Saint Paul's retail real estate market stands out for its low vacancy, vibrant neighborhood corridors, and growing demand driven by major development catalysts. Unlike many markets where retail has struggled with e-commerce disruption, Saint Paul's neighborhood-oriented retail districts, anchored by Grand Avenue, Selby Avenue, Highland Village, and the emerging Midway district near Allianz Field, have maintained strong occupancy and steady rent growth. For investors and business owners seeking retail property financing, Saint Paul offers attractive fundamentals with multiple viable entry points.
This guide covers everything you need to know about financing retail properties in Saint Paul, from loan programs and interest rates to corridor-specific analysis and the factors that drive lender decisions in the retail sector.
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Why Is Saint Paul's Retail Market Outperforming National Trends?
Saint Paul's retail market benefits from several structural advantages that have helped it maintain low vacancy and steady rent growth while many markets nationwide have struggled.
The city's neighborhood retail model is inherently more resilient than big-box and regional mall formats. Saint Paul's retail corridors, including Grand Avenue, Selby Avenue, Highland Village, and West 7th Street, are dominated by independently owned restaurants, specialty shops, and service businesses that draw customers through unique experiences rather than competing directly with online retailers. This experiential, community-oriented retail model generates foot traffic and tenant demand that pure commodity retail cannot match.
Saint Paul's demographics support retail spending. The city's neighborhoods include some of the most affluent zip codes in the Twin Cities metro, particularly Summit Hill, Crocus Hill, Mac-Groveland, and Highland Park. Household incomes in these areas exceed metro averages, and the residents' preference for shopping locally creates a loyal customer base for neighborhood retail tenants.
Two major development catalysts are driving new retail demand. The Midway district surrounding Allianz Field is emerging as a new mixed-use retail destination, with national and local tenants filling space in newly constructed buildings along the Green Line LRT corridor. The Highland Bridge redevelopment of the former Ford plant site will include a walkable town center with significant retail, creating an entirely new shopping district in one of the city's most desirable neighborhoods.
The Xcel Energy Center, home of the Minnesota Wild NHL team, and the RiverCentre convention complex generate significant visitor traffic that supports Downtown and West 7th Street retail. Events at Allianz Field similarly drive foot traffic and retail spending in the Midway district.
Overall retail vacancy in Saint Paul sits at approximately 4.5%, well below the national average, and prime corridors like Grand Avenue maintain vacancy below 3%. Asking rents average approximately $18.50 per square foot NNN across the city, with premium locations commanding $25 to $28 per square foot.
What Types of Retail Loans Are Available in Saint Paul?
Saint Paul's retail lending market offers a comprehensive range of financing programs suited to different property types, tenant profiles, and ownership strategies.
Conventional commercial mortgages serve stabilized retail properties with strong tenant rolls. Banks offer rates between 5.50% and 7.25%, LTV up to 75%, and 5 to 10 year terms with 20 to 25 year amortization. These loans work best for multi-tenant strip centers, neighborhood retail buildings, and single-tenant properties with credit tenants. Lenders evaluate tenant mix, lease terms, and sales performance when underwriting retail loans. Minnesota community banks including Bremer Bank, Bridgewater Bank, and Sunrise Banks are active retail lenders in Saint Paul.
SBA 504 loans represent the best financing option for business owners purchasing retail space they will occupy. With down payments as low as 10%, rates between 5.50% and 7.00%, and terms up to 25 years, SBA 504 loans provide significant savings for restaurant owners, retailers, and service businesses acquiring their own storefronts in Saint Paul. The borrower must occupy at least 51% of the building. Grand Avenue, Selby Avenue, and Highland Village see significant SBA activity from small business owners investing in their locations.
SBA 7(a) loans offer flexible financing for smaller retail acquisitions up to $5 million, with rates from 6.00% to 8.00% and terms up to 25 years. These loans work well for first-time retail property buyers and small business expansions.
Bridge loans provide short-term capital for retail properties with vacancy, tenant transitions, or renovation needs. Rates range from 8.00% to 11.00% with 12 to 36 month terms. Bridge financing is active in Saint Paul for investors acquiring underperforming retail properties with plans to re-tenant at higher rents.
CMBS conduit loans offer non-recourse financing for stabilized retail properties valued at $2 million or more, with rates from 5.80% to 7.50% and 10 year terms. CMBS lenders favor single-tenant NNN properties with credit tenants and multi-tenant centers with strong occupancy.
DSCR loans serve investors purchasing retail properties without income documentation. Rates range from 7.00% to 9.50% with LTV up to 75%. DSCR loans work well for NNN-leased retail where the tenant pays operating expenses, producing clean NOI figures for DSCR calculations.
Use the commercial mortgage calculator to estimate monthly payments for your Saint Paul retail acquisition or refinance.
Which Saint Paul Retail Corridors Offer the Best Investment Opportunities?
Saint Paul's retail landscape is organized around several distinctive corridors, each with unique characteristics, tenant demographics, and investment profiles.
