Downtown Minneapolis: 'Pretty strong' as recession ebbs

What's the post-recession state of downtown Minneapolis?

Employment is down 7 percent among the top 15 employers since 2008. Only about 80 percent of the office space is occupied. And retailing continues to be a challenge.

But crime has dropped markedly, 150,000 people work downtown every day and the number of downtown residents climbed slightly last year. And the city is arguably still the single biggest commercial mecca between Chicago and San Francisco.

"The state of downtown is pretty strong, although the forecast for recovery looks better as we get out 12 to 18 months," Sam Grabarski, longtime chief executive of the Minneapolis Downtown Council, said after last week's sold-out annual meeting of several hundred members and guests at the Hilton. "To a degree, as goes Target, so goes downtown, because so many companies that do business with Target are here. And 2009 was a slow year for building stores.''

Downtown generates about a third of the property taxes in Minneapolis.

Last week's meeting provided an array of interesting statistics and insights, provided by government and industry researchers. Among them:

•Downtown employment among the 15 largest outfits fell 4 percent, or 1,798, because of job cuts at companies including Target and the Star Tribune, as well as at the city and county. Target, downtown's largest employer with nearly 10,000 corporate and retail employees, is followed by Wells Fargo (7,700) and Hennepin County (5,100). Fast-growing Capella Education, the online-higher education company, jumped ahead of Xcel Energy to No. 7 with 1,356 workers. The Star Tribune, which emerged from bankruptcy in September, ranks 11th with 1,000 employees.

Target also renewed its lease in the City Center office tower, keeping 4,000 jobs, and relieving much consternation over a possible move.

•The downtown residential population grew slightly to 33,590, which would make it Minnesota's 22nd-largest city, were it a free-standing community. According to Maxfield Research, the number of units sold was 100 more than were put up for sale in 2009, although the average price of a downtown residence dropped by 15 percent.

•Downtown's office market remained stressed, with the vacancy rate rising to 19.4 percent. "I think we'll see a modest increase in commercial office leasing activity during the second half of 2010," Colin Barr, a Ryan Cos. executive, said Monday. "There are potential tenants looking for space. Some are moving from one place to another, and some even reducing in size in terms of the space they need. Moving into 2011, we'll see some modest new hiring. I don't see that driving expansion in the downtown office market until 2012 or 2013 because a number of large employers have 'shadow space' ... they might have 15 or 20 percent of their work stations vacant."

By comparison, during the last major real estate recession in 1992-93, downtown's vacancy rate peaked at about 28 percent. We won't see any new skyscrapers until the vacancy rate drops to 10 percent or lower.

•Violent crime dropped by 17 percent in 2009, and felony assaults, theft, arson, auto theft and robberies were all down. Arrests for aggressive panhandling, loitering and curfew violations were way up as the police focused on so-called "liveability" crimes that worry workers and visitors.

Much of the credit goes to the long-awaited "Downtown Improvement District," a business-funded effort that puts specially trained liaisons on the streets around the clock to direct visitors, assist anybody who needs a hand and report suspicious activity. The cops and county attorney's office focused on arresting and keeping downtown's most-frequent criminal offenders off the streets.

•Downtown backers produced statistics showing that the city is a growing entertainment center, from the Minnesota Twins to the new Guthrie Theater to small jazz clubs and the live productions at the historic Pantages, State and Orpheum theaters. Target Center's ticket sales for all events, including basketball, made it the 30th-most-popular venue according to Pollstar's tracking of the world's top 100 arenas.

Pollstar also reported that the State Theater (No. 78) and the Orpheum (No. 38) are among the 100 most popular live-theater venues in the world.

"Can you keep a secret?" asked Lynn Casey, CEO of Padilla Speer Beardsley and a Downtown Council executive board member, concluding a report on nