Twin Cities shopping centers need more than stores

A shopping center owner's plan to build a hot dog restaurant in Maple Grove was about as sensible as such plans get.

It wouldn't have been just any hot dog stand, but a 9,000-square-foot Portillo's gourmet hot dog restaurant out of Chicago. And a thriving Portillo's restaurant — trust me, hot dogs and Italian beef sandwiches as good as Portillo's would sell there — is a sure bet to help attract more consumers, the blessed traffic retailers so sorely need. Brick-and-mortar retailing is fast hurtling toward a crisis, and any Portillo's customers coming to the Shoppes at Arbor Lakes center would certainly be welcome.

But by now you can probably guess that Maple Grove's City Council members voted down this proposal to generate desperately needed consumer traffic — for the reason that it would generate too much traffic. The city has a two-step process so a second vote is coming up this week, but there's no good reason to expect a reversal.

Here's a city that doesn't seem to get how much the retailing industry is changing. If city councils like Maple Grove's aren't prepared to see these retailing spaces get turned into something else then they should expect to see a lot more empty space.

The Shoppes at Arbor Lakes is far from zombie status. It's a top-tier property, lying adjacent to busy freeways in a leafy and upscale suburb northwest of Minneapolis. Built about 14 years ago, it's often called Minnesota's first lifestyle center, combining some of the features of big malls with a walkable, Main Street-style lineup of shops.

It's owned by an affiliate of Prudential Financial, and like other good real estate owners it didn't just collect the rent and occasionally resurface the parking lot. It constantly tweaked the property to remain competitive. And lately that's become a lot harder.

If the name Shoppes at Arbor Lakes has made the newspaper recently, it's probably because another tenant went out of business, like the clothing retailer Wet Seal. The occupancy of the center is around 87 percent, said Michael Landstad of CBRE, the center's manager. Given retailing's challenges, the center's performance could be a lot worse.

When the center did a parking study last fall as part of the application for the new Portillo's, there were two vacant storefronts in the building next to the parking lot where the Portillo's was going to go. When the city staff went back in February to do its own count, there were four vacant storefronts.

"Really very disappointed that you cannot keep top stores that make the trip there worth it," a shopper wrote on the center's Facebook page last month. "Anthropologie gone and now went to get something from J. Crew and found it gone as well. Were it not for the Pottery Barn and Williams-Sonoma stores I would likely not bother and just head to Ridgedale."

Losing tenants is not a problem unique to Maple Grove, of course. More retailers will go bankrupt this year and more stores will close than in the worst year of the Great Recession. Part of the explanation for the unfolding crisis in traditional retailing is a continuing shift to purchasing online, but consumers also aren't as enthusiastic about buying more stuff as they used to be.

Over much of the past 25 years, the trend lines in retail sales and restaurant sales growth basically paralleled each other, but since the last recession restaurant sales have been growing faster. So some of what consumers used to spend on clothing and other stuff is now getting spent on more beer, salads and hot dogs.

"Nowadays, with the demise of traditional anchor retailers for the shopping centers, restaurants are becoming our anchors," said Landstad, the Shoppes at Arbor Lakes general manager. "Something of the magnitude of Portillo's, a Chicago institution, would definitely bring a lot of eyes onto the center … and hopefully bring in a lot of additional business throughout the center, and hopefully new businesses to the center as well."

Portillo's picked Maple Grove for its second Twin Cities location (a Woodbury site is set to open this summer) over other good sites, Landstad said. The center found a way to accommodate Portillo's, too, by plopping the restaurant into what the planning documents called Lot B.

The center's parking consultant found 16 cars parked there at the peak of demand on a weekday and 35 on a typical Saturday — in a lot that has 256 parking stalls. Maybe it's just a coincidence that the aerial photographs used in the zoning application seemed to show no more than a handful of cars on the proposed site of the restaurant.

The developer managed to answer questions about parking but never got the city comfortable about car traffic. Portillo's explained it could "stack" about three dozen cars in its drive-through lanes and if those all filled it could direct additional drivers to line up in the lot and still not block any traffic, allowing the line to reach 80 cars deep. It's really hard to imagine anyone willing to wait for a hot dog, gourmet or not, behind 80 other cars.

It's clear the council was mostly interested in second-guessing the business strategy of using restaurants as a way to attract more consumers. Two council members expressed skepticism at a recent meeting that anyone would eat at Portillo's and then walk all the way over to the stores — never mind that a best guess from the aerial map shows that a storefront couldn't be more than 100 steps away.

The good news for the nay voters on the council is that they seem likely to get a lot less of what they don't seem to want. As more stores in that part of Maple Grove inevitably close, fewer and fewer shoppers will be driving over there.

lee.schafer@startribune.com 612-673-4302