Grand Avenue is Saint Paul's premier retail destination and one of the most coveted neighborhood shopping streets in the Upper Midwest. Stretching approximately two miles from Dale Street to the Mississippi River, Grand Avenue features approximately 750,000 square feet of retail space with just 3% vacancy. The corridor is dominated by independent retailers, award-winning restaurants, coffee shops, and professional service offices. Asking rents reach $28 per square foot NNN, the highest in Saint Paul. The surrounding neighborhoods of Summit Hill, Crocus Hill, and Mac-Groveland provide an affluent customer base with strong spending power. Lenders view Grand Avenue retail very favorably, and investors compete for the limited properties that become available. Cap rates of 5.5% to 6.5% reflect the corridor's premier status.
Selby Avenue has evolved from a transitional corridor into one of Saint Paul's most vibrant restaurant and boutique districts. The section of Selby between Dale and Lexington, known as the Selby-Dale neighborhood, has attracted a critical mass of popular restaurants, bars, and specialty shops. Approximately 400,000 square feet of retail with 4% vacancy and rents around $24 per square foot NNN make Selby a strong investment opportunity. The corridor benefits from walkability, proximity to Summit Avenue's historic mansions, and a young professional demographic.
Highland Village centers around the intersection of Ford Parkway and Cleveland Avenue, serving as the retail hub for the Highland Park neighborhood. Approximately 600,000 square feet of retail space with 3.5% vacancy and rents of $25 per square foot NNN create a strong investment profile. The Highland Bridge redevelopment will add significant new residential population to the area, creating additional retail demand. National tenants (Starbucks, Lunds and Byerlys, CVS) anchor the corridor alongside independent shops and restaurants.
Midway/Allianz Field represents Saint Paul's most dynamic emerging retail submarket. The redevelopment of the former Midway Shopping Center site around Allianz Field is creating a new mixed-use retail district with national tenants, restaurants, and entertainment venues. Approximately 2 million square feet of inventory with 5% vacancy and rents around $20 per square foot NNN offer growing yields. Green Line LRT access and the stadium's event-driven traffic support tenant demand. Investors entering this corridor benefit from rising rents as the area matures.
University Avenue contains Saint Paul's most diverse retail landscape, with approximately 3 million square feet of space serving the city's multicultural communities. The corridor features a remarkable mix of East African, Hmong, Vietnamese, Mexican, and other ethnic retail and restaurants. Vacancy at 6% and rents around $16.50 per square foot make this the most affordable retail corridor in Saint Paul. The Green Line LRT has improved accessibility, and community development investments continue to strengthen the corridor.
West 7th Street connects Downtown to the river neighborhoods, offering a mix of bars, restaurants, neighborhood retail, and professional services. The corridor benefits from event traffic from the Xcel Energy Center and maintains moderate vacancy around 5.5% with rents of $17 per square foot NNN.
What Interest Rates Should Saint Paul Retail Investors Expect in 2026?
Retail loan interest rates in Saint Paul reflect both national capital market conditions and lender attitudes toward the retail asset class, which have improved significantly from the uncertainty of the pandemic period.
Conventional commercial mortgage rates for stabilized retail properties with strong tenants range from 5.50% to 7.25% as of early 2026. NNN-leased properties with credit tenants command rates at the lower end of this range, while multi-tenant properties with shorter leases or weaker tenants carry higher rates.
SBA rates for owner-occupied retail properties range from 5.50% to 7.00% on the CDC portion. For restaurant owners, retailers, and service businesses purchasing their storefronts on Grand Avenue, Selby Avenue, or Highland Village, SBA financing provides the most cost-effective path to ownership.
Bridge loan rates for retail acquisitions involving re-tenanting or renovation range from 8.00% to 11.00%. Retail bridge loans are most common for properties where an anchor tenant has vacated or the property needs significant renovation to attract quality tenants.
DSCR loan rates for investment retail properties range from 7.00% to 9.50%. NNN-leased retail properties with strong tenants produce clean cash flow metrics that DSCR lenders value, often qualifying for rates at the lower end of the range.
Use the DSCR calculator to model cash flow coverage ratios for your Saint Paul retail property.
How Do You Underwrite a Retail Deal in Saint Paul?
Retail property underwriting in Saint Paul requires analysis of several factors specific to the retail asset class and the local market.
Tenant mix analysis evaluates the quality and sustainability of the property's income stream. Lenders prefer a mix of credit tenants (national or regional chains), established local operators, and service businesses (hair salons, dry cleaners, medical offices) that are less vulnerable to e-commerce. Saint Paul's neighborhood retail corridors tend to have a healthy balance of these tenant types.
Lease structure matters significantly. NNN leases, where tenants pay property taxes, insurance, and common area maintenance in addition to base rent, are preferred by lenders because they shift operating cost risk to the tenant and produce higher, more predictable NOI. Gross leases require the landlord to absorb operating costs, resulting in lower NOI and higher risk.
