Shops at West End: Right Place, Wrong Size
Happy hour is winding down. It’s a chilly Friday evening at Shops at West End in St. Louis Park, and in Rojo Mexican Grill, patrons swarm the bar three deep. Hostesses are quoting an hour or longer wait for a table in the dining room. Across the street, waits are just as long at Crave and the newest restaurant, Lucky Cricket. “It’s first come, first served in the bar,” a Lucky Cricket hostess offers, but every stool is taken.
Seven restaurants line the northern corner of Shops at West End, an outdoor “lifestyle center” with a long, straight-through road and storefronts on either side. This type of center—smaller than an enclosed mall, larger than the typical strip center—rose to popularity in the early 2000s, when traditional mall anchors were beginning to falter, and “experience” was becoming a buzzword. Developers said shoppers wanted a “main street” experience where they could enjoy a sidewalk stroll and park conveniently near their destination. Of course, most of the Shops at West End’s parking is tucked inside ramps that are behind and underneath the stores. The main street, West End Boulevard, offers fewer than a dozen parking spots, in a 15-minute zone.
West End Vital Stats
2.2 million square feet of office space
700,000 square feet of retail
90 percent average occupancy for commercial buildings
Largest available property block: 30,000 square feet at West End Center
Just beyond West End’s restaurant row, a steady stream of moviegoers head in and out of Showplace Icon Theatres. But on the other side of the theaters, the hum of activity abruptly falls off. It’s 6 p.m.—most stores won’t close for another three hours, but they look to be done for the night. (Sometimes, it looks that way at noon.) A handful of women wander around Anthropologie and Evereve. Directly across the street, a string of four storefronts stands empty. As you walk south, the vacancies seem to outnumber the stores. The frozen yogurt place didn’t last. Charming Charlie closed last year after the company declared bankruptcy. Kittsona, a Fargo-based boutique chain, closed physical stores outside of North Dakota earlier this year to focus on e-commerce. But the recent exit that has sales associates throughout West End talking is lululemon, an original tenant and one of those magnetic brands every commercial developer knows will draw a crowd. When lululemon leaves, there’s got to be cause for concern.
Shops at West End has been a headscratcher ever since it opened a decade ago in the depths of the recession. It put the former light-industrial area just west of I-394 and Highway 100 on the map as a commercial district—just five minutes west of downtown Minneapolis and surrounded by desirable neighborhoods. Shops at West End literally gave the quadrant on the border of St. Louis Park and Golden Valley its name, which is now applied to office towers, hotels, and apartment buildings. Restaurateurs say they love West End for its easy highway access and walkability, with the density of a city and the suburban convenience of ample free parking. The concentration of office workers and entertainment options such as Life Time fitness and the Icon theater add to the draw.
But retail there has always been a struggle—even more so than at nearby malls and strip centers like Ridgedale Center and Shoppes at Knollwood, which have updated and found a post-recession groove. A 20,000-square-foot box at the southern end has never been filled. Its vacancy rate hovers at 21 percent, according to the most recent Cushman & Wakefield retail study; the overall Twin Cities vacancy rate was 9.4 percent at the end of 2018. The only west metro mall in worse shape is Southdale Center, at 23 percent.
Indisputably, Shops at West End is a victim of bad timing. Post-recession, retail has only become more nuanced. That aside, it’s easy to look back on mistakes that were made in building a 350,000-square-foot lifestyle center on spec: Inconvenient parking, bad sight lines, restaurants concentrated at one end with nothing to draw shoppers down the sidewalk.;
Even more challenging is figuring out how to fix it.
A 20,000-square-foot space at the south end of Shops at West End has never been filled.
A needed amenity
Before Shops at West End, the southwest quadrant of I-394 and Highway 100 was an unappealing industrial lot dotted with run-down warehouses. Duke Realty acquired the site from NECP American in 2004. Combined with two neighboring office buildings, the 1600 Tower and the MoneyGram building, Duke controlled 32 acres and set about redeveloping the area as an office park.
“We needed an amenity to go with it,” says Patrick Mascia, who led the West End project as Duke’s senior vice president of Minneapolis/St. Paul operations. He now leads Briggs and Morgan’s real estate section.
