Retail Exodus in Downtown Mpls. Continues Amid Residential Building Boom

Updated: 07/22/2014 10:29 PM
Created: 07/22/2014 8:02 PM
By: Stephen Tellier

In downtown Minneapolis, more people are moving in, but retailers are moving out.

Ann Taylor left in March. Saks Off Fifth is leaving in January. And this week, 5 EYEWITNESS NEWS learned Office Depot closes in September.

It begs the question: Why isn't the influx of new residents stopping the exodus of retailers from downtown?

Six days a week, at Eighth Street and Nicollet Mall, you'll find Elijah Holiday hawking hot dogs.

"There's a lot of entertainment, music, people walking up and down," Holiday said.

But the vibrancy outside hides many of the vacancies inside.

"It's a lot of empty spaces," Holiday said. "You've got the corporate businesses and stuff like that, but not too much shopping on Nicollet Mall."

Such is the state of retail in the heart of Minneapolis.

"It's in a state of flux," said Andrea Christenson, vice president of Cassidy Turley, a commercial real estate company in Minneapolis.

Recent numbers from Colliers International, another real estate firm, show 5.2 percent of retail space in the Twin Cities currently sits vacant. But downtown, that number is 14.4 percent. There, "for lease" signs are a common sight.

But Christenson said downtown is actually on the upswing.

"I've never had more interest in downtown," Christenson said.

She points to thousands of new apartments that have recently opened in the area, or will do so soon. Those new residents are keen on spending.

"It's a dream demographic because it's people with disposable income - they don't have children or they're empty-nesters. So they have a lot more discretionary income for shopping and entertainment," Christenson said.

The Target store at Ninth and Nicollet is a bright spot.

But even Christenson admits the days of the big box store downtown are likely over.

"You're going to see a lot more specialty retailers, unique retailers - not a lot of chains," Christenson said.

She predicted downtown would see such retail stores blossom there within about three years. If that sounds optimistic, Christenson says look at the North Loop. Just a few years ago, she couldn't get anyone to lease retail there. Today, it's booming and companies that lose out on space there could end up near Nicollet Mall instead.

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