Edina’s Galleria No Longer For Sale Amid Pandemic
The upscale Galleria shopping center is no longer on the market for sale.
In January, Twin Cities Business reported that the property was on the market after reviewing marketing materials that were posted online by JLL, a Chicago-based commercial real estate services firm. Houston-based Hines Global REIT Inc. acquired the mall for $127 million in 2012.
But for now, the property is off the market.
“Galleria is not for sale at this time,” said Mark Clegg, a spokesman for Hines, who declined to say anything further about a possible sale.
The Covid-19 pandemic has wreaked havoc upon retailers everywhere as stores closed in response to government edicts. That, in turn, means that the investment sales market for commercial real estate retail properties has nearly evaporated.
A new report on Wednesday morning from New York-based Real Capital Analytics underscored how badly retail property investment sales have cratered. RCA’s data shows that sales of retail properties dropped a staggering 84 percent in April compared to a year ago. Sales of shopping centers fared slightly worse, down 87 percent in April.
Real Capital Analytics provides research and data on investment sales for all sectors of commercial real estate.
RCA’s retail report noted: “The already beleaguered retail sector is being pummeled by investor apprehension on forced store closures, weakened consumer spending, and tenant bankruptcies.”
Translation: hardly anyone wants to invest in retail property assets right now.
One veteran investment sales broker confirms the current state of the market for retail properties.
“I think I’ve been on 50 calls with institutional investors in the last two months and I haven’t heard anybody say, ‘Yeah, we’re actively seeking retail,’” said Bob Pounds, senior managing director with the Minneapolis office of Newmark Knight Frank.
Two exceptions in the retail market: grocery-anchored centers and pharmacies. Per RCA, “Investors in the sector continued to focus on retail that caters to daily needs. The combination of grocery-anchored and drug store assets accounted for over 40 percent of volume for the month.”
According to RCA’s data, investment sales for office and industrial properties fared the “best” for April even though sales in those sectors were down 60 percent. Every other property sector fared worse. Hotel sales were at the bottom of the heap, down 98 percent for the month.
Back in Edina, Hines has other issues to grapple with at the Galleria. Although the Galleria is 95 percent leased, the Gabberts store there is slated to close in July which will open up nearly 76,000 square feet of space.
“We are currently exploring options for the Gabberts space,” said Clegg.