With owner’s residential vision paused, St. Paul’s vacant Sears draws fresh looks — even reality TV

Frederick Melo, Pioneer Press
6 min read
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After 32 years as a criminal fraud investigator with the Minnesota Department of Labor and Industry, Ricky Johnson retired six years ago with a vision of organizing reality show contests. Think competitive country music, gospel and rap battles. Now add culinary cook-offs organized by theme, such as Italian food.

Now imagine all of it at the old St. Paul Sears site.

Johnson, 66, has been shopping around a grand vision to turn the site of the vacant Sears building off Rice Street into a reality TV entertainment complex. The venue could serve as an incubator of sorts for talent looking to connect with local restaurants and music venues, and as a testing ground for national reality shows.

Johnson, an entrepreneur from Cottage Grove, is imagining two “American Idol” and “Hell’s Kitchen” style face-offs being filmed at once before a live audience that could sway to the music in one studio and then cross the floor to sample the food at another.

How much of the sprawling Sears site would his vision require?

“All of it,” said Johnson, the chief executive officer of the fledgling Brix Entertainment. “Every single bit of it.”

If his grand plan strikes some as wishful thinking, he acknowledges that for a new developer, he isn’t thinking small. “I’ve never done this before,” he said.

Whether property owner Seritage Growth Properties and the state of Minnesota would chance the fate of the sprawling Sears complex to a first-time developer remains to be seen, but Johnson’s vision indicates that interest in the building remains high in some corners, even as official plans for a new urban village at the site have been put on pause since March.

The planning delays have been multi-faceted, with Seritage officials pointing to the city’s new rent control restrictions as cause for concern. The company, however, has undergone unrelated internal changes impacting its tax status, placed some 40 properties on the market to pay off a major loan from Berkshire Hathaway by a July 2023 deadline and otherwise reshaped its portfolio.

OFFICIAL PLANS ON HOLD

Zoning and planning within the 60-block area surrounding the Minnesota State Capitol building is overseen by a 12-member Capitol Area Architectural and Planning Board, which is chaired by the lieutenant governor. Four members are appointed by the governor, three by the mayor of St. Paul, two members by the president of the state Senate, and two by the speaker of the House.

In early 2021, Seritage — a publicly traded Sears spin-off that manages vacant Sears sites across the country — unveiled plans for a mostly residential, five- to seven-story redevelopment of the Sears store mall that sits between Rice and Marion streets.

The vision drew praise at the time from the CAAPB board and other officials worried that a more office-oriented redevelopment would compete with downtown properties, many of which had struggled to retain retail and office tenants even before the pandemic thrust employers into the brave new world of remote work.

The board, however, has not received any new information from Seritage about its redevelopment plans beyond what was relayed more than a year ago, other than a general commitment to stay the course and eventually re-engage in community outreach.

“Since that time, Seritage has reiterated periodically to CAAPB staff that they remain committed to the urban village vision that they previously developed in collaboration with the CAAPB, the city and community,” said Merritt Clapp-Smith, executive secretary for the board, in a recent email.

The CAAPB board has dedicated a state webpage to the planning process at mn.gov/caapb/zoning/sears-site. The last major update was Aug. 24, when principal planner Peter Musty explained in writing that Seritage, which had been a real estate investment trust, had converted into a C corporation, a significant internal change.

C Corporations are taxed separately from their owners, which opens up the possibility of double taxation if corporate income is distributed to businessowners as dividends, but at the same time creates more opportunity for flexibility with new developments.

FOCUSING ON REDEVELOPMENT

Meanwhile, the company drew attention in business circles for hiring a real estate to help it unload at least 38 Sears stores, an attempt to meet a major financial obligation to holding company Berkshire Hathaway by a July 2023 deadline.

“Their objective is to sell off up to 40 of their existing retail sites nationally, allowing them to focus on several larger redevelopment sites such as the site in St. Paul,” wrote Musty at the time. “They reiterated commitment to resuming development planning soon but for now remain on pause with this site in St. Paul – which as they related has to do with uncertainties in St. Paul as much as the
larger changes as a company.”

“It is clear that increasingly, as their pause extends, public information and engagement around the design of the larger vision will need to be rebooted,” he added.

Seritage leads visited the site in December for a tour, and met with CAAPB and city staff, as well as five stakeholder groups.

They pointed at the time to internal market research and community input indicating they favored a more residential focus over office development in their “urban village” mix. The city’s voter-approved rent control ordinance, which took effect in St. Paul in May, came up in discussions.

“In 2022, Seritage team activities slowed, due in part to their increasing concerns centered around the status of the city-wide rent control issue and how that might impact delivering residential choices at the Sears site,” Musty wrote. “Seritage called for a formal pause on public or private design and engagement activity as of March 2nd.”

Seritage, which formed in 2015 to help determine the fate of Sears stores as they began to shutter by the hundreds nationwide, is now wholly independent from Sears. It officially acquired the early 1960s-era St. Paul property in or around 2018. The store closed forever in January 2019.

REDRAWING THE 18-ACRE SITE

In early 2021, Seritage worked with the St. Paul office of real estate consultants Kimley-Horn and New York-based S9 Architecture to effectively cut up and redraw the 18-acres Sears site, with the ultimate goal of winning permitting approval from the CAAPB Board and a re-platting of the street grid by the city of St. Paul.

The vision, unveiled around March 2021, called for five-to-seven stories of mostly market-rate housing, presumably apartments, spanning 600 to 800 housing units in eight or nine buildings built in phases by 2030 or so.

The housing would be situated around a central public green. Retail, commercial and office uses would line the site’s eastern edges at Rice Street, extending the Rice Street business corridor along a future bus rapid transit line.

While that vision remains on pause, Seritage has begun to allow some temporary uses on the site for short-term activities or events, including police anti-riot training. The site is officially zoned for mixed use.

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