April 1, 2019, Monday - Chameleon Shoppes open at Gaviidae Common

A proposal to repurpose empty space in office buildings in downtown Minneapolis into pop-up retail stores could get its first test drive during April's Final Four.

An initiative called Chameleon Consortium created by a Minneapolis Downtown Council official has begun soliciting small businesses, sponsors, building owners and managers for the pilot.

The monthlong test run would begin in April with a grand opening likely during the weekend of the NCAA Final Four men's basketball tournament, said Dan Collison, the Minneapolis Downtown Council's director of downtown partnerships.

Plans call for at least 20 primarily minority-led small businesses to set up shops separately or together in spots ranging from 1,500 square feet to 5,700 square feet of vacant retail space.

"I just feel like there are wonderful entrepreneurs … that will benefit from this, and we just need to find each other," Collison said.

He argued that the retail pop-up, which is being called Chameleon Shoppes, would allow small businesses owned by people of color, women and other minorities to test the downtown Minneapolis retail market in a less-risky way than securing a typical long-term lease. The initiative would also help landowners sitting on vacant retail space to add vibrancy with an active store, he said.

Stakeholders started discussing the pop-up program in March. The group created branding and marketing for the initiative using a $20,000 grant from the city of Minneapolis. Numerous professionals and consultants have volunteered their time to the project, Collison said.

The McKnight Foundation funded researchers at the University of Minnesota's Carlson School of Management to complete two studies on the program's potential.

According to the final study presented last week, retail vacancy in downtown Minneapolis has ranged from 10 to 20 percent in the past five years, with changes largely due to closures of big-box retailers such as Macy's, Barnes & Noble, Office Depot and others. Ground-floor and basement retail space has higher vacancies than the skyway level.

At the busy City Center complex, which is home to a two-level Saks Off 5th store, nearly 40,000 square feet of retail space is empty, an overall retail vacancy rate of about 16 percent. The building's former Sports Authority store that occupied the corner of 7th Street and Nicollet Mall served as the volunteer offices for the 2018 Super Bowl early this year.

Last month, City Center opened its North Local Market, a retail pop-up of about 40 small businesses in the Sports Authority space. The market is similar to an earlier local pop-up that City Center hosted during the days leading up to the Super Bowl. Products range from handmade blankets and macaroons to furniture constructed out of reclaimed wood.

"It's an amenity," said Jim Durda, general manager for City Center who works for Ryan Cos. "It's good for our tenants. It's good for downtown."

The local vendors put $150 to $400 down and pay up to 17 percent of their gross receipts to lease the space.

"We are not going to break even on this space, and that's OK because it's supposed to activate the space, and it gives these local brands a chance to show off their products," Durda said.

Retail is a small component of an office building's revenue, so many owners tend to hold out for tenants like a large national chain that can afford a higher lease rate.

For the pilot, the Minneapolis Downtown Council would secure the lease and receive a percentage of the gross receipts businesses generate. A fee would be charged for a consignment setup. Chameleon Consortium is in negotiations with Impact Hub MSP to staff, operate and coach businesses participating in the pilot. Collison said he is approaching City Center, Gaviidae Common and IDS Center as possible locations for the pop-up pilot.

Eventually, the Chameleon Consortium is envisioned to be a full-fledged pop-up incubator with employees who can help foster pop-ups throughout the year.

While there haven't been set locations yet, the Downtown Improvement District (DID) has space in Gaviidae that the program could likely use, and there have been talks about using an empty hair salon in the complex for a temporary shop staffed by barbers from north Minneapolis, Collison said.

Another potential avenue is the city's new public-services building under construction near City Hall. Chameleon is a finalist for a vending contract to provide concessions made by minority-owned vendors, Collison said. A city spokesman wouldn't confirm details, saying the city doesn't disclose who has submitted proposals until a contract is awarded.