Burnsville Center, long plagued with empty storefronts, under contract for sale

Burnsville Center, the south metro mall that has long struggled to fill empty storefronts, could soon change hands.

The ownership shift, plus a potential infusion of city grant money, could revamp the languishing shopping complex.

"The mall is in contract to be sold," co-owner Felix Reznick told the Star Tribune on Thursday. Reznick is a principal at 4th Dimension Properties, a partner of New York-based Kohan Retail Investment Group, which purchased the majority of Burnsville Center in late 2020.

Reznick wouldn't say who the new owner of Burnsville Center could be. He also wouldn't say when the sale could close, citing a nondisclosure agreement. There isn't yet a public record of the sale in the state's database of electronic certificates of real estate value.

The 2020 sale, not including the anchor stores, was for about $17 million at auction, a massive decline for a property once valued at $135 million. Last year, Pacific Square Burnsville, a development group, bought a chunk of the mall for $10.6 million, including Dick's Sporting Goods, Kirkland's Home, Panera Bread, Noodles & Company and the now-closed Gordmans.

All the current active tenants will continue operations, but the developers are working on a proposed $30 million project called Pacifica of Burnsville that would bring an Asian grocery store, a food hall with 10 food vendors plus a new addition housing two restaurants to the empty Gordmans.

That's the endeavor that could benefit from the city of Burnsville's $1.1 million in grant funding.

"Burnsville Center itself, it's a dying mall. ... It was mismanaged throughout the years," said Marshall Nguyen, a partner with Pacific Square Burnsville, one of the project's developers. "Our goal is to come in and help revitalize it."

Under new management?

Should the potential sale go through, many Burnsville City Council members could breathe a sigh of relief. While city officials and business owners were initially hopeful for the mall's future under Kohan and 4th Dimension's management, that soon turned to concern.

Burnsville City Council Member Dan Kealey said the 2020 sale hurt the city because the mall's property taxes plummeted at a time when Burnsville's expenses were rising.

During a City Council work session in March, Kealey said he approached the current owners to clean the mall's "absolutely, unbelievably, filthy dirty" carpet. He said the owners might have recently cleaned, but there are already new stains.

"I am not 100 percent confident going into the future that there's going to be significant investment in the mall. ... It would not shock me if the current owner ends up putting it up for sale," Kealey said.

Kealey brought up how other cities have done public-private partnerships to help with funds for new owners to bolster their neighborhood shopping centers.

"I just don't want to see the Burnsville Center continue to decline anymore than it already has," he said, clarifying he thought the city could partner with a future owner.

Mayor Elizabeth Kautz said she hasn't been impressed with the recent condition of the mall.

"I don't trust the Kohan group. ... They haven't done anything," Kautz said.

Many have criticized the Kohan group — which also owns Mankato's River Hills Mall — for letting other malls it owned fall into ruin.

A needed investment

Kealey said the Pacifica project could reinvigorate Burnsville Center and even the entire County Road 42 corridor.

"There's no other place in Burnsville that needs [the grant] worse than Burnsville Center," Kealey said.

The City Council has expressed support for the project and chose it back in April as a possible grant recipient instead of an apartment complex. The council will decide Tuesday whether to award funds from the Environmental Legacy Fund grant, money Dakota County gave to the city in 2020 to offset the negative aspects of hosting landfills.

Burnsville received the largest sum of the four Dakota County cities that qualified, because it houses one open landfill and two that are closed or no longer accept waste.

If the council votes to allocate the money to Pacifica, the Dakota County Community Development Agency (CDA) will review and potentially approve the request May 23.

Pacifica's developers, Nguyen and partner Christina Le, have helped bring both food hall and Asian retail concepts to the Twin Cities: Le with Eat Street Crossing in Minneapolis in March, and Nguyen with Asia Mall in Eden Prairie. Another partner is the Windfall Group of Chicago, which Le said has a track record of resuscitating dying malls.

Pacifica will have two phases, with construction starting later this year and an opening slated for early 2024. Phase one will remodel Gordmans with a 50,000-square-foot grocery store called Enson Market and a 13,000-square-foot food hall.

The second phase includes a two-story addition with an exterior staircase allowing customers to walk from the Dick's Sporting Goods parking lot down to the Pacifica lot. The expansion will sport two restaurants: Bullvino's Brazilian Steakhouse and Shoo Loong Kan, a hot pot concept.

Challenges remain

The mall's pending sale as well as the Pacifica development won't solve all its problems, though. The anchor tenants aren't involved in either, and some are in disrepair.

Kealey said the city hopes to see Burnsville Center's former Sears store sold and demolished. It flooded last winter when the company stopped heating the building and a fire-suppression system pipe broke. That allowed mold and mildew to fester.

"It's an unhealthy building," Kealey said.

Shoppers and employees at Burnsville Center shared varying thoughts about the mall's state as they walked around the nearly empty space Wednesday afternoon.

Kathia Thoma, manager at Victoria's Secret, said the lingerie company is committed to staying at the mall, and the vacancies don't bother her.

"I have my regulars here that come in all the time," she said.

Bobbie Anderson of Prior Lake was shopping at Burnsville Center because she didn't want to venture to a bigger mall to look for shoes and dresses. But all her favorite stores are gone.

"I live close, but this is a shame," Anderson said. "It's very sad."