HEARTLAND SNAPSHOT, MARCH 2006

Minneapolis/St. Paul Retail Market

Currently, the retail development trends in the Minneapolis/St. Paul area are the proliferation of mixed-use developments and the continued repositioning of older shopping centers. According to Andy McConville, senior associate with CB Richard Ellis in Minneapolis, the owners of Eagan Town Centre invested a considerable amount of money to renovate and replace the façade. As a result, significant gains were made in rent, occupancy and tenant sales. Strong population growth in the northwest metro area has fueled development projects.

Developers such as Opus, Ryan Companies and Solomon Real Estate Group have several major projects in the works. Opus Northwest is developing The Fountains of Arbor Lakes in Maple Grove, Minnesota, which is located approximately 13 miles northwest of the Minneapolis Central Business District (CBD). Arbor Lakes will add an additional 800,000 square feet of retail space and include retailers such as Costco, DSW Shoe Warehouse, Ethan Allen, Verizon, and Dick's Clothing and Sporting Goods when it opens this fall.

The Grove, a development of Ryan Companies, will be located at Interstate 94 and Maple Grove Parkway in Maple Grove. The 157-acre mixed-use development will include a 450,000-square-foot power center and a 100,000-square-foot retail village. The Grove will be anchored by The Home Depot and a Super Target, and will include a range of local, regional and national retailers. Construction is slated to begin this spring.

Solomon Real Estate Group recently partnered with The Principal Life Insurance Company to acquire and redevelop Calhoun Square in Minneapolis. The 320,000-square-foot mixed-use center includes shopping, dining and entertainment options, and a residential component is underway. Tenants of Calhoun Square include Gap, Urban Outfitters, MAC Cosmetics, Panera Bread, Cold Stone Creamery, Starbucks Coffee, Border Books & Music and Famous Dave's.

New to the retail market is Trader Joe's. The specialty grocery store will open its first Minnesota location in St. Louis Park this year.

The overall vacancy rate for the metro area is 6.8 percent. “Significant gains should be made [this year],” McConville says. While the northwest market continues to see the most activity, the Minneapolis CBD should see more activity as growth continues.

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