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No, the former Kmart blocking Minneapolis’ Nicollet Avenue isn’t going anywhere for a while

The city’s deal to let the U.S. Postal Service use the site for a temporary post office means the building will remain standing through at least next year, and maybe longer.

Kmart’s parent company, Transform Operating Stores LLC, agreed to terminate its lease and vacate the building, with the ailing retailer accepting a $9.1 million dollar payout to break the lease and clear out of the site.
MinnPost file photo by Tony Nelson

Culminating decades of work by Minneapolis leaders and residents, the Kmart site that obstructs traffic on Nicollet Avenue just north of Lake Street was set to be demolished in December. 

But with the city leasing the site to the U.S. Postal Service to use as a temporary facility — USPS’ Lake Street Station was burned and deemed a total loss during unrest after the Minneapolis police killing of George Floyd — that move has been delayed. 

The USPS lease was signed July 31, 2020, and lasts for up to 24 months. That means any demolition of the Kmart site will be pushed back to 2022 or early 2023, said a city spokesperson.

The tear down is a long-awaited exclamation point for efforts to unblock Nicollet Avenue that began shortly after the construction of the Kmart blocked off the street in 1977. It’s been a notorious land use nuisance for city planners and hiccup for residents ever since. 

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The oddly placed clump of retail, though, also served as a vital source of grocery and pharmacy options for nearby residents, and it was long one of the most profitable Kmarts in the nation. In the end, though, Minneapolis leaders saw the site as too much of a logistical headache and began systematically purchasing land around and under the building starting in 2015. 

The last domino — getting Kmart’s parent company, Transform Operating Stores LLC (formerly Sears Holding Corp.) to agree to terminate its lease and vacate the building — fell last summer, with the ailing retailer accepting a $9.1 million payout to break the lease and clear out of the site. 

The money for the 2017 land deal and lease termination came from a special tax district established to raise money for a 3.7-mile streetcar on Nicollet and Central avenues. The tax district gives the City Council the power to levy property taxes from five parcels along the proposed streetcar route. 

City staffers are working out timelines for plans regarding transit and business development for the reopened Nicollet Avenue, said Minneapolis spokesperson Sarah McKenzie. But the added wrinkle of the USPS lease, according to City Council documents, will not “negatively impact” city plans for Nicollet Avenue and redeveloping the site, which has yet to undergo community engagement, street design or engineering.