Why did Minneapolis close Nicollet Avenue for a Kmart?

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The intersection of Nicollet Avenue at Lake Street was once a lively commercial strip packed with small retailers. But the city blocked Nicollet's path in the 1970s — obliterating entire blocks of buildings in the process.

Nicollet yielded to a sea of asphalt and a drab, concrete storefront punctuated by a giant, red "K" above its entrance: the Lake Street Kmart. Yes, that Kmart.

The city recently demolished the store and has plans to reopen the street. But reader Larry Merwin has long wondered what compelled the city to close one of its iconic main streets for a discount store. He reached out to Curious Minnesota, the Star Tribune's reader-powered reporting project.

"Why did it have to be Nicollet and Lake?" he asked. "If you'd have moved a block one way or the other, you'd have left a major intersection open."

Merwin said his mother used to talk about riding the trolley in the days before bus service in Minneapolis. "Historically, Nicollet was an important thoroughfare, with two trolley lines."

In fact, the city had a conundrum on its hands years before Kmart arrived.

Minneapolis leaders were eager to attract business to Lake Street after years of its decline. But their overly optimistic plans for new development spanning eight square blocks at Nicollet fell apart amid poor planning and a sagging economy. At that point, they had already bulldozed much of the land.

When Kmart offered a take-it-or-leave-it plan that included closing Nicollet, city leaders had few options, said Lou DeMars, who was Minneapolis City Council president from 1974 to 1980.

"We weren't doing it laughing," DeMars, 87, said in an interview this spring. "I can tell you that it was painful."

An ailing strip

In 1972, Lake Street was hurting. Minneapolis had lost 87,000 residents between 1950 and 1970 as people left for the suburbs and took their tax dollars with them.

"At that time, cities like Minneapolis didn't know what to do," DeMars said. City leaders were "trying to figure out, 'What might work? Because the inner city [areas] were going downhill."

Lake Street wasn't dead; it was still the metro's sixth-largest retail area. But the street's dense landscape belied the growing blight. A 1972 survey found 78 empty buildings along a 2-mile stretch, the Minneapolis Star reported.

"It is a jumble of used car lots, vacant buildings, struggling businesses and peeling signs," the Minnesota Tenants Union newspaper wrote.

In 1967, Minneapolis landed a grant from the federal Model Cities program, which targeted areas for improvement but encouraged involving the community in planning.

The city established a "Model Neighborhood" district in south Minneapolis, roughly bounded by Interstate 94, Lyndale Avenue, 36th Street and Hiawatha Avenue. As city leaders considered how to proceed, they hired Richard Nelson, a Chicago consultant, to examine the district's business climate.

At a 1969 meeting of local merchants, Nelson called the area viable but said its businesses were obsolete and too spread out — especially given that many of the district's residents traveled by bus or on foot. He recommended clustering businesses around a few key intersections, including Nicollet and Lake.

Nelson was asked if a major mall such as Edina's Southdale could be built in the neighborhood to attract shoppers who would otherwise go to the suburbs, according to the Minneapolis Tribune.

"I don't think there's a chance in the world you could get one," Nelson replied, cautioning against "going all out" in trying to build a shopping center to compete with downtown and suburban malls. "Your first order of business is to get the business that's already here."

A vision for Nicollet-Lake

But when the city submitted a plan in October 1972, its centerpiece was a 200,000-square-foot shopping center to be built west of Nicollet with the second story spanning Lake Street. It also included a 970-car parking ramp and about 600 new apartments.

The plan required purchasing land, relocating businesses and clearing lots. To pay for it, the city turned to tax-increment financing (TIF), a common tool today but novel in the 1970s: The Nicollet-Lake plan and a sister project to revitalize Loring Park were the first in Minneapolis to use TIF.

Under the practice, a city takes on debt to pay for development and essentially gambles on a project's success by committing projected future property tax revenue toward repayment. The city estimated it would need to sell $7.4 million in bonds by 1976.

Immediately, a neighborhood group protested the city's plans for "a little Southdale" at Nicollet and Lake. The group criticized the city for not giving residents and small businesses more of a voice in the planning.

