MSP Airport's attempt to find new tenants gets cool reception
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Photo: Kyle Stokes/Axios Twin Cities
Restaurant operators and retailers balked at the high asking rents and long lease terms that MSP Airport wanted as part of a large search for new tenants.
Why it matters: MSP's reputation as the top U.S. airport is based partly on its dining and shopping options. The lack of vendor interest shows that it may be asking too much from businesses seeking access to the airport's 36 million annual travelers.
State of play: The airport has been working on a major overhaul of its commercial spaces this year. Staff informed the Metropolitan Airports Commission (MAC) that it found vendors for less than half of the available space.
By the numbers: In May, the MAC issued a request for proposals for about 40% of the restaurant and retail spaces in both terminals — 80,000 square feet in total.
- All of those spaces were bundled into 10 batches. Nobody responded to four of the batches and staff chose not to award deals to a group that was the only respondent on two others.
- Concessions brings in big bucks for the airport — it reported $250 million in revenue from rent collections last year.
The intrigue: The airport had a long list of demands for businesses, including that they sign 10-year leases and pay a cut of their gross revenue in rent — 10% for food, 12% for retail and 15% for alcohol.
- They must pay their own taxes, utilities and maintenance, agree to caps on how much they can charge customers and pay employees the airport's minimum wage, which will reach $17 an hour next year.
What they're saying: At a committee meeting this week, commissioner Richard Forschler said the MAC may have "missed the ball" on the current economic conditions for businesses.
- "Everybody who's doing business here is seeing increased costs for food and materials, increased costs for labor, increased costs for construction," he said.
What we're watching: Because of the pushback over high rent, the full commission is scheduled to vote on Nov. 16 to authorize staff to negotiate directly with interested tenants, with flexibility on rent and lease terms.
Kim Bartmann was one of 300 interested parties who attended the MAC's June informational meeting because she considered pitching her Uptown restaurant Barbette for the airport.
- She didn't bid, but told Axios that she would be interested if the MAC is open to direct negotiations and some rent concessions.