A lifestyle center—with a mix of restaurants, entertainment, and distinctive retail—seemed the perfect convenience for office workers, from running errands to power lunches to happy hour, followed by dinner and a movie. Remember, this was 2004—the economy was booming, Amazon Prime didn’t exist, Nordstrom had yet to open fewer than 5 miles away at Ridgedale Center, and now-defunct chains like Borders Books and Circuit City were still in expansion mode.
By the time St. Louis Park signed off on plans and the land was cleared for redevelopment, four years had passed. Construction began in the spring of 2008. The recession hit that fall. Duke was too far in to stop—
Mascia estimates $2 million had been spent on demo and planning.
“As we came out of the recession,” says Mascia, “we had to take more risk.”
The biggest risk was building the entire center at once rather than in phases. That decision was made to accommodate underground parking. “In hindsight, it was probably too much retail, or you wouldn’t want to build it on a spec basis,” says Mike Ohmes, managing principal of the Minneapolis-St. Paul office of
Cushman & Wakefield, which is leasing manager for the second-floor office space at Shops at West End (around 20,000 square feet is currently vacant), along with other office towers in the area. “But underground parking was a huge amenity.”
Retail developments weren’t Duke’s specialty, so Mascia’s team enlisted Cincinnati–based Anderson Co. as a partner to lease the center. “We followed their lead,” he says. Rainbow Foods (now Cub) and the movie theater were the first to sign on—but not without compromise. To lock in Showplace Icon, Duke agreed to a deal where the theater would pay just 50 percent of its rent until three restaurants opened. That drove the focus on restaurant development around the theater, which, Mascia acknowledges, sealed the center’s lopsidedness—and it’s only become more acute over the years.
“We knew we had to be aggressive in developing 72,000 square feet of restaurant space right off the bat,” Mascia recalls. “We could have supported more, but we would have had to make a significant investment, which greatly increases the risk.”
In a nutshell, restaurant spaces are more expensive to build on spec and require more ongoing utility investment such as water and electrical. So Duke made the decision at the onset not to build more restaurant spots at the south end of the center, Mascia says. Early plans called for another type of destination like a bookstore with a coffee bar to draw shoppers down West End Boulevard. But by the time Shops at West End opened, bookstores weren’t building.
Fashion retail proved to be a struggle, too. “We were planning on mainstream retail, but when the recession hit, we had to change our focus and went for more upscale,” Mascia says. Stores like lululemon and Anthropologie were still expanding in 2009. Landing them seemed like good news, but neither was a first-to-market location. The same was true for several of the local retailers that signed on: Creative Kidstuff, Primp, and Evereve all had a solid presence around town, from Linden Hills in Minneapolis to Cathedral Hill in St. Paul. That minimized West End’s draw as a regional shopping destination. And while those local stores, which remain today, helped to round out the mix on the north side of the center, near the restaurants and theater, the momentum did not flow to the south end.
“We were just never able to get the critical mass of fashion retailers that you need,” Mascia says. The longer storefronts remained empty, the tougher it became to lease them. “Then the mothballing gave it a stigma.”
A different reality: More than shops
Duke Realty hired a branding agency to name Shops at West End, then made a deliberate decision not to copyright it. “We wanted everybody in the neighborhood to use the name, to have it become a neighborhood,” Mascia says. “It really helped put the area on the map and drive the value around the shops.”
Today, there’s West End Office Park, West End Center, Flats at West End, Millennium at West End—in all, more than 2 million square feet of office space in the vicinity, a new AC Hotel, and four new apartment buildings with a total of nearly 1,400 housing units. Construction is scheduled to begin later this year on 10 West End, Ryan Cos.’ 11-story office building, which will add more than 335,000 square feet of Class A office space to the area. A sister tower of equal size is planned when the first is complete.
West End’s apartment buildings fetch leading suburban market rental rates, and corporations are clamoring for commercial space in the area, Ohmes says. Pentair spin-off nVent and Life Time Work, a new co-working space from Life Time fitness, are among the most recent arrivals.
“It’s become its own micromarket,” Ohmes says. “With the exception of the North Loop, the cachet of the West End is unparalleled.”
“It’s become its own micromarket. With the exception of the North Loop, the cachet of the West End is unparalleled.”
—Mike Ohmes, Cushman & Wakefield
Even the big-box spots on Park Place Boulevard, across Park Place from Shops at West End, are successfully adapting to changing retail times. A downsized and remodeled Office Depot made room for popular boutique workout concept OrangeTheory. Modern fast-casual concepts Five Guys and Roti recently opened nearby.
So why can’t Shops at West End fill 72,000 square feet of vacant space?
The retail puzzle
“It’s the wrong size,” says Tricia Pitchford, senior vice president of leasing for Mid-America Real Estate, which leases Shops at West End. “To be an entertainment complex, it should be much smaller. But it’s too small to be a great fashion center.” A desirable anchor like Nordstrom Rack or T.J. Maxx wants to be surrounded by other top-notch retailers, and West End’s size and available spaces has made that difficult, she explains.
“To be an entertainment complex, it should be much smaller. But it’s too small to be a great fashion center.”
—Tricia Pitchford, Mid-America Real Estate
West End is not an anomaly—fashion retail is struggling everywhere and leases that used to fill quickly now take a year to 18 months to complete, Pitchford says. Just look at the Dayton’s Project, the downtown Minneapolis retail/restaurant/office redevelopment, which has yet to sign any stores and recently pushed back its opening from 2019 to 2020. In today’s survival-of-the-fittest retail centers, West End is, simply, less fit. Nearby in St. Louis Park, Knollwood flipped itself from outdated indoor mall to power strip center and landed Nordstrom Rack to complement T.J. Maxx, DSW, and Old Navy. Ridgedale reignited itself with a new Nordstrom and a center addition that made way for a spacious Apple store, along with upscale brands Athleta, Banana Republic, and Williams Sonoma.
Lululemon opened at Ridgedale after closing at West End. “We have no official comment on our move,” says lululemon spokeswoman Meghan Chisholm. “But I will say that we listen to feedback from our guests on product, events, and store location to determine how we best provide a full, positive brand experience at every turn.”
Who Works at West End?
MoneyGram: 442 employees
HealthPartners: 400 employees
Coherent Solutions: 330 employees
nVent: 170 employees
Clear Channel: 125 employees
Healthland: 112 employees
Magenic Technologies: 100 employees
Evereve, which has stores at Ridgedale and West End, is one of the few exceptions. The Edina–based retail chain is far along in negotiations to renew its West End lease for another 10 years. (Crave restaurant just did the same.) “We’ve always performed well at West End,” says co-CEO Mike Tamte. Evereve’s West End store sales peaked in 2016, then dropped 20 percent in 2017 and 2018, but are back up 26 percent year over year since Nov. 1. “We are pretty good at forecasting, and we predict sales at West End will end up growing around 25 percent. I can’t tell you why we succeed at West End when others have struggled. I am a bit biased, but I believe our joyful attitudes and personalized customer service attracts and retains customers.”
Still, Tamte says he worries about all of the vacancies. “My sense is that the landlord needs to lower rents to attract more retailers.”
Mid-America’s focus is more restaurants and entertainment. “That’s where the growth is,” Pitchford says. “That’s where people are spending their money.” Punch Bowl Social, a restaurant, bar, and gaming establishment, is a recent success story on the southern tip of Shops at West End. It faces Park Place Boulevard, which means it isn’t even visible from within West End; it stands alone on the outer edge of the center. The adjacent spot has been vacant since Toby Keith’s Bar & Grill closed in 2015.
“We need another big entertainment complex like Punch Bowl Social that isn’t in conflict,” Pitchford says; that rules out bowling, bocce, arcade games and karaoke, which are all offered at Punch Bowl. But Pitchford is undeterred. “Ping-Pong bars, ax throwing, dart throwing, indoor mini golf—these are all things we don’t have. That’s what we’re working on. You have to stay on the front end of what’s hot.”
Mid-America has had inquiries from potential tenants who want to rent a portion of the 20,000-square-foot box on the back side of Punch Bowl, but that is West End’s largest available space and dividing it would preclude one of those new entertainment concepts from coming in. “It’s less about filling boxes and more about what’s going to work here in the long-term.”
A concentration of restaurants near the movie theater keeps the northern end of the center busy. Photo courtesy of Hanna Voxland
Time to evolve?
Even if Mid-America can identify that hot new concept and sell it on the demographics of the West End area, the center’s awkward design continues to be an obstacle, local developers say. The Twin Cities’ two other similar “main street”-designed lifestyle centers, Shoppes at Arbor Lakes in Maple Grove and Woodbury Lakes, both have the suburban luxury of surface parking on all sides. The underground parking that was thought to be a West End perk has proven off-putting to shoppers.
“Minnesotans don’t view a ramp as convenient. That’s what I’ve learned about Minnesota consumers,” says John Johannson, senior vice president of Colliers International in the Twin Cities.
Colliers’ Central Park Commons in Eagan is an example of the latest thinking about suburban lifestyle centers. Rather than erecting a faux main street in the middle of a parking lot, Central Park Commons was designed as several mini-strip centers throughout the property, each with its own surface parking and circular roads and sidewalks connecting each group of buildings. The design does little to promote walking, but visitors seem only too happy to drive across the parking lot from HyVee to Punch Pizza.
“Asking suburban shoppers to shop someplace without convenient up-front parking is really difficult,” Johannson says. “It’s a good lesson in trying to engineer design where you’re asking people to change their social behavior.”
Will there come a point when West End has to give up on filling out its retail spots and consider something different? “We’ve thought about alternative uses: a hotel, office space, multifamily units,” Pitchford says. “But we would need ownership to make investments and decisions.”
New York–based investment group AR Global bought Shops at West End from Duke in 2015 for $117 million. A representative for AR Global says ownership is open to pivoting if necessary, but does not believe the center is at the point of needing to remodel, and, in fact, is optimistic that residential growth in the immediate area will stimulate retail interest. The representative says lease negotiations are underway for at least three of the available retail spaces and office space above it.
But other developers with property in the area believe some reconfiguration of Shops at West End should be considered sooner rather than later. “I think we’re going to start to see some new decisions made there,” Ohmes says. “It may require some additional city approvals. It hasn’t worked the way it was originally envisioned a decade ago. But it’s still a prime location with a vibrant life ahead of it.”
If there’s one constant in retail development, it’s change.
“Retail is always evolving—that’s one of the beauties about it,” Ohmes says. “West End will figure out what it’s supposed to be in time.”
- Life Time Work 28,000 square feet of luxury co-working space opened in April.
- nVent The Pentair spin-off opened a 60,000-square-foot headquarters at West End Center in 2018.
- Magnet 360 and CoBank each signed leases at West End Center in 2018.
- AC Hotel Minneapolis West End 126-room hotel by Marriott opened in 2018.
- 10 West End 11-story office tower being developed by Ryan Companies
- Luxe Residential 207 units ranging from studio to two-level three bedroom
- Elan 164-unit apartment building
Across City Lines
While I-394 is commonly thought of as the border between St. Louis Park and Golden Valley, the latter actually dips south of the highway—straight through the Central Park West mixed-use development. A third of the apartment dwellers there live in Golden Valley, while across the hall, their neighbors maintain a St. Louis Park address. Likewise, the planned 10 West End office building is in St. Louis Park, but its adjoining ramp is in Golden Valley. The two suburbs worked together to review and approve plans for both projects, says Jason Zimmerman, Golden Valley’s planning manager.
The Golden Valley side of the highway counts Allianz Life Insurance, Pentair, Bell Bank, and Buffalo Wild Wings among its prominent office headquarters. Today, residential development is picking up. Here’s what’s new and under development just north of West End, at I-394 and Xenia Avenue in Golden Valley.
- Arcata Apartments: 173 units, opened in 2015.
- Talo Apartments: 303 units (with a “lazy river” water feature on the deck), opened in 2018.
- Global Pointe: 100-unit senior living building under construction between Talo and Good Day CafÃ©, opening 2020.
- Xenia Apartments: 369 units with indoor/outdoor pools, a dog run and pickleball court, under construction at the northwest corner of Xenia and Golden Hills Drive, opening 2020.
Allison Kaplan is TCB’s editor in chief.