Waffles and Yoga Pants Give Malls New Hope – Twin Cities Business Magazine

August 25, 2020 - Short Yoga Pants

The first half of 2020 was brutal for regional shopping centers, but slowly, retail leases are getting signed.

Stretchy yoga pants are to quarantine life what lululemon is to shopping malls: a comfortable, reliable fit.

Rosedale Center announced last week that lululemon will open at the mall this fall. Not a massive concept store like the one that debuted at Mall of America in November 2019 (seems a lifetime ago) with café, yoga studio, and meditation space; but a permanent retail store from a brand that has weathered the Covid-19 economic downturn better than most.

“Rosedale Center Prevails Throughout the Pandemic” read the headline on a press release sent out by the mall, which also announced the opening of Tradehome Shoes, Chatime beverage shop and the recent remodel of American Eagle and Aerie.

Apparel and accessories retailers have been the hardest hit by Covid-19; sales plummeted 89 percent year over year in April, according to JLL Research, a division of Jones Lang LaSalle Retail Group, whose national portfolio includes Rosedale Center. JLL also took over management of Eden Prairie Center in June. While sales figures have improved across the board since then, the pandemic accelerated the demise of many mall retailers that were past their prime.

Apparel retailers make up approximately 57 percent of malls, JLL reported. Losing stalwarts like Ann Taylor and J.Crew has rocked the very foundation of regional centers, which were already scrambling to fill massive holes left by the dwindling number of national department stores. JC Penny will close three Twin Cities locations this year including Eden Prairie Center. Ridgedale Center and Mall of America have yet to fill empty Sears stores. Southdale has been working on possible replacements for a vacant Herberger’s space. Burnsville Center—anchored by Macy’s, which is on industry watch lists for possible closures in the second half of 2020—is in foreclosure, unable to compensate for a 32 percent decline in net operating income triggered by temporary closures. Mall of America, the nation’s largest shopping center, is three months behind on mortgage payments.

But lululemon’s new lease agreement at Rosedale isn’t the only glimmer of hope. The Maple Grove outdoor lifestyle center Shoppes at Arbor Lakes just announced five new tenants opening soon including an Xfinity store that provides internet and video related products and services; Cycle Gear, an accessories shop for motorcyclists; and Face Foundrie, a third Twin Cities location for the locally owned express service spa, which is scheduled to debut in November. Another local concept, Fox Run occasional shop (open three weekends each month), opened earlier this summer, featuring gifts, accessories, and apparel from 25 Minnesota makers.

Like many store openings happening right now, Fox Run had been working on its buildout at Arbor Lakes pre-pandemic, owner Tia Scott said. “We were extremely close to pulling the plug on the whole thing,” Scott said. “But one of our vendors convinced us that we should pursue it after all the hard work we’d put into the space. When you add in how devastating 2020 has been for small businesses, and the 25 businesses we support, it seemed that this was the only way we were going to move forward.”

Fox Run’s arrival at the regional center—the first permanent location for a company that got its start with mobile markets—fits with what Terese Reiling-Holden, a vice president with Colliers in Minneapolis, is seeing: increased activity from local, entrepreneurial businesses. It’s not national brands driving most of the new leases, she said. “A lot of local, entrepreneurial concepts” are taking advantage of available bank loans and more favorable lease terms being offered by some centers. Of course, other landlords are holding firm on prices, she said.

“The users I’m working with are optimistic,” Reiling-Holden said. “They’re assuming we’ll be on the other side of this in 12 to 18 months.”

That’s likely the attitude driving CoHAUS, a new co-working space just announced by Shoppes at Arbor Lakes. The co-working boom has cooled off during the pandemic, with some spaces closing permanently, like the Riveter in Edina, and others struggling to adapt their collaborative spaces for social distancing. The official description for CoHAUS says the membership-based co-working, meeting and event space was “founded on the idea of fostering a space that is comfortable, flexible, and feels like home but with all the amenities of an office and social club.” Owners could not be reached for comment. Arbor Lakes management would only say that CoHAUS is “coming soon.”

Meanwhile, the comeback has been slow going for Mall of America, which is currently dogged by headlines about its missed mortgage payments due to an 85 percent drop in revenue. The Star Tribune reported last week that MOA’s owner, Triple Five Group, entered into a cash management agreement to avoid foreclosure. But today, MOA will score a small victory with the opening of Wafels & Dinges. The opening represents the first store outside of New York City for the specialty food icon, and the sort of buzz-worthy arrival that has been in short supply this summer at MOA. (Free waffles today, Monday Aug. 24, from 12:30 to 2 p.m.)

Locally owned home and gift shop Piccadilly Prairie also opened a new store at Mall of America this summer—its third, in addition to Southdale and Ridgedale locations. Much like Fox Run at Arbor Lakes, Piccadilly’s MOA lease was signed pre-pandemic, owner Lacey Brooker said. She had been scheduled to open March 27, the day Minnesota’s shelter-in-place order went into effect.

So far, traffic at Piccadilly Prairie is slow at MOA, as it is at Ridgedale and Southdale, Brooker said. “People seem less inclined to spend the day at the mall for something to do and more likely to get in, do their thing, and get out.”

Brooker is planning an indoor vintage market at the Southdale Piccadilly Prairie store for late August in an attempt to drive traffic. “Basically, we’re just trying to limp along until holiday season,” Brooker said.

Everything at Scheels in Eden Prairie is supersized, including the Hydroflask assortment.

It’s a good time to be in the sport goods business, however. In July, Fargo-based sporting goods chain Scheels opened a mega store at Eden Prairie Center that replaced Sears. The 250,000-square-foot store was in the works long before Covid. Other than the shiny new Ferris wheel in the center of the store being roped off, and face masks on staff and shoppers, you’d never know physical retail was struggling due to a pandemic. On a recent weekday afternoon, the parking lot was full; and shoppers of all ages were scooping up camping gear, water toys, racquets, clubs and balls as they attempt to seize every outdoor moment. When the frost rolls in, Scheels has an entire department devoted to ping pong accessories.

A recent report from Retail Dive said that mall traffic is beginning to pick up. Outlet mall traffic was actually slightly higher in the week ending Aug. 9 than 2019 levels.

Concerns about the U.S. Postal Service slowdown could work to the advantage of brick and mortar stores with holidays approaching. “With online shopping delays and delivery issues, we are forecasting more in-person shopping to avoid gifts being delayed,” said Sarah Fossen, Rosedale Center’s director of marketing and experience.

Rosedale stores report some of their strongest sales right now are athletic apparel, shoes and sunglasses, which is consistent with broader retail spending reports. “We have also seen an increase in millennial and Gen Z traffic,” Fossen said, “which we are forecasting to continue to increase as the weather turns cold and more time is spent at home with distance learning.”

The retail concepts best positioned to grow right now combine products and services, said Reiling-Holden. She noted a strong trend toward salon suites, which allow for more separation between clients. “They’re being aggressive on expanding,” she said. “It fits the current situation.”

So too, do yoga pants.

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