Downtown St. Paul will lose its only grocery store when the Lunds & Byerlys closes on March 26.

Tres Lund, chief executive officer of the Edina-based supermarket chain, said the grocery, which opened at 115 E. 10th St. in 2014, had been profitable in its first seven or eight years, but struggled during the pandemic when downtown employers, including the state of Minnesota, shifted to remote work. An increase in store security expenses and decrease in customer visits left operating costs far outpacing sales, and staffers were tough to hold onto amid incidents of shoplifting, harassment, vandalism and an arson that caused upward of $500,000 in damage in 2022.

“After the arson and the fire, I had a lot of outreach from folks who were very concerned, but they realized our resolve was to get that store reopened within four days, in record time,” said Lund, who predicted better days ahead for downtown despite its well-documented challenges. “Our capital city is going to pull through this. There are too many business leaders and city staff, and people who care so deeply about weathering this storm.”

Lund said Friday that he had met with city officials and the property owner on Wednesday to discuss preserving the space to someday accommodate another grocer.

“We are going to have our shoulder into helping the city with a grocery alternative to the degree that’s possible,” said Lund, noting the Downtown Development Corporation, a new nonprofit real estate subsidiary of the St. Paul Downtown Alliance, was also engaged “to ensure we can actively bring that to fruition.”

Lunds & Byerlys will continue to offer online delivery in the area. The grocer also operates two stores in and near downtown Minneapolis, which is also served by a Whole Foods and Trader Joe’s.History

In late 2011, a divided St. Paul City Council voted 4-3 to complete the 254-unit Penfield apartment development after a previous developer walked away during the economic downturn. The decision not only installed new luxury housing in a corner of downtown better known for small artist studios. It also drew Lunds — as the grocer was known before incorporating its Byerlys stores into its name. Its opening in 2014 was hailed as a badly needed addition to an increasingly residential downtown short on grocery options.

The city was able to sell the development in 2016 to real estate investment company Jones Lang LaSalle for a profit.

“We opened this store early in St. Paul because of the population base,” Lund said. “We were excited then about the development prospects, and certainly the Penfield project. We were profitable within that year-plus, and then for seven years. We were on a good trend, and then things began to change, most significantly the pandemic. The issue was remote work, and that was a national and international issue.”

Efforts to switch up food offerings, reduce store hours late last year and make other changes were unable to make the math work on paper.

“I am saddened by this announcement, yet grateful for the investments both Lunds & Byerlys and the building owner have made in our city,” Mayor Melvin Carter said in a statement. “We look forward to our continued partnership as we realize our vision for a thriving downtown.”

City Council Member Rebecca Noecker, who represents downtown, said there remains a need for a grocery store in the area.

“This was the downtown grocery store, and every neighborhood needs a grocery store,” Noecker said on Friday. “Even in the midst of this difficult decision, they’ve agreed to leave all of their equipment in place, and the landlord has agreed to that. All the shelving, all the coolers, all the refrigeration will still be there. My priority is going to be working with city staff to try to find another grocer who wants to come into the space, knowing all the infrastructure will be there for them.”

Plans for Grand Avenue

Lund said his company has maintained a grocery for more than 40 years in Highland Park, which shifted locations on Ford Parkway in 2022 into freshly built space within the Highland Bridge development. Though initial planning was put on hold in 2020, Lunds & Byerlys still plans a mixed-use development on Grand Avenue that would incorporate apartments above a new grocery, replacing the former home of a North Face clothing retailer and surrounding real estate around 799 Grand Ave.

“We’re still going to develop land on Grand Avenue at some point. We see that as a development opportunity,” said Lund, noting that since the 2022 arson at the downtown location, “my relationship has grown significantly with Mayor Carter as well as other business leaders, working on the framework to get through this difficult time.”

Lund said his company had worked with the St. Paul Area Chamber and the Downtown Alliance on public surveys of the Central Business District to assess perceptions of crime downtown, which have shown improvement as crime trends have softened.

Still, he said, downtown suffers because too many city, county and state employees now work remotely, even as some employers in the private sector begin to call their employees back to the office.

“Between the city, county and the state, that’s a pretty significant population,” Lund said. “There is national recognition that workforce presence is part of a bustling city. That is well within the mayor, and county and state to influence. Our capital city needs us back. Many businesses that also experienced remote work, you’re seeing a national trend to shift that back.”

Lund said the Downtown Alliance’s Downtown Investment Strategy, released last year, and the launch of the Downtown Development Corporation were bright spots, and the opening of the new Pedro Park this fall and several office-to-housing conversions in the pipeline gave him optimism for the future.

For downtown St. Paul, “there is an upcoming resurgence,” Lund predicted. “None of us can put our finger to a specific date, but things will get better.”

The new Vieng Chan Market, located at the site of the former Cooper’s Foods on West Seventh Street, and the Mississippi Market on East Seventh Street are each about 1.8 miles away from downtown. A two-level downtown Walgreens on Wabasha Street offers some grocery items, mostly frozen and refrigerated foods.