Edina showroom project now plans to also target downsized design firms

In early March, Gregory Rich bought a stylish midcentury modern office building in Edina. His plan: Create a one-stop shopping destination for people doing homebuilding, design and renovation projects.

His goal is to fill "The District Edina" with design-related firms that already have a presence in the Twin Cities, but need a satellite showroom with 1,200 to 3,000 square feet.

Today, with economic uncertainties looming, he has tweaked his strategy and is now targeting firms that suddenly realized they have too much space and want to downsize during whatever economic contraction is underway.

"Rather than carrying large, expensive showrooms in these presumably lean times," he said, "[firms can] cut the overhead, downsize the footprint and wait for the inevitable rebound."

Today, the National Kitchen & Bath Association and John Burns Real Estate Consulting said that its 2020 Kitchen & Bath Market Index, which surveys professionals in building/construction, manufacturing, design and retail sales on industry conditions, shows that 69% of all kitchen and bath projects have been affected by the pandemic, mostly in the way of postponements rather than cancellations.

Home-improvement spending in the Twin Cities metro is expected to slow dramatically this year. Last year remodeling spending was increasing at an annual rate of 4% to 6% in the metro, but it is expected to post only half that gain by the end of 2020, according to the Remodeling Futures Program at the Joint Center for Housing Studies at Harvard University. The Twin Cities is one of only 15 large metros where spending is expected to eke out even a modest gain while most metros are likely to see a decline.

"Although the pandemic is lowering prospects for remodeling everywhere, relatively more affordable metros in the Midwest and Sun Belt should be among the brighter spots for home improvements this year," said Sophia Wedeen, a program research assistant, in a statement.

Rich said in anticipation of a possible pullback, instead of pitching his concept to firms that want to expand, he's now trying to appeal to those that want to reduce expenses and share operating costs, including advertising and marketing expenses, with other showrooms. The building will include a 2,000-square-foot "flex-space" on the top floor where contractors and designers can meet with clients.

Rich is a longtime Twin Cities designer who operated Habitation Furnishing + Design out of a storefront in St. Louis Park. His projects have included large residential and commercial projects, including the Fifth Street Towers office building in downtown Minneapolis and several large apartment buildings such as the Vicinity, which just opened in Minneapolis' Mill District.

Though he focuses on design, he has also bought and sold several buildings, but this is by far his biggest venture. After searching for a new home for the business, he toured the 21,000-square-foot building along Nine Mile Creek in Edina and immediately saw its potential. He envisioned filling the building with businesses that would serve anyone doing a building, remodeling or design project.

His goal was to stock the building with nine firms that incorporate all the elements of a home project, including kitchen/bath, tile and lighting companies.

"I envision a building that will house a variety of showrooms," he said. "A collection of independent showrooms working together to maximize their exposure and pool their advertising efforts."

He said that before the pandemic the concept had plenty of traction. When Rich closed on the building at the beginning of March he had two signed leases and two letters of intent, but both tenants have since canceled.