Remember those dire headlines warning of a retail apocalypse? Or those news stories predicting the death of brick-and-mortar stores? Turns out, retail wasn’t nearing its end. It was just evolving.
And the results of that evolution are clear today in the Twin Cities: The retail sector is strong here, with an eclectic mix of restaurants drawing diners hungry for new experiences to Minneapolis-St. Paul and other retailers offering experiences that customers can’t get online.
How has this happened? Why is the retail sector performing so well in the Twin Cities today? Retail specialists here say it all comes down to creativity and offering customers something new.
Busy days at Mall of America
Mall of America in Bloomington, Minnesota, has been generating headlines since it opened in 1992. This massive mall boasts more than 520 stores and employs about 11,000 year-round workers. About 40 million people visit the mall each year. That’s more than the combined populations of North Dakota, South Dakota, Iowa and Canada.
And in good news for the state? Mall of America generates nearly $2 billion in economic activity each year for the state of Minnesota.
The fortunes of the mall, then, are a good indicator of how strong the retail sector in general is in the Twin Cities region.
It’s good news, then, that Mall of America is as busy as ever, according to Carrie Charleston, vice president of leasing at the mega-mall.
“Our leasing activity has been incredibly strong over the last four years,” Charleston said. “We are seeing a lot of new brands entering our market. There is so much leasing activity, that we are looking at relocating tenants to make room for the new ones coming in.”
Charleston says that new tenants help drive even more traffic to the mall. That’s largely because Mall of America features more than 170 brands that were new to the Minneapolis-St. Paul market when they first opened in the mall.
“That is what sets us apart. We have so many unique brands,” Charleston said. “The only place to shop at some of these brands on a brick-and-mortar basis is in Mall of America.”
Why do these new-to-market brands choose Mall of America? Charleston points to the tens of millions of visitors who flock to the mall each year. Retailers want to get their brands in front of all these eyeballs.
Charleston said that many of the brands in Mall of America report that their mall locations rank as the top-selling spots in their chains.
Have a spot in Mall of America allows retailers to show off their wares to shoppers from across the globe, too. Charleston said that 60% of Mall of America’s traffic comes from local shoppers, while 40% comes from tourists, who travel to Bloomington from around the world.
Charleston said that a wide range of retail types are thriving today at the mall. This includes retailers who cater to children, those who offer beauty supplies, those specializing in athleisure and sporting goods and those offering jewelry.
Mall of America is known for its experiences, too. The mall holds an indoor amusement park, large aquarium, multiple miniature golf courses, arcades, ax-throwing, movie theater and a multi-story M&Ms store, among other examples of experiential real estate. These retailers are important: Consumers today are seeking experiences. Those retailers who offer them are positioned to thrive today.
“We have always been about experiences,” Charleston said. “We are seeing a continued increase in retailers who are bringing experiences into the mall. Our guests and customers are always looking for something new to do. Those experiences create brand loyalty.”
Charleston said that about 65% of the tenants in Mall of America are classified as retail while 35% would be better classified as entertainment and dining.
An experience doesn’t always mean a trip to an amusement park or aquarium. Many of the retailers inside Mall of America offer in-store demonstrations of their products. Others have salespeople who educate customers on all that they can do with their products.
Consumers might not buy the product while they’re at the brick-and-mortar location. But when they get home, they might order it online. The retailer still made a sale, thanks in part to the experience it offered. This is what is known as the omnichannel approach, retailers focusing both on brick-and-mortar locations to showcase their products and online stores at which consumers make their actual purchase.
“We went through the pandemic when people weren’t able to shop as much in person,” Charleston said. “People were excited to get back and go to a store to see, feel and touch products. That’s more satisfying than just shopping online. It goes back to the experience that is being provided inside the store. It creates brand loyalty.”
Charleston said that Mall of America continues to evolve, much like the retail sector. She said that seven new brands recently opened in the mall as Mall of America continues to offer new retail experiences to its visitors.
“Bringing in new retailers is what we love to do,” Charleston said. “And we do it well. We have such a great offering. There is something for everyone. There is always something new in terms of stores, dining and attractions. We are boosting the percentage of our offerings that are more on the side of experiences and attractions. Our guests want it and desire it. They love the experience.”
A restaurant boom
Of course, Mall of America isn’t the only example of a retail space that is thriving today in the Twin Cities market. In both the urban heart of Minneapolis-St. Paul and in its suburban communities, retail spaces are filling fast today, say the brokers working this market.
Ben Kepple, director of commercial operations with Minneapolis-based Sherman Associates, said that the demand from tenants for retail space throughout the Twin Cities market remains high. This is especially true of restaurant space, Kepple said.
“We are high on restaurants today,” Kepple said. “We are receiving a lot of inquiries from different users. It’s the post-COVID effect: People want to get out.”
Kepple points to the new restaurant leases that Sherman Associates has signed as proof of the demand for restaurant space here.
Sherman Associates recently closed a lease for casual French restaurant Chloe by Vincent in the Canopy by Hilton hotel in Minneapolis’ Mill District. Sherman also closed a lease for La Madre, a Mexican restaurant at 2025 Park Avenue, also in the Mill District.
Then there’s Pearl & the Thief, the restaurant of famed chef Justin Sutherland. This spot, specializing in seafood and southern cuisine is opening at Sherman Associates’ O2 Luxury Tower at 250 Portland Ave. in Minneapolis.
“We’ve found that certain areas of Minneapolis, including the Mill District, are hungry for restaurants,” Kepple said. “The demand is there, and deals will be done.”
Why are so many new restaurants moving into the Twin Cities market? Kepple again cites the impact of COVID. People today want to spend time outside their homes. Sitting down for a nice meal or enjoying an experience? That satisfies this desire.
The Mill District is particularly appealing to restaurateurs, Kepple said. The average income is high in this slice of the Twin Cities market. Several older residents live here, too, and they are more likely to spend their dollars on a meal out. The Mill District also has fewer safety issues than does the heart of downtown Minneapolis.
It helps, too, that a growing number of companies have brought their employees back to the office at least on a hybrid basis, Kepple said. When employees are back at the office three or four days a week, that provides a boon to restaurants and other retailers.
Kepple said that Sherman Associates has about seven residential buildings and 1,200 total units in the Mill District area. When new residents move into these spaces, Sherman Associates often provides them with a $100 gift card to a restaurant in the building or near it. That’s another help to restaurants in the area.
“That can be a big thing for the restaurants,” Kepple said. “It’s free marketing for them. It also helps us at Sherman Associates get deals done. Our clients know that we’ll do whatever we can to take care of them. We know that the restaurant industry is a tough one. Anything we can do to help them? We’ll do it.”
Kepple agrees with Charleston that experiential retail is a draw in the Twin Cities market, too. An example? The Puttery on Hennepin Avenue is an immersive miniature golf course and bar. This concept is attracting a steady stream of customers.
“It all goes back to people wanting to be around people,” Kepple said. “We are seeing less of the retail that is just retail and more of the retailers that are offering experiences. People want those experiences today when they go out. And they want to have them with other people.”