Sales performance (where available) provides insight into tenant health and renewal probability. Lenders may request tenant sales data, particularly for restaurant and specialty retail tenants where occupancy cost ratios (rent as a percentage of gross sales) above 10% to 12% indicate potential stress.
Location quality in Saint Paul's retail market is measured by foot traffic, parking availability, visibility, co-tenancy with complementary businesses, and proximity to residential density. Grand Avenue's success is largely attributed to its walkable format, affluent surrounding neighborhoods, and critical mass of diverse tenants that generate cross-shopping.
Market rent comparisons ensure the property's in-place rents are sustainable. Rents significantly above market create re-tenanting risk at lease expiration, while below-market rents represent upside potential. Saint Paul's corridor-by-corridor rent data provides clear benchmarks for underwriting.
What Are the Risks of Retail Investing in Saint Paul?
Saint Paul's retail market offers strong fundamentals, but investors should evaluate several risk factors.
Tenant concentration is a concern for smaller retail properties dependent on one or two anchor tenants. If a key tenant vacates, the property may face prolonged vacancy while a replacement is found. Diversified multi-tenant properties mitigate this risk.
E-commerce competition continues to pressure commodity retail, though Saint Paul's neighborhood-oriented, experiential retail format is more insulated than big-box or regional mall retail. Investors should focus on tenants whose businesses rely on in-person experiences (restaurants, salons, fitness, medical) rather than pure goods retailers.
The Highland Bridge development will add new retail inventory to the Highland Park area over the next decade. While this new supply serves growing demand from the project's residential component, existing Highland Village retailers should monitor competitive dynamics.
Minnesota's winter climate affects retail foot traffic during December through February. Seasonal adjustments to cash flow projections are appropriate, particularly for retail properties dependent on walk-in traffic rather than destination customers.
Frequently Asked Questions About Retail Loans in Saint Paul
What is the minimum down payment for a Saint Paul retail property?
Down payments depend on the loan program and ownership type. SBA 504 loans for owner-occupants allow down payments as low as 10%. Conventional commercial loans for investment retail typically require 25% to 35% down. Bridge loans require 25% to 35% equity. CMBS loans require 25% to 35% down. NNN-leased properties with credit tenants may qualify for lower down payments due to their perceived lower risk.
Can I get an SBA loan for a restaurant I plan to open in Saint Paul?
Yes. SBA loans are available for purchasing or leasing retail space for a new restaurant, including funds for equipment, build-out, and working capital. The SBA 504 program is ideal for purchasing the building, while the SBA 7(a) program can cover equipment and working capital in addition to real estate. Restaurant borrowers should prepare a detailed business plan, demonstrate industry experience, and provide personal financial statements. Saint Paul's active restaurant scene, particularly on Grand Avenue, Selby Avenue, and in Lowertown, creates strong SBA lending activity.
How do NNN leases affect retail loan qualification?
NNN (triple net) leases significantly improve loan qualification. Because tenants pay property taxes, insurance, and common area maintenance in addition to base rent, the landlord's operating expenses are minimal, producing a higher NOI relative to gross rent. This results in a stronger DSCR, which allows higher loan amounts and potentially lower interest rates. Lenders strongly prefer NNN lease structures for retail properties, and many CMBS and DSCR lenders specifically target NNN-leased retail.
What cap rates should I expect for Saint Paul retail properties?
Cap rates in Saint Paul retail vary significantly by location and tenant quality. Prime corridor retail on Grand Avenue trades at 5.5% to 6.5%. Highland Village and Selby Avenue retail trades at 6.0% to 7.0%. Midway and University Avenue retail trades at 6.5% to 7.5%. Secondary locations and properties with vacancy trade at 7.0% to 8.0% or higher. NNN-leased properties with credit tenants typically trade at tighter cap rates than multi-tenant properties with local tenants.
How long does it take to re-tenant vacant retail space in Saint Paul?
Re-tenanting timelines vary by location and property quality. Prime locations on Grand Avenue and Highland Village may attract new tenants within 3 to 6 months. Secondary locations may take 6 to 12 months. Properties requiring significant renovation or those in weaker micro-locations may take 12 to 18 months. Restaurant spaces typically take longer to lease because build-out costs are high and operators are selective about locations. Budget for tenant improvement costs of $20 to $50 per square foot when underwriting re-tenanting scenarios.
Are there tax incentives for retail property investment in Saint Paul?
Saint Paul offers several incentive programs that may benefit retail property investors. Tax increment financing (TIF) districts in areas like the Midway corridor can provide property tax relief for qualifying developments. Opportunity Zone designations in parts of the East Side and Midway offer capital gains tax benefits for investments in designated census tracts. The Minnesota Small Business Development Center and Saint Paul's STAR program provide technical assistance and some financial support for small business tenants, which indirectly benefits property owners by supporting tenant success.
Contact Clear House Lending today to discuss retail property financing in Saint Paul. Our network of over 6,000 commercial lenders includes specialists in neighborhood retail, strip center, and single-tenant NNN financing across the Twin Cities metro.