Hobby Lobby to open store in Duluth

• Hobby Lobby

The first Hobby Lobby in the Northland will open in early 2013 in the former Miller Hill Kmart space in Duluth. The rapidly growing chain’s store in Edmond, Okla., sports an extra fancy storefront. (Photo courtesy Hobby Lobby Stores Inc.)

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Hobby Lobby, a rapidly growing chain of arts and craft stores, will open a new store in the former Miller Hill Kmart around Jan. 1.

After months of negotiations, Hobby Lobby representatives have signed a 10-year lease for 59,000 square feet of the 88,000-square-foot store. Renovations will start in September and will take about four months.

Hobby Lobby, founded in 1972, is the nation’s No. 3-ranked craft and fabric retailer, behind Michaels Stores and Jo-Ann Fabric and Craft Stores. Besides a wide selection of arts and crafts supplies, fabric, hobby and games, Hobby Lobby also offers home accessories and seasonal items. The Oklahoma City-based chain, founded in 1972, has 503 stores with 29 opening this year and 40 in 2013. While it has many stores in Wisconsin, its only stores in Minnesota are in Rochester and Mankato.

The chain has wanted to expand to Duluth for more than a decade, said J. Scott Nelson, the chain’s assistant vice president for real estate.

“We do well in the upper Midwest,” Nelson explained. “There’s not a lot of towns in Minnesota outside Minneapolis that are large enough to support one of our stores, and Duluth is one of those markets. It’s somewhat isolated and draws from a really large trade area. And those are some of the things that really appeal to us when looking for a new site.”

While half of Hobby Lobby stores are in buildings built by the company, officials ruled that out early on for Duluth.

“Duluth is not the easiest place to build with all the rock and elevation change,” Nelson said. “You kind of have to blast out. That gets pretty expensive.”

So for years, the company looked for an existing big-box space that could accommodate their typically 55,000-square-foot store.

“We were always looking in the Miller Hill Mall area,” Nelson said.

But such large spaces have been in short supply in the Miller Hill retail hub. “There’s not a lot of vacant space up there, which is good for your market,” he said.

Then came Kmart’s closing in May at 1731 Mall Drive, part of the first round of closings of Sears Holders’ marginally performing Kmart and Sears stores. The Kmart store had been open since 1975.

“We jumped on it,” Nelson said.

Jim Rock, a Minneapolis Realtor representing the property owner, Cal-Am Properties of Costa Mesa, Calif., said the owner was looking for stable, long-term, highly recognized tenants — like Kmart — for the site.

Hobby Lobby fit the bill.

“We are very excited to finally find a location in Duluth after looking there for many years,” Nelson said.

Coincidentally, the new Duluth Hobby Lobby will be next to the former site of a Michaels store, its biggest competitor. It will employ 35 to 50 workers, with hiring likely to occur in December, Nelson said.

Unlike most big-box stores, Hobby Lobby is closed on Sundays due to the founder’s Christian beliefs.

“The owner feels it’s important for our employees to have the opportunity to have a day off if they wish to worship,” Nelson said.

Hobby Lobby will occupy most but not all of the former Kmart space, leaving 29,000 square feet still unleased. But a deal is in the works with another retailer for that “junior box” space. And if those talks are successful, it could open before Hobby Lobby does.

“We’re in negotiations with a leading candidate,” Rock said. “We hope this summer we have it figured out so they can be open this fall.”

He declined to say whether that retailer would be new to Duluth, but said the store would complement Hobby Lobby and the Savers store next door.

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