Former furniture store finds new life

Big-box stores have been among the biggest casualties of the meltdown in the commercial real estate and retail markets. Here and nationwide, large stores are sitting empty as retailers like Linens 'n Things and Circuit City tumble into bankruptcy and other chains close outlets to cut costs. With few retailers expanding, there's a dearth of large-scale tenants looking for vacant space.

That's all the more reason to note the start of a small but interesting retail redevelopment underway near the Eagan Promenade shopping center. A former Ethan Allen furniture store, closed for more than a year, is undergoing a makeover that will turn the store into a mini-mall for small retail tenants.

Stonehenge USA bought the 21,214-square-foot building last month from Connecticut-based Ethan Allen, which closed the store as part of a company-wide cutback in 2008. Stonehenge, the development arm of Wayzata-based Dale Properties, recently started work on the redevelopment and expects it to open in January.

The project plans call for demolishing the front end of the building and reducing its depth from 122 feet to 82 feet to create room for 28 new parking spaces. When finished, the building will have 14,466 square feet with new storefronts for a multi-tenant property.

Dave Carland, Stonehenge executive vice president, said about 86 percent of the space already has been leased to Verizon Wireless, Sport Clips, Smash Burger, Solos Pizza and Panda Express. "There's not a lot of small shop space in the area, so we had interest from several prospective tenants," Carland said. Eagan Promenade is fully occupied with large tenants that include Byerly's, Bed Bath and Beyond, Office Max, PetSmart, Michaels and Barnes and Noble.

The strong preleasing allowed Stonehenge to secure permanent bank financing for the $3.8 million project, Carland said. "A number [of lenders] didn't want to look at it because it was retail," he said. Bremer Bank was one of three willing to finance the project at terms that worked, he said.

The Eagan project is among the first for Stonehenge, formed in 2006 by Dale Properties, whose focus has been land investment. Dale's total holdings amount to more than 1,200 acres in the Twin Cities, including a 450-acre site along Interstate 94 in Woodbury where Stonehenge hopes to develop a mixed-use project.

Carland is a veteran on the local commercial real estate scene. He spent 26 years at Minneapolis-based CSM Corp. helping oversee projects that included the Milwaukee Road Depot restoration in Minneapolis, Westridge Marketplace Shopping Center in Minnetonka and the Waters Business Park in Eagan.