Vacancy Rates Rising at Regional Centers

MINNEAPOLIS-Twin Cities regional centers have seen their vacancy rates rise as they struggle through major makeovers, according to a mid-year report on the commercial real estate market from United Properties. As the repositioning of major malls in Eden Prairie, Edina, Burnsville and Brooklyn Center continues to be the top story among regional centers, vacancies have sputtered upward from 3.2% at year-end 2000 to 3.9% at mid-year 2001.

With malls repositioning themselves for the future, little new leasing activity occurred to counterbalance attrition, according to United. As a net result, there was negative absorption of 144,594 sf from an overall market totaling about 10.8 million sf. Despite the rising vacancy, rental rates have held steady, according to the report.

Burnsville Center owners announced the largest renovation project for the mall since it opened in 1977. Chattanooga, TN-based CBL & Associates Properties Inc. says the renovation will open the way for a 22,000-sf Old Navy store and eventually Gap Kids and Baby Gap stores. In the process, the mall is eliminating its previously closed movie theater space.

Eden Prairie Center’s repositioning efforts are also moving along, with a new Von Maur Department Store–the Twin Cities’ first–set to open late this summer.

The Center also plans to introduce the Twin Cities to the first WildFire Grill restaurant, a concept eatery from Chicago-based Lettuce Entertain You Enterprises Inc.

Progress also continues on a new, AMC-operated 17-screen movie megaplex.

Brookdale Center, in Brooklyn Center, launched a major renovation and repositioning. Coral Gables, FL-based owner Talisman Cos. plans todemolish and reconstruct major portions of the mall, including adding two junior anchor stores–Barnes & Noble and Old Navy–and a 500-seat food court. Target Corp. is repositioning its Dayton’s/MarshallField’s department store, as well. And the Twin Cities’ first Tumbleweed Southwest Mesquite Grill & Bar is also set to open in the mall. Completion dates weren’t announced.

Southdale Center in Edina is proceeding with the construction of a new 19-screen MegaStar movie complex. Other elements of its effort to lure younger shoppers to the mall are coming into focus, including planned additions of new restaurants such as the Cheesecake Factory and P.F. Chang’s China Bistro, as well as a new Apple Computer store.

Bloomington’s Mall of America added Boss and Hugo Boss apparel retailers to its constantly changing mix. An Apple Computer store is also slated to open there, and General Mills has opened its first Cereal Adventure park with a build-your-own-cereal concept.