Galleria Edina, the fanciest mall in the Twin Cities, is sold to local investors for $150 million

Two years after first hitting the market, the poshest mall in the Twin Cities has a new owner.

The Galleria Edina, a 398,585-square-foot luxury shopping destination, was bought by a group of local investors that calls itself 70th Street Properties LLC.

The sale closed on Thursday for $150 million, according to a document filed Monday by the Department of Revenue. Houston-based Hines, a leading national property company, paid $127 million for the 20-acre property in 2012.

Hines initially tried to sell the mall in early 2020 just before the pandemic upended much of life, leading to the closing of stores and restaurants and gutting demand for commercial properties.

At the time, Hines said it planned sell all or most of its assets.

The mall was marketed and ultimately sold by the Chicago office of commercial real estate firm Jones Lang LaSalle (JLL).

JLL said the Galleria is 99% leased, making it an outlier among regional malls that have struggled to attract and retain tenants through the pandemic and an uncertain future for retail.

The Galleria has experienced strong leasing momentum since the first quarter of 2020, signing deals that account for more than 170,000 square feet of space, JLL said.

"Galleria Edina is one of the premier retail assets in the Midwest and has an expansive trade area as a result of being the sole location for many of the tenants in the Midwest region," said Danny Finkle, a co-head of JLL's U.S. retail business, in a statement. "This is the essence of a generational asset within a remarkable market with unlimited growth opportunities ahead."

A representative for Hines said that the company will continue to manage the mall for its new owners.

Dick Grones of Twin Cities-based Cambridge Commercial Realty said that given the mall's high occupancy and top-shelf tenants, he's not surprised the mall found a buyer when so many others haven't. Upscale retailers, he said, have few options if they want a location in the Twin Cities.

"It's a who's-who of [retail] names when you walk through that mall," he said. "It's a mall that's out there on its own."

For shoppers, it's the exclusivity of its tenants that sets the Galleria apart, Grones said, noting that while retail and other commercial sectors have suffered through the pandemic, many high-end shopping destinations including the Galleria have fared better than others.

"High-end retail has suffered but not as much as the mid-range retailers," he said. "Wealthy people have just gotten wealthy."

The pandemic aside, brick-and-mortar retailers in the Twin Cities have been forced to evolve over the years. That includes the Galleria, which was once dominated by high-end furniture stores including Crate & Barrel, Design Within Reach and Gabberts, which vacated the mall in 2020.

Today, the Galleria is dominated by high-end specialty retailers that can't be found anywhere else in the region, including Louis Vuitton and Tiffany & Co.

"You can still get the biggest diamonds and the nicest meals at the Galleria," Grones said. "They've done a good job of setting themselves apart from general retail."

As retailers move online and filling retail space gets more difficult, the Galleria and other malls have also explored other ways to increase their revenues and the value of their property.

That includes selling outlots for restaurants and converting parking lots into apartments and for-sale condominiums that create a kind of town center experience.

A Westin hotel and high-end condos have been built at the Galleria. The former space for Gabbert's, the retailer that started the mall in 1974 and left in 2019, may someday become the site for housing or another hotel.

"Gabberts left a big physical space behind," said Grones. "Malls are exploring all kinds of different alternatives."