It’s been nearly 10 years since a large-scale shopping center opened in the Twin Cities, and despite a growing appetite for more space, there are no imminent plans for another.
Why it matters: Retailers and restaurants looking to open shop are feeling the pinch. A recent JLL report says Twin Cities retail rents last quarter grew by 6.7% year-over-year, the largest hike in the nation.
What they’re saying: “It’s gotten more and more difficult for retailers to execute on their growth plans with a lack of space,” said Johnny Reimann, a broker for Mid-America Real Estate who helps retailers and restaurants find space.
- He notes that the Twin Cities ranks near the bottom in terms of new retail construction in the U.S.
Flashback: Two big shopping centers opened in 2016 and 2017: Eagan’s Central Park Commons and Woodbury’s City Place.
- Since then, developers have built smaller strip malls and redeveloped other shopping centers, but nothing as large scale as the 434,000-square-foot Central Park Commons.
Between the lines: It’s an uneven landscape. Hundreds of thousands of square feet are vacant in downtowns, and landlords are basically giving away skyway storefronts. Indoor regional malls have also struggled.
- But it’s much harder to find space in the suburbs. The type of shopping center in high demand is called a “power center” — usually a few hundred thousand square feet of open-air storefronts surrounded by surface parking.
- It’s typical to see them anchored by a large grocer or general merchandiser, such as Target.
Friction point: The problem, said JLL real estate broker Ted Gonsior, is that land and construction costs have gotten so expensive that developers need to charge high rents to make the finances work. But those rents are too high for what many midsize retailers are able to pay…