Filling Herberger’s spaces might be easier in Twin Cities 

What to do with hundreds of thousands of square feet left empty by the demise of Herberger’s?

The closure of just the six department stores in the Twin Cities area could dump a little more than 677,000 square feet of space, according to CoStar data, onto a market already dealing with retail closures. The closures would come with the pending liquidation sale of Herberger’s and Younkers’ parent company, Bon-Ton Stores Inc.

York, Pennsylvania-based Bon-Ton confirmed in a press release Wednesday morning that a group of investors had purchased the company and planned to liquidate it. A hearing in U.S. Bankruptcy Court was scheduled for Wednesday to “approve the sale and wind-down of the Company’s operations,” Bon-Ton said.

The company’s store brands — Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Younkers and Herberger’s – will hold store-closing sales, the release said. Bon-Ton operates 260 stores in 24 states, and Minnesota is home to 18 Herberger’s and two Younkers stores.

What will become of the stores will depend on their location, said Jen Helm, a managing director specializing in retail real estate with the Twin Cities office of Newmark Knight Frank.

“Metro-wide, landlords should be OK. Those are good sites,” she said of the Twin Cities locations. “I think the outstate is going to be challenging.”

Bon-Ton filed for Chapter 11 protection in February in an attempt to restructure the business. The sale of the company’s assets came out of an auction. Bon-Ton did not disclose the selling price.

Herberger’s local stores are in Roseville, Edina, Blaine, Stillwater, Bloomington and St. Paul. The company recently closed a 27,000-square-foot clearance center at Birch Run Station in Maplewood. Herberger’s was founded in St. Cloud in the late 1920s.

The Herberger’s space would come open in a retail market that had an 8.3 percent vacancy rate at the end of 2017, according to Cushman & Wakefield’s Compass Report.

Bon-Ton did not reply to a request for more information about the liquidation and store closings.

The news of the closings comes just months after Bon-Ton sold its recently remodeled Roseville store to the Rosedale mall’s owner, PPF RTL Rosedale Shopping Center LLC, for $18.9 million in cash. The deal was completed in September just as Herberger’s finished the renovation, Finance & Commerce reported.

The Roseville store upgrade was part of a $100 million-plus overhaul of the 1.1 million-square-foot mall that began in late 2016. The work includes construction of a 140,000-square-foot anchor department store for Von Maur of Davenport, Iowa.

Regional malls have already seen other anchor stores close — including J.C. Penney and Sears — and have found ways to backfill or redevelop that empty space, Helm said. Chanhassen-based Life Time Fitness is razing a former J.C. Penney at Southdale Center and replacing it with a health club, retail space and co-working office space. The Southdale Herberger’s store is near the center’s restaurant spaces and should be relatively easy to fill, Helm said.

But at least one metro location may struggle. Herberger’s Midway store in St. Paul will likely have to be redeveloped for some other use, Helm said. She said retail demand probably won’t be enough to support a retailer of a similar size in the building, even when Minnesota United FC’s new soccer stadium next door is finished.

Bon-Ton CEO Bill Tracy said in the release that the company “tried very hard to identify bidders interested in operating the business as a going concern.”

Bon-Ton said it would release more details about the liquidation plans and going-out of-business sales at its stores after the court’s approval of the winning auction bid.

Herberger’s Twin Cities locations are:

• 301 Northtown Drive NE, Blaine, 130,722 square feet.
• 1675 W. Highway 36, Roseville, 150,000 square feet at Roseville Center.
• 1400 University Ave. W., St. Paul, 125,000 square feet at Midway Marketplace.
• 300 Southdale Center, Edina, 45,000 square feet at the Southdale regional mall
• 7831 Southtown Center, Bloomington, 131,124 square feet at the Southtown Center mall.
• 2001 Washington Ave., Stillwater, 95,400 square feet in a stand-alone store.

Herberger’s also has stores in Moorhead, Fergus Falls, Bemidji, St. Cloud, Virginia, Alexandria, Willmar, New Ulm, Mankato, Rochester, and Albert Lea, according to its website. The Minnesota Younkers stores are in Duluth and Austin.