I, Thomas Paulson, had the privilege of growing up in Southwest Minneapolis and still live close by which makes America’s first indoor shopping mall--the Southdale Mall in Edina, Minnesota the place where I grew up as a mall rat and a place that I know well. It was imagined and crafted as a shopping destination that would rival downtown Minneapolis--the central shopping district/gifting destination for the region prior to indoor malls. (Indoor malls being a popular alternative in Minnesota during the winter.) As a kid, the mall’s three anchor stores were Dayton's, Donaldson’s, and JCPenney and the mall was vibrant as it enjoyed many visitors from affluent Edina and West Bloomington. My favorite venues at the mall were the magic store (I was an amateur magician at the time), the B. Dalton Bookstore, the game arcade, and the pet store that had a parrot outside that cursed like a sailor. (I had nothing to do with influencing that.) The image below is representative of Southdale in the 70s and 80s, except that there were a lot of teenagers – that’s where you met kids (girls) from different schools.
Despite being in a very affluent area, the Southdale Mall began to lose its draw in the 90s as the Mall of America (MOA) opened in 1992. The MOA offered a far larger selection of retail, dining, and movies, along with ample parking. (I would also guess more girls as well, but I was off to college by then.) Moreover, it was only 5.6 miles from Southdale which for a day’s outing was only a small inconvenience. A pinnacle Life Time Fitness location opening in the JCPenney slot in December 2019 (timing, right?). As this is my fitness club, I can attest to it being very packed despite a $200 per month per member price. Aside from the Life Time, the rest of Southdale weathered the pandemic less well.
Southdale’s owners have unveiled big plans for the mall. As mentioned, Southdale is in an affluent area and one can see that in the Captured Market using Placer for the neighboring Galleria Edina where 19% of the visitors have a household income above $200K and which houses a Louis Vuitton and a Tiffany store. The WSJ and local paper The Star & Tribune wrote about the $400M upgrade plans which include shops from Tory Burch, Gucci, Moncler, Burberry, and Rolex, thus forming a “luxury wing.” (To our eyes, this looks like one of our durable retail themes from 2022 of European luxury brands turning their sites onto the U.S. consumer as a way of de-risking their business from outsized exposure to China.) Interestingly, five new retail spaces will added to connect to the mall, but also with exterior entrances that open onto a covered walkway with valet parking.
Within the trade area are a hotel, medical offices, an RH pinnacle store, and a Shack Shack, which ranks highly compared to nationwide and state peers. Of note, the Southdale Macy’s location will continue per the WSJ as part of the Macy’s 350 go-forward store locations, despite it being a lower-performing store as part of the chain. When Macy’s acquired Dayton’s, it had been rebranded Marshall Fields. Also, recall that Dayton’s started Target and the Southdale Target, a couple of blocks away, is ranked #34 in the nation per Placer. The original anchor location of the Donaldson’s department store will be rebuilt as a Kowalski’s Market – a local high-end grocer to open in the spring. (I can attest that their merchandise and fresh selection are excellent.) And so in terms of Southdale’s original department store anchors, Dayton’s became Macy’s and that will remain, but will be upgraded along the lines of our Macy’s story. Donaldson’s space will become a higher-end grocer and JCPenney will become a fitness and workplace center. To our eyes, this looks like the general transformation of retail-center real estate across the U.S. and seems like a promising turn to the future. I also hope they add a magic store; the salty talking parrot – may he RIP.