Searching for tenants

By 1975, despite any solid commitments from business tenants, the city had cleared most of the land and hired a group of developers. Plans were even expanded to include a proposed entertainment complex with a 48-lane bowling alley, four-screen cinema, cafe, health club and shops.

Yet, no construction had begun because the project lacked an anchor tenant. The city gave the developers multiple deadlines to find one, and it threatened to take back control if work didn't begin by summer.

In the wake of the oil crisis and Vietnam War, a recession added extra economic pressure.

The developers argued they were being cast as scapegoats, the Star reported. They noted that a discount chain, Zayre Shoppers City, had wanted to build at the site. The city rejected the proposal, not wanting to bring competition to a SuperValu grocery store two blocks away.

DeMars defended the city's land acquisitions in a 1975 Tribune interview, saying developers wanted a demonstration of the city's commitment before making their own.

But the city would soon have to start paying off nearly $2 million in bonds, with no new tax money coming in. The project that was supposed to pay for itself threatened to pull Minneapolis deeper into debt. To make the payments, the city needed to take millions from its general fund, passing the cost on to taxpayers.

The blue-light savior?

In March 1976, the project got a lifeline. Kmart wanted to build at Nicollet and Lake.

But there was a catch: Kmart insisted the store be built straddling Nicollet, forcing the street to close between Lake and 29th Street.

"We said, 'We can't close Nicollet,'" DeMars said in the recent interview. "Well, then [Kmart] would take a walk."

The city had a decision to make: Close a major street or continue to bleed money waiting for a new tenant.

Neighbors protested the plan to divert traffic onto the more residential Blaisdell and 1st avenues, and the city would need to spend more to buy and clear additional land. Some on the City Council questioned whether accommodating Kmart was worth the benefit, the Tribune reported.

But in May 1976, the council approved the plan. Nicollet Avenue would close.

Alderman Keith Ford, who represented the district, said he was "very pleased" with Kmart's arrival. He scolded his colleagues for regarding the store as a second choice.

"I have 34,000 people in my ward who won't have to drive to the suburbs," Ford told the Tribune after the decision.

Nicollet closed to traffic on July 1, 1977, and the new Kmart opened its doors the following March. The nearby SuperValu moved in next door.

Where Nicollet terminated behind the store, residents saw only a beige slab, which they nicknamed the "Berlin Wall." (Kmart later offered $3,000 toward a mural.)

Kmart's end, and a new beginning

Looking back, DeMars admits the city could have better planned for the project, which ended up costing the city and its taxpayers nearly $17 million by 1984.

"Maybe we wouldn't have done it then; maybe we would have done it later," he said. "Maybe we wouldn't have done Loring Park and Nicollet-Lake at the same time. We would have staged them differently."

While the city failed to fulfill its vision for Nicollet-Lake, the neighborhood welcomed Kmart. As recently as 2017, the Lake Street store was described as the most successful Kmart in the country.

"The concept was right," Rita Fassbinder, director of the Greater Lake Street Area Council, told the Star Tribune in 1988, when the district's last parcel was finally developed. "Kmart does a good business down there, and they're providing a service."

In 1997, 17 blocks of Nicollet north of the Kmart site were rebranded as "Eat Street," with diverse restaurants drawing visitors to the neighborhood. It might have been a tougher sell if the street had remained intact and full of traffic, DeMars said.

"In my mind, the redevelopment, the whole restaurant area, wouldn't have happened if it had been a through street," he said.

By the new millennium, Minneapolis officials came to see Nicollet's closure as a mistake. There were growing calls to restore it.

Kmart had a lease through 2053 and did not want to move. But when the parent company went bankrupt in 2018, the city bought the site and paid $9.1 million to end the lease. The store closed during the riots after George Floyd's murder in 2020 and never reopened. It was the last Kmart in Minnesota.

The building was demolished in 2023. In May, the City Council approved a new plan for the site. The main goal? Restoring Nicollet.

Adelie Bergström is a multiplatform editor for the Star Tribune.

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