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Days at office aren't fueling downtown Minneapolis' recovery. Nights out are

Jim Buchta, Star Tribune on

Published in Home and Consumer News

Just two months earlier this year tell the condensed story of downtown Minneapolis' choppy recovery.

In February, the area achieved the largest post-pandemic rebound in the U.S. and Canada, with the biggest year-over-year increase of 64 major cities, according to cellphone activity that leapt 45% compared to the previous year.

By April, that gain had halved, showing that the downtown's comeback is happening in fits and starts — and mostly at night — as intermittent entertainment attractions draw crowds formerly funneled to cubicles, offices and boardrooms for 40 hours every work week.

Karen Chapple — the researcher with the University of Toronto School of Cities study that ranks the month-to-month recovery of big-city downtowns by tracking cell calls of 5 minutes or longer — emphasized that nighttime and weekend visitors are making the difference. So downtowns once saturated with office buildings now need to reinvent themselves as 24/7 neighborhoods where people play and live instead of just work.

Though downtown Minneapolis' recovery has been among the slowest of those tracked, Chapple said there's reason for optimism.

"Stay focused on the big picture: Minneapolis continues to trend strongly positively, which is great," Chapple said. "Just one event can throw off counts for the month. The long-term trends are what matter."

Chapple's analysis showed the annual change in visits peaked last summer when downtown was abuzz for Taylor Swift's concerts at U.S. Bank Stadium and Twin Cities Pride festival. Those events filled nearly every hotel room and parking space in the area.

"People are coming," said Abby Sia, who last month opened Thai-Malaysian restaurant Ococo in a sleepy downtown skyway of the 811 LaSalle building.

Sia works full-time as a civil engineer in the LaSalle Plaza building adjacent to the one that houses her new restaurant. LaSalle Plaza recently sold to a local investor for a fraction of its pre-pandemic value. Yet Sia was so confident in an impending rebound, she decided this was the perfect time to open a restaurant because so many others had closed, limiting her competition.

"I didn't want to wait," she said."

Chapple said Minneapolis is one of several downtowns where a high rate of remote work has hampered recovery. That's common in areas where commutes tend to be long and there's an abundance of jobs that allow for working from anywhere. The share of workers in Minnesota who work from home at least part of the week is 34%, well above the national average, according to a recent report from the Federal Reserve Bank of Minneapolis.

That makes downtown Minneapolis one of several where after-hours activity gains exceed work-week gains by 35%.

In Minneapolis, the study tracks cell data for a compact area that includes at least a dozen of the metro area's tallest office towers and where employment density is highest. It excludes several surrounding neighborhoods often considered part of downtown, including the bustling North Loop and Mill District areas.

Jon Commers, a Twin Cities-based researcher who does his own highly detailed cellphone data analysis, said while there are other ways to measure the recovery, cell data is an important tool that helps quickly measure the impact of revival efforts.

"As Minneapolis is looking at other cities and thinks about how to build on our response," he said, "the study provides a yardstick, a way to gauge impact."

 

His data confirms the rebound is happening most quickly in more mixed-use neighborhoods that surround the central business district. He's also working with the city to help understand the potential impact of declining office values on the city's coffers. The value of downtown's commercial buildings — a key contributor to the city's tax base — has fallen 13% since last year, according to the city assessor's office.

By nearly every measure, the spaces that once brought people downtown are not the draw they were before the pandemic.

Downtown office vacancies are now at a record high, but vacancy rates have stabilized in recent quarters. Hotel occupancy remains below pre-pandemic levels but flirted with the highest level since 2019 last year. And apartment vacancies downtown dipped during the first quarter, posting healthy rent gains despite the addition of thousands of new rentals.

"It's been an all-hands-on-deck effort," said Adam Duininck, president and CEO of the Minneapolis Downtown Council and Downtown Improvement District.

The Vibrant Downtown Storefronts Workgroup, a task force Minneapolis Mayor Jacob Frey convened last year, focused on how to revamp downtown's retail scene, which struggled even before the pandemic. Today, the epicenter of that is the 900 block of Nicollet Mall, where the new Strive bookstore and Corner Coffee have opened on the ground floor of the Young-Quinlan building, a stalwart along the Mall.

"The recovery might be incremental," Duininck said. "But as long as we're heading in the right direction, that's what's important."

A new report from the Urban Land Institute (ULI) focused on how to revitalize the Warehouse District, a key connection between the central business district and the North Loop. There, residents and businesses are now moving into the North Loop Green, a sprawling mixed-use development that has an office and apartment tower surrounded by green space.

The report also identified key buildings ripe for conversion into housing and other uses, but noted that such projects are expensive and need financial incentives. That's how the former Northstar Center East office tower is converting into 217 moderately priced rentals, with the help of historic and low-income tax credits.

Last month, a key piece of legislation aimed at helping accelerate the transformation of those buildings stalled. It would have established a refundable tax credit or grant that could help convert underutilized buildings into income-producing, habitable structures.

John Breitinger, executive manager director at Cushman & Wakefield and the co-author of the ULI study, said reducing concerns about crime is also key to the recovery. That's already happening, he said, in part because of new initiatives such as Warehouse District Live, a collaboration between the Downtown Improvement District and the city.

This summer, a section of 1st Avenue N. in the Warehouse District will close to car traffic on Friday and Saturday nights, making it a safe pedestrian zone with food trucks and places to sit.

"If you fill the space with positive activity and eyes on the street, the problems goes away," Breitinger said. "The more you can activate the public spaces, the more people want to be there."

Sia is already noticing her new eatery giving people more reasons to visit downtown. She also owns four short-term vacation rentals in the area, and they're fully booked.

"Even though they complain about safety and construction," she said. "People are still coming to downtown."


©2024 StarTribune. Visit at startribune.com. Distributed by Tribune Content Agency, LLC.

 

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