have been taken in recent months to make the $220 million to $225 million expansion at the nation's biggest shopping mall a reality. That includes the reconstruction of a critical feeder street, Lindau Lane, and the naming of Minneapolis-based Ryan Companies as the project's co-developer.

A 600,000-square-foot office-hotel-retail complex is a far cry from some of the ideas floated over the past 20 years for a second phase -- including a water park with a submarine ride, a Shakespearean theater, five car dealerships, a 21st-century State Fair, and a futuristic, if loosely defined, concept called the "Hyperport." Most faded away as developers scaled back and consumers tightened spending after 9/11 and during the Great Recession.

"It's always been a challenge to figure out what the mall is doing for the second phase," said Minneapolis retail consultant Jim McComb.

Timing of the current project is aggressive: The retail portion of the project is expected to be completed by late fall of 2014, in time for the holiday shopping rush. The hotel and medical component will follow in 2015.

Meanwhile the mall has had to adapt to ever-changing market and economic forces. Recently, officials confirmed that fast-fashion retailer Forever 21 will take over part of the space left behind by Bloomingdale's, one of the mall's original anchor stores that closed this year.

The most recent expansion plan carves out a relatively tiny five-acre fragment from the mall's north side that will fit into what is now the main entrance like a Lego piece snapping on to the larger core, as one city official put it. That leaves much room for further expansion in coming years, primarily on the spot once inhabited by the Met Center arena. Now a sea of asphalt and parking spaces, the location is seen in commercial real estate circles as among the most-desirable sites in the Twin Cities.

Ryan is perhaps best known as the long-term builder of Target stores nationwide. But Ryan officials see the Mall of America project as a natural extension of recent work in the Twin Cities, including the $190 million Midtown Exchange, a mixed-use development on the site of an old Sears store in Minneapolis. The project includes the headquarters of Allina Hospitals and Clinics, a public market and business incubator, a hotel and more than 350 apartments, condominiums and townhouses.

"It's got a unique set of characteristics as a tourist draw, as well as the potential involvement of a very well-known health system and a new hotel that can draw from the mall, the airport and the 494 strip," said Rick Collins, Ryan's vice president of development.

Kurt Hagen, senior vice president of development for mall owner Triple Five Group, said Ryan was chosen because, "In the end, we felt they would help us advance the project, help us get over the goal line," he said. "There wasn't any one reason, but part of it was their ability to bring capital to the project and share the risk."

Neither Ryan nor the Mall of America revealed the terms of the development agreement.

Mixing retail and medical uses -- a key component of the mall's expansion plan -- has emerged as a real estate trend in the Twin Cities in recent years.

In a statement, Mayo spokesman Karl Oestreich said the world-renowned health care system is "still exploring development options for a permanent facility in Mall of America. Mayo Clinic believes that health care in the future won't be limited to clinics and hospitals. Health care providers need to adapt to people's changing needs, including seeing patients where and when it is convenient for them."

Mayo already has two outposts at the megamall called Mayo Clinic Healthy Living, which help shoppers define their wellness goals and access information to improve their health.

The proposed 350-room hotel called for in the expansion would be an convenient stop for the Mayo Clinic's out-of-town patients, mall officials say. They also note that tourists account for four out of every 10 visits to the mall, roughly 16 million people a year -- many of whom may need a place to lay their head.

Already, the $137 million Radisson Blu hotel is taking shape on the mall's south side. The 500-room, higher-end Radisson concept, akin to W Hotels and the Westin chain, will also feature a full-service spa. It's expected to open in 2013.

One looming issue for the mall is whether it can extend its tax-increment financing (TIF) district through 2038. A broader tax bill that included the provision was vetoed by Gov. Mark Dayton earlier this month. The governor's action, which enraged Republican supporters of the bill, won't affect current expansion plans, according to Hagen.

But in the future, the popular financing tool is required to support redevelopment of the empty patch of land north of the mall, he said. The current TIF district expires in 2016.

Mall officials could ask the Legislature to consider the measure again next year, but Hagen says no decision has been made. "Unfortunately, politics sometimes get in the way of projects," he said.

A bigger Forever 21

Meanwhile, the mall continues its interior renovation, which is expected to cost $30 million to $50 million.

Los Angeles-based Forever 21 will assume some space in the megamall's basement, which is now used for storage, and on the first level of the mall.

"I've been in the bowels of the mall. The space has a dirt floor and has never been occupied or leased," said Dick Grones, principal of Edina-based Cambridge Commercial Realty.

The store may have a coveted exterior entrance, although details have yet to be worked out.

Janet Moore • 612-673-7752