Uptown’s retail scene heats up

Long-vacant spaces are drawing renewed interest from potential tenants

Spill the Wine opened April 2, one of three new retailers on Lake Street. Credit: By Michelle Bruch

The owners of Mpls Tattoo at 2211 Lyndale Ave. S. feel lucky to have landed the storefront.

“We beat out other people for the space,” said co-owner Nikki Time.

The landlord, Alan Joseph, said the site was a bit run down when he bought it in 2011. He refurbished the building and saw a late surge of interest from retailers.

“A lot of people came through. … Restaurants, hair salons, retail, offices,” he said, noting that the corner has one of the heaviest traffic counts in the city. “It’s a pretty good neighborhood to live and work in.”

The Uptown-area retail environment remains healthy, local brokers say. Demand is highest for smaller, more affordable spaces, according to broker Jeff Herman of Urban Anthology. The former Atmosfere space at Lake & Hennepin was leased to a national home accessory store without any marketing, he said. The Eyedeals storefront at 3042 Hennepin Ave., formerly Brides of France, was leased within weeks. Golden Leaf Tobacco at 907 W. Lake St. was also leased immediately, he said.

“If a sign had gone up, we probably would have had multiple offers,” he said. “It depends on where the space is, and how it’s priced. … If you drive through the Uptown area now, especially at Hennepin & Lake, you don’t see a lot of vacancy.”

Even a few persistent vacancies might have some hope. The former Rockler Woodworking store at 3025 Lyndale generates a few new calls each week. There is serious interest in the Suburban World Theater — the East Calhoun neighborhood was alerted in March to a potential prospect. The former Theater Antiques building, vacant more than five years at 2934 Lyndale, has a letter of intent from a potential tenant.

“I’ve had a hell of a time getting a decent tenant,” said building owner Gregory Scott.

When Theater Antiques broke up, the city announced plans to work on the corner, Scott said. The work started a year later and took a year to complete, he said, just in time for the economy to fall. The Uptown Bar almost relocated there in 2010, but the business couldn’t pull the trigger.

“That marquee is solid gold for anybody that wants to have a presence,” Scott said. “We’ve got such incredible density moving in, it should have a profound effect on all the business on the corner.”

It’s tempting to conclude that all the new luxury housing is driving demand for retail space in Uptown, but some local agents and retail experts say that’s not necessarily the case.

“I don’t think new buildings have a whole lot to do with retail space,” said Mike Finkelstein, a broker with the Ackerberg Group. “It’s a benefit, but it doesn’t mean anything to the bottom line.”

Real estate consultant Jim McComb also said new buildings don’t add significantly to the retail potential of Uptown.

“The Uptown trade area is already very dense, and there are a lot of housing units in that area,” he said. “We do see that the Uptown area is perceived as a stronger retail area now than 10 years ago or 20 years ago.”

McComb, who remembers jotting the financial pro forma for Calhoun Square on a breakfast napkin, said Uptown has long been a commercial mainstay.

“Historically, what is called Uptown has always been one of the strongest shopping districts in the Twin Cities area,” McComb said. “It goes back before World War II. It has always ranked right up there with 50th & France.”

At the Rockler space, tenant interest has included a couple of national chains, one of which had 800 stores.

“Three or four people a week call on it,” said owner Julius De Roma.

De Roma also owns the HUGE Theater building at 3037 Lyndale. He said it took him several months to land the tenant, but it was worth the wait.

“They are a wonderful addition to the neighborhood,” he said. “For the buildings I own here, it’s better to get a good mix of people in than have a business that does not fit in very well.”

Retail vacancy in the Twin Cities ended 2012 at 6.2 percent, according to Colliers International, which continues a slow improvement in the sector. Colliers’ fourth quarter report said expanding retailers are pursuing locations in the urban core or first-ring suburbs, yielding rising rental rates and strong competition for spaces there.

“There is always a demand for space in greater Uptown,” Finkelstein said. “During the downturn in the economy there was still a high demand — there was less activity, but still demand.”

Reach Michelle Bruch at [email protected]