Southdale address could attract not just shoppers, but residents, too

A novel groundbreaking for a new luxury apartment complex occurred last week in the shadow of a Cheesecake Factory.

Sure, there were the usual fancy shovels perched atop a ceremonial pile of dirt, surrounded by beaming real estate developers and city officials. But the site itself, at the corner of W. 69th Street and York Avenue S., has never been developed — even though its Edina location is one of the most attractive commercial spots in the Twin Cities.

That's because it sits squarely in Southdale's parking lot. Now, the owner of the nation's first enclosed mall, Simon Property Group, has partnered with the Bloomington-based developer Stuart Co. to build One Southdale Place, a 232-unit upscale apartment project there.

These vast swaths of parking surrounding shopping malls have traditionally attracted free-standing restaurants and shops or, in Southdale's case, a Firestone tire-and-repair shop. But as traditional malls struggle to attract customers, and as established cities like Edina look to build upon their tax base and prospective tenants crave a pedestrian-friendly lifestyle, more developers will likely eye these fallow parking slabs.

"Let's face it, parking lots are not beautiful," said Stuart Nolan, founder and chairman of Stuart Co. "And the mall is heaven." The two, he added, can be joined in a meaningful way, in this case, by a pedestrian walkway.

Southdale's experiment is not entirely novel in the Twin Cities. Across the street, the Westin Edina Galleria is a successful hotel/condominium hybrid that is connected to the Twin Cities' signature upscale shopping center. The 18-story tower in the $100 million project features 11 stories of condos, which are reportedly in high demand.

Other retail complexes, such as St. Louis Park's West End and Eagan's impending Paragon Outlet Center, have attracted residential development, as well. And Minneapolis developer Ryan Cos. is working on two residential projects in Minneapolis and St. Paul that feature a Whole Foods grocery store as an anchor.

As the mall embarks on a $230 million expansion, spokesman Dan Jasper said "all potential uses are considered. We continually evaluate how varying uses impact our business model and how well they fit in with our surrounding community."

Ironically, when Southdale's pioneering architect Victor Gruen first designed the iconic mall in the 1950s, he envisioned the shopping center in the middle of apartments, houses, schools and a medical center, complemented by a park and a lake.

Jesse Tron, spokesman for the International Council of Shopping Centers, a Washington, D.C.-based industry group, said parking at malls was long associated with the center's retail square footage: The bigger the mall, the bigger the parking lot.

But that's changing, he said, and now a mall "can look at other revenue producers, not all of them are apartment complexes, but the direction is definitely toward more mixed uses."

Dick Grones, principal at Edina-based Cambridge Commercial Realty, said "malls have been overparked for years, you can see grass growing through the tarmac in some places."

In the case of One Southdale Place, co-developer Simon Property Group also happens to be the country's biggest mall operator with $4.9 billion in annual revenue and some 325 malls nationwide.

John Phipps, Simon's senior vice president of development, said the company identified 20 properties nationwide that it considered potentially "transformative" if a residential component was added. Southdale, the only mall pegged in Minnesota, was chosen because of Edina's lucrative demographics and the "historic nature of the property," he said.

Whether Simon's venture will spread to other malls — the company also owns Maplewood Mall and the Albertville Premium Outlets — "depends on the market and the property," Phipps noted.

It's unclear whether a certain type of retail serves as a better catalyst for residential development over another. In Eagan, 180-unit Stonebridge Apartment complex is proposed near the $100 million Paragon Outlet Mall, seemingly a more discretionary retail choice than, say, a grocery store.

Yet the central theme to these projects is convenience. "Literally, you can live here and walk to a very good office job, walk to the grocery store, then shop for clothes, eat at a restaurant and then go to a movie. It's all within 600 feet of your home," said Chris Culp, president of Eden Prairie-based Excelsior Group, which developed the Flats at West End in St. Louis Park.

Janet Moore • 612-673-7752