Willmar's Kandi Mall offering free rent to lure new businesses

Willmar. Minn. – An institution for nearly 50 years in this central Minnesota city, the Kandi Mall is looking for a path to the next 50 years.

Battered by the growth of online shopping, the loss of several anchor tenants and now the COVID-19 pandemic, the mall is hoping to add new blood with an unusual offer: reduced or free rent for new tenants.

"The owners have to be more creative now," said Aaron Backman, executive director of the Kandiyohi County & City of Willmar Economic Development Commission. "They are buffeted with the same trends all retailers are facing. And with the COVID-19, people are shopping online."

Sited on 44 acres, with more than 400,000 square feet of retail space, Kandi Mall serves a regional trade area of about 90,000 residents. After it was built in 1973, it siphoned shoppers away from Willmar's downtown.

Now its own customers are being lured away by online retailers as well as by the big box stores that arrived after the mall shifted the city's retail center to the edge of town.

"There are a few stores that still make it worth coming," said Christina Williams, shopping at the mall last week. "Otherwise, a lot of people just shop at Target or Walmart."

The mall used to be much busier, said LeAnn Kitzmann: "Now, it's just a ghost town."

For years, the mall had three anchor tenants: Kmart, Herberger's and JCPenney. But Kmart closed its store in 2012. Herberger's closed after the chain went bankrupt in 2018, even though the Kandi Mall store was one of the company's best performers, Backman said.

Now, struggling JCPenney has announced that it will close 154 stores nationwide, including its Kandi Mall location, which will shut down over the next couple of months.

It's a familiar story to mall owners across the nation. Some have taken steps to diversify their properties, adding non-retail businesses and services that make the mall into more of a community center.

In the Twin Cities, Rosedale has plans to add housing. Southdale in Edina has been a leader of this trend. In recent years, the mall sold off pieces of its huge parking lots to developers who built apartments and hotels on the site.

The Hennepin County Library is building a new branch on the Southdale property, and Life Time last year opened a giant, $43 million luxury fitness and lifestyle center in the mall space formerly occupied by JCPenney.

That kind of use is in line with the original vision of Southdale's designer, Victor Gruen, who saw the nation's first enclosed mall — which opened in 1956 — as the centerpiece of an entire planned community.

That's the kind of thinking needed to revive struggling malls, Backman said. The city of Willmar recently changed its zoning laws to allow more non-retail uses at the mall, which also received a $1.2 million tax abatement in 2016 to spur capital investment at the site.

"It could be education, some kind of public use, housing," Backman said. "But those uses have to make sense with the location. I'm optimistic they will be able to increase the range of uses, but it's a slog. It's a long process."

Kandi Mall's owner, Texas-based RockStep Capital, did not return a phone call and an e-mail seeking comment.

Currently, more than a dozen of the mall's 50 retail spaces are empty. Traffic was sparse on a recent weekday.

But officials are hopeful. Kohl's opened a store in part of the empty Kmart space late last year, and it was doing very well until COVID-19 hit, Backman said. Another large store, Harbor Freight Tools, is set to open later this year.

"If they can land another major retailer, I think that will stabilize it," Backman said. "But there are things that are out of their control."