Latent Downtowns
Changes revealed during the COVID-19 pandemic are challenging the 20th-century model of office-focused central business districts, presenting a profound opportunity for the future of downtowns
By Jon Commers | May 1, 2023
Image courtesy of Visible City.
2023 PRINT ANNUAL
This feature appeared in the 2023 ENTER print annual, available for purchase here.
In the jarring initial weeks of the pandemic, my colleagues at Visible City and I examined the collection of Minneapolis buildings constructed in 1919, 1920, and 1921—years of recovery from the catastrophic 1918 flu epidemic and World War I. The ubiquity of these homes and commercial structures, which today comprise parts of many of the city’s most emblematic neighborhoods, lent us confidence. While no one is here to recount that time for us, the buildings themselves provide testimony. Community members persevered through the 1918 flu, making long-term decisions like building homes and shops that would last for at least the next 100 years.
It’s human nature to feel that the current day is untethered to the patterns of history. We also typically attribute more value to our recent experience than to more distant memory. Current planning for downtowns reflects both tendencies. Very few among us recall blocks in downtown Minneapolis and downtown St. Paul that combined numerous uses and activities. We think instead—narrowly, in most cases—of office and office work.
The COVID-19 pandemic did not so much transform as reveal. The public health emergency forced rapid adoption of technology and models of work that we now know reflect social and economic change that has been underway for many years. The phrase “return to work” may be a misleading description of what’s happening: Nationally, the number of people working in a downtown office setting has plateaued at about half.
This shift represents a profound opportunity for downtowns. Here’s why.
Downtowns have some common characteristics that underlie their durability. Most obviously, they are highly accessible locations with a set of geographic attributes that made the original location strategic or otherwise valuable. Downtowns also offer a quality of infrastructure—resulting from investments made over many years—that supports activity at large scale, such as communications, parks and open spaces, and transit connections.
Image courtesy of Visible City.
Downtowns are most widely understood as collections of structures: offices, venues, and residential buildings marked by their height and proximity to the street as reflections of highly valued land. These buildings also represent some mix of vintages—a testament to the ability of downtowns to pivot and endure. Importantly, many older buildings downtown offer attributes that make for flexible reuse. High ceilings, “daylight factory” windows, thick floors, heavy timbers, ornamentation, and other features catalyzed the rise of the North Loop in Minneapolis, Lowertown in St. Paul, and other downtown submarkets.
At a fundamental level, downtowns are most distinguished by the interaction of people. Who is drawn to downtown and for what purpose and duration shapes the rhythm of the district—and the extent to which residents and owners of businesses and property invest in its future. Today, those parts of downtown most reliant on office uses and office-driven foot traffic are, of course, in the most precarious position.
One of the essential revelations of the pandemic is that downtown districts are vulnerable when uses are uniform. Among the most visible examples (and the most debated at present) are those areas where office buildings and first-floor retail space dominate. The absence of office workers continues to generate ripple effects for all the parties in the value chain: brokers, property owners and their lenders, and operators of retail and accessory businesses. To some, the most logical response to diminished activity and occupancy is to implement strategies to incent office workers to return to the office, and to stimulate interest with events and social media campaigns. Not only will this response yield incomplete results; it also promises to miss the bigger opportunity to diversify and activate downtown going forward.
Every city resident, every Minnesotan, has a stake in getting this right. With all the downtown systems and infrastructure in place, these districts have potential to surpass what is a strong past record in driving economic activity, cultural vitality, and tax revenue.
Downtowns remain largely defined by having been driven toward uniformity for the second half of the 20th century; office districts were for office, residential districts were for residential, and institutions like hospitals were self-contained. In Minneapolis, due to the market’s relative strength in the middle part of the century, demolition and redevelopment accelerated this trend, replacing more patchwork land use with single-purpose office buildings. In St. Paul and other cities with less robust markets during the midcentury period, more of the older building stock remained; its smaller floor plates and other attributes may support easier reuse moving forward.
Our public policy has reinforced monolithic office districts, as well. Zoning and overlay districts that required incorporation of street-level retail to development plans have resulted in retail spaces in locations where demand may be low. Meanwhile, these spaces—including many that stood vacant well before the onset of the pandemic—could not be flexibly deployed for other purposes such as residential, workshop, or veterinary clinic. In Visible City’s work in downtown settings, we observe that criminal activity is concentrated on the edges that separate these districts.
Behind the retail vacancies and quiet offices, a fundamental shift in office-building uses and a likely sea change in valuation are coming. Organizations leasing downtown offices have gained from the pandemic a much stronger negotiating position with landlords, which they are using to trade to smaller amounts of space offering more amenities. Downward pressure on occupancy and per-foot lease revenue will reduce building valuations, enlisting lenders in the call for more substantial and faster transition to non-office uses. While it’s true that office reuse for residential poses challenges, once the interests of these parties are aligned, transformation of office to other uses will likely accelerate.
So, What’s Coming?
The list of key ingredients of a downtown—geographic location, infrastructure in place, structures, and a critical mass of people—is not changing. But the way these ingredients are valued in relation to each other is evolving. In St. Paul and Minneapolis, music and theater venues are serving crowds 85 percent or more of 2019 attendance, while the daytime workforce remains in the 50- to 60-percent range. Many workers have shifted to a modular day and week, so building programs and downtown blocks that serve a more varied set of needs and interests will perform the best.
A more modular, less uniform approach to downtown sites, blocks, and districts will allow the downtown marketplace to capture and build on demand where and how it is expressed. In a given building, former office spaces will convert to light assembly, senior care, fitness, higher education, lab space. The elevator’s next stops might reveal middle-income apartments or condos for younger people and families with programs that include childcare. More demand for short-term and interim work and living spaces will add another growth area to the downtown market.
Office space will shift to other purposes by proximity. Residential nodes in Lowertown and Mears Park, Wacouta Commons, and Seven Corners in St. Paul and in the North Loop, Mill District, Elliot Park, and Loring Park in Minneapolis will support partial conversions to residential in adjacent buildings in sequence, for example.
Changes to city ordinance and state law can support downtown’s pivot. Minneapolis and St. Paul should each consider dramatic liberalization of downtown zoning and overlay districts to allow space to respond to new kinds of demand. State legislation including House File 2455/Senate File 1481, which would broaden how residential properties are engaged in downtown special service districts, can help form a more inclusive agenda for downtown investment and programs.
Why This Matters
There is strong consensus that our downtowns need support in this transition. According to CoStar, St. Paul’s office vacancy rate is 11.5 percent and has remained essentially flat since March 2020, while Minneapolis’s has risen from 14 to 22 percent during the same period. These numbers reflect unleased space; leased-but-underutilized space represents a higher proportion. Downtowns have room to grow.
And every city resident, every Minnesotan, has a stake in getting this right. With all the downtown systems and infrastructure in place, these districts have potential to surpass what is a strong past record in driving economic activity, cultural vitality, and tax revenue. Intentional strategies that nurture and activate our downtowns will also serve to lift up those corners and communities facing the steepest hurdles.
Generations of public and private investment have been made in each of Minnesota’s major downtowns. They are full of productive assets in the forms described above. But downtowns aren’t perpetual motion machines; they need ongoing attention and care. We need to bring imagination, flexibility, and vision to what downtowns are becoming.
To some, the idea of reintroducing a wider range of activities to downtown office and retail spaces is unwelcome and its value unproven. Yet, this is how downtowns once functioned. Our current approach, with its emphasis on incenting firms and workers to return to a pre-pandemic model, distracts from the urgent work of growing downtown productivity through a wider range of uses. By meeting demand for residential and a range of non-office uses, downtowns can become more active, more productive, and more resistant to future market shocks.
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