May 21, 2024

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Mall of America making comeback, but challenges remain

The Mall of America in Bloomington has announced several new store openings lately, a sign that one of the country’s premier malls is pulling out of the slump caused by the coronavirus pandemic.

Foot traffic is not as high as before the pandemic but it has been on the upswing.

“Traffic has been increasing,” said Sarah Grap, an MOA spokeswoman, during a busy day at the mall last week as some visitors celebrated the Muslim holiday of Eid. “We are very optimistic that things are moving in the right direction.”

Still, after a year that saw the shuttering of numerous stores and financial difficulties for the retail industry as a whole, there is a long way to go before MOA and other malls in the Twin Cities area recover from the pandemic.

Visits to the Mall of America in April were down a bit more than 18% compared with the same month in 2019, the best comparison since the beginning of the pandemic, according to research firm Placer.ai.

“Considering the heavy impact of tourism on Mall of America visits, the narrowing of the visit gap already is an incredibly powerful indication that a full return could come very quickly,” Placer.ai said in a statement.

And while travel is now on the upswing nationally again, the average visitor to MOA right now is from less than 50 miles away, instead from across the country, as patterns shifted dramatically in the past year, according to Gravy Analytics, whose data also show the mall gaining traffic back.

Still, signs of progress include a massive and colorful M&M’S candy store that opened at the beginning of the month near the rotunda in the space formerly occupied by the American Girl store. In April, a new 35,000-square-foot experience concept was unveiled on the fourth floor called the Fair on 4, complete with fair-inspired food, a go-kart track and ax-throwing lanes.

Last week, the mall announced B&B Theatres — a regional movie theater operator that is expanding to more states, much like Marcus Theatres — will replace the shuttered CMX Cinemas. The 13 screens will reopen May 27.

“It’s impossible to overstate how tough this year has been for individuals, families, and businesses,” said B&B Theatres President and CEO Bob Bagby, in a statement. “Our industry has been hit hard, and our hearts go out to operators that have been forced to close locations and to communities that have been left without theaters. This opportunity with Mall of America has been a source of excitement and optimism for us and seems a match made in cinema heaven

Eyeglasses maker Warby Parker is slated to open this summer.

The mall also was successful in getting several local and independent brands that had participated in its Community Commons marketplace for minority-owned businesses to sign independent leases. Those include Fabulous Diva Boutique, 4 the Love, Sherrod Gallery & Studio, Herbal Alchemy, Llakta and Urban 29.

Meanwhile, the mall has a new round of retailers for Community Commons.

Other malls around the Twin Cities also are seeing new tenants.

Late last month, Rosedale Center said demolition of the vacant Herberger’s store is scheduled to begin in June, another step in its $200 million expansion of the mall into a lifestyle center that also includes apartments. Newly signed leases include one with Raising Cane’s Chicken Fingers. The Macy’s there also opened an off-price Backstage store.

A new Backstage also opened at Southdale Center in Edina. The Ridgedale Center in Minnetonka gained an Urban Outfitters chain. The Williams-Sonoma brand Rejuvenation will open in the former Restoration Hardware space at the Galleria this summer.

Late last month, Moody’s Investor Service changed its outlook for the U.S. retail and apparel industry from “stable” to “positive.”

“As pandemic pressures ease and the cadence of vaccinations accelerates, we expect the retail sector to experience broad-based improvement,” said Mickey Chadha, Moody’s vice president and senior credit officer, in a statement.

Moody’s expects that a stronger economic environment and pent-up demand will fuel retail growth with sales growth predicted to be led by the sectors hit hardest during the pandemic, including apparel, department stores and off-price retailers.

Despite recent positive news, shopping centers in Minnesota, similar to those across the country, still face a multitude of challenges as they push to recover losses they suffered during the pandemic. Some national retailers are shrinking their physical footprint and closing stores at different locations.

For example, the Disney Store at the Mall of America will close this month following Disney’s exit from the Ridgedale Center.

In recent months, the Mall of America has sued several tenants including jewelry chain Alex and Ani, footwear store the Walking Co. and restaurant Villa Fresh Italian Kitchen for overdue rent the mall has said it is owed.

MOA has had its own specific issues tied to its owner. Triple Five Group had first started missing mortgage payments last spring after the mall had to close temporarily because of the pandemic. Triple Five was able to have the terms modified for the mall’s $1.4 billion mortgage and brought the loan current at the end of last year.

However, earlier this year, reports surfaced that JPMorgan Chase, Goldman Sachs and other investors will wind up with nearly half of the ownership of the Mall of America due to a deal to restructure Triple Five’s debt after setbacks with the group’s American Dream project in New Jersey. The Mall of America and its West Edmonton Mall in Canada were used as collateral to secure the loan to build the American Dream.

Triple Five executives told Bloomington officials during a recent City Council meeting that a deal was being structured so the company would retain 51% ownership stake, while the lenders would get 49%, meaning just under half of MOA’s profits would go to the minority stakeholders. A Triple Five executive said the deal wouldn’t affect the mall’s operations.

Last week, mall management said its staff will still be required to wear masks as will members of the public who visit the Nickelodeon Universe amusement park, but other shoppers in its common areas would only be “strongly encouraged to wear masks” while following the rules of individual stores and restaurants.

Includes reporting by staff writer Jeff Meitrodt.

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