Store closings not just a mall problem as Uptown, Grand Avenue feel the pinch

The January store wipeout now seems as much a part of the retail calendar as the after-Christmas sale.

With receipts counted from the year's busiest shopping period, retailers close stores that didn't meet goals. Such closings appeared to accelerate in 2017 and last year, particularly in malls. But in the Twin Cities this post-holiday period, the closing news is happening in local neighborhoods such as Minneapolis' Uptown and St. Paul's Grand Avenue.

In Uptown, both Columbia and North Face will close soon after 10-year runs. The Victoria's Secret store has sat dark for more than a year on the busiest intersection in Minneapolis. Meanwhile, Grand Avenue will soon lose longtime tenants as well, including Traditions, Sixth Chamber bookstore and North Face.

Parking shortages, along with higher rents, property taxes and minimum wages put pressure on small retailers. In some cases, owners are simply getting older and moving on. Roxy Freese, owner of Bibelot gift stores in the Twin Cities, decided in November to retire after five decades in the business. Just last week, GoodThings, another local gift retailer, decided to buy two of her four stores, including the one on Grand Avenue.

But both the Uptown and Grand Avenue areas are seeing more development of multifamily homes, too. And two key blocks of Uptown retailing were blocked by road construction for much of last year.

"I'm concerned when I see stores like Bibelot closing and condos coming in," said Misha Hemingson of St. Paul as she shopped Bibelot's closing sale on Grand.

Two years ago, the post-holiday store crunch captured national headlines and investor attention as chains like BCBG, the Limited and Wet Seal packed it in. January 2017 was also the month Minnesotans learned Macy's could close its downtown Minneapolis store. St. Paul-based Gander Mountain tumbled a few weeks later. Since then, Toys 'R' Us and the various Bon-Ton chains disappeared, Sears has cut its locations by half. Last week, Shopko, the Wisconsin-based variety-store chain that mainly operates in small towns, filed for bankruptcy and said it would close about 15 percent of its 300 stores.

Mall vacancy rates are hovering around 9 percent, the highest in seven years, according to Reis, a national market research firm. In the Twin Cities, the retail-vacancy rate, excluding malls, is 10.8 percent, up slightly from a year ago.

Independent retailers with a compelling concept and little debt are doing fine. One of those retailers is Dan Marshall, who co-owns Mischief, a toy store for teens and adults in an 1895 Victorian home on Grand Avenue. He opened Mischief three years ago after he and wife closed Peapods, a children's toy shop.

"The store is going really well but specialty retail has changed phenomenally," Marshall said. "You can't just be selling stuff. You need to be a part of the community and creating experiences for your customers."

Mischief has a game room it lets customers use to host birthday parties and other events. Marshall's daughter created events where customers make terrariums with figurines of popular animation figures, filling the store each time. "We listen to our customers because we're small. They tell us what they're enjoying about the store and what they like," Marshall said.

Sanford Stein, a Twin Cities-based retail-trend forecaster and founder of Retail Speak on LinkedIn, said that small, independent retailers have a brighter future.

"I'm more optimistic about the local independents than the chain stores because the indie, if it's good, has a unique product or service," he said. "They are better and knowing and connecting with their customers."

The arrival of national chains in a neighborhood shopping district is a mixed blessing. They tend to land after appealing local retailers create a draw for shoppers.

"But nationals drive up rents and pretty soon the trendy independents can't afford to stay anymore," Stein said. "Then the nationals overexpand, run into trouble and stores sit vacant after landlords price themselves out of the market."

Grand Avenue blocked the entry of the Noodles & Co. restaurant chain in 2007. Since then, however, J. Crew, Pottery Barn, Starbucks, CVS, Walgreens, Pizza Hut, Jimmy John's and Chipotle all landed on it. Recently, North Face and Ann Taylor Loft said they would leave.

In 2016, the Ten Thousand Villages artisan shop on Grand Avenue did not have its lease renewed by an out-of-town landlord who wanted a national tenant. "They probably thought a national tenant would pay more rent with a longer lease. It's still empty after three years," said Kathy McGinley, manager of the nonprofit, fair-trade retailer.

By contrast, downtown White Bear Lake, which had a vacancy rate of nearly 30 percent two decades ago, has thrived in recent years in part by holding off larger chains and keeping rents in line for local stores. "Bear Patch Quilting just came available and we already have somebody else lined up," said Dale Grambush of Downtown White Bear Lake Main Street, referring to a recent retail turnover.

In Minneapolis' Uptown, the churn may turn out to be fairly quick. Just last week Salons by JC announced that it will take over the Columbia space. The North Face space has also attracted many inquiries about leasing, Jeff Herman, president of Urban Anthology commercial real estate, said.

And the two-story site at the corner of Hennepin Avenue and Lake Street that was vacated by Victoria's Secret a year ago may finally be getting a new tenant. Ruth Weisberg, whose family owns the building, said a deal is imminent. "We have been very selective in whom we put there," she said.

Doug Huemoeller, owner of Kitchen Window in Uptown's Calhoun Square, said parking is a perennial concern in the neighborhood. A recent construction project along Hennepin permanently removed 31 parking spaces between Lake and 31st Streets. "The city doesn't think that pop-in, pop-out parking is important," he said. "It's highly disappointing that the city doesn't see that."

John Stedman, owner of Roam home furnishings in Uptown since 2012, said his business has steadily increased. But if the city puts his block on Hennepin between Lake and Lagoon under construction, he will consider vacating.

"We are a destination so we're staying put, at least until the city closes Hennepin and tries to add bike lanes all the way," he said.

City spokeswoman Sarah McKenzie said there are no imminent plans to change that block. But the city is developing plans for a full reconstruction of Hennepin from Lake Street north to Franklin Avenue, the ultrabusy connection to downtown. No timeline has been set.

In St. Paul, business owners tried in 2015 to get the City Council to put in parking meters but virulent public opposition doomed them. George John, professor of marketing at the University of Minnesota's Carlson School of Management, said retailers enliven neighborhoods and residents need to compromise or find themselves living next to empty buildings.

"Do they want to live in a museum or live for today?" John asked. "You can preserve some of the neighborhood but you've got to make life convenient for these businesses too."

John Ewoldt • 612-673-7633