In the beginning of the year, empty prime retail spaces were noticeable throughout Southwest commercial areas. Area professionals said the reasons included the country’s economic slump, a location’s particular rental rates and to lengthy lease negotiations.
However, area retail specialists say things are looking up.
Michael Finkelstein, senior associate at Suntide Commercial Realty, does a lot of work in the south and northeast Minneapolis urban areas, including Uptown and Lyn-Lake business districts. He said that fewer new businesses meant more noticeable vacancies.
"There’s less number of people interested in starting a business due to the economy and 9/11," he said.
Finkelstein said the slump hit across the retail sector, whether a clothing store or a gift shop. He said retail is tricky because it is increasingly reliant on trends, and those trends are increasingly fickle. "If they don’t stay ahead of the curve, they’ll be out in the cold," Finkelstein said.
Michael McLaughlin, executive director of the South Hennepin Business Association and consultant to the Lyndale Business Association, said that some locations are more costly; for example around Calhoun Square. He said property owners in pricey locations might wait for a suitable tenant a little longer.
Finkelstein said many people misinterpret business vacancies as a larger downward business trend. Finkelstein said people see a lease sign and think nothing is happening with the space; however, there are often ongoing lease negotiations. Some negotiations just take longer than others, he said.
Lisa Hannum, spokesperson for United Properties, the Twin Cities’ largest commercial realty company, which has property in Southwest, said the retail market has always been quick to bounce back following a latent period. "Retail has [had] the shortest downturn and the fastest recovery over the last 18 months in the market, as far as commercial realty goes," she said.
Hannum said as of mid-2002, the vacancy rate has gone down .7 percent compared to the same point in 2001 (see info box). "Compared to other real estate, retail continues to be a good investment," she said.
Kingfield’s Paul Kjornes, owner of Paul Thomas Properties, recently had tenants vacate his retail property at 4534 Nicollet Ave. S. He said filling the space won’t be a problem.
"It’s a free-standing building close to 46th Street and Nicollet Avenue South — huge traffic," he said.
The previous tenants, Wide Angle Records, left because the market for records declined, Kjornes said. He said he’s not sure what he wants to put into the space, but he’s had plenty of people interested.
Kjornes said parties looking to open an antique store, a gift shop, card store and possibly a flower shop in the empty space have approached him. He said he’s not ruling anything out and hasn’t decided on what should fill the spot yet.
McLaughlin said despite the past year’s lull, many new businesses have been sprouting up in vacant Southwest retail spaces in just the past few months.
"We had some spaces fill that had been vacant for some time," he said of businesses at Hennepin Avenue and 28th Street, describing the location as "pretty full."
McLaughlin said there are still a few vacancies on Lyndale Avenue, but he’s not worried. "I haven’t seen rates drop to fill spaces," he said.
Total Twin Cities market retail vacancy rates
Vacancy rates provided by United Properties