Industry Watch

Stuart Ackerberg

New office developments boost business in Uptown

Growth in the area brings more during-hours bustle for the after-hours neighborhood

By Dan Emerson
08-21-2014

Stroll around the Uptown neighborhood of Minneapolis on a Friday evening or Saturday afternoon and you’ll find it teeming with activity. Bars, cafes, and restaurants are packed, and shoppers stream into national retailers such as H&M, Apple, and Urban Outfitters. 
 
Explore the neighborhood on a Tuesday afternoon, however, and the description “bustling” might come less readily to mind. You could even wonder how some shops stay in business. In recent years, the neighborhood has become increasingly defined by dining and entertainment, pushing up rents and forcing out many local shops that need more than after-hours customers to thrive. 
 
“They just couldn’t generate enough sales in that compressed ‘window,’” says Stuart Ackerberg, CEO of Minneapolis-based real estate company The Ackerberg Group. He cites as an example the now-closed Morris and Christie grocery store, a fixture in the neighborhood for decades. “Others have been prepared to pay the higher rents, so we saw a lot of traditional retailers go away.”
 
For many of Uptown’s merchants and local business groups, anemic daytime retail traffic on weekdays has become a pressing concern. The good news is that recent and upcoming office developments should help alleviate the problem and, in the process, boost business opportunities.
 
Developer Ackerberg is playing a key role in those developments. His MoZaic East, an office building slated to open in early 2016 on a lot behind the Lagoon Theater, will add at least 600 office workers to the neighborhood. It will also include 15,000 square feet of restaurant/retail space, plus 20,000 square feet of underground parking.
 
It’s been reported elsewhere that Code42, a rapidly growing Minneapolis-based software firm, might lease most of the building’s 175,000 square feet of office space. For this article, that’s been neither confirmed nor denied.
 
Meanwhile, Ackerberg’s adjacent MoZaic building opened a few years ago with 65,000 square feet of office space and is already 100 percent leased. Its tenants include creative agency mono, retail marketing firm JohnRyan Performance, and Keller Williams Realty.
 
One retailer eager to welcome more office workers to the neighborhood is Flooring Expo. A local chain owned by Minneapolis-based Carpet King, it opened its first Uptown store last January at the high-profile corner of 28th St. and Hennepin Ave. 
 
According to former showroom manager Jon Pearson, the addition of MoZaic East “should increase foot traffic substantially — that’s what we rely on.” He’s been known to walk around the area to “meet and greet people, let them know we’re here, and asking them to come visit us when they have a chance.”
 
Jim McComb, president of retail consulting firm McComb Group, believes additional apartments being built in the area will also support more retail. But the challenge, he adds, is “finding locations to put additional retail.” 
 
“There is little or no ground-floor retail space available in Uptown,” Ackerberg notes, “and there are not a lot of development parcels to create more.” 
 
Larry Frattallone found a choice spot at 2737 Hennepin Ave., once home to an auto parts store. He opened his Frattallone’s Ace Hardware store there a few years ago. The availability of a parking lot next to the store — not easy to find in Uptown —  was also a major draw. 
 
The area, he notes, includes “a lot of transients [renters] and high-buck people. We would put several more stores in that area if we could find the right locations.”
 
Jeffrey Herman, president of Urban Anthology, a Minneapolis-based retail brokerage and development firm, points out that along with potential customers who work in or near a given commercial area, there is also a “trickle-down effect” in the form of other workers who come into an area to attend business meetings.
 
People who work in Uptown, he says, “will always have some shopping needs that national retailers will not be able to meet [that] local retailers can, whether stationary, groceries, outdoor clothing, postal services, and other things provided by independent businesses.”
 
Herman believes Uptown is the “edgiest” retail area in town. To succeed there, retailers “need to be confident in their niche,” he says. “They have to be creative and unique, and add a level of excitement and curiosity.” He cites as examples the Goorin Bros. hat shop, Dogwood Coffee, and Paper Source
 
Ackerberg says he might add even more office space to the neighborhood. When he recently purchased Calhoun Square, he also acquired an adjacent 1.9-acre vacant lot at 1301 Lake St. “Our desire is to figure out some additional daytime use for that property, and we will likely focus on office use.” 
 
He notes that adding more office workers to the area during the daytime can have the effect of expanding the “selling period” of the typical retailer from 4 or 5 p.m. to 9 p.m., to 11 a.m. to 9 p.m. 
 
“We could have a profound effect,” he says, “on their viability and success.”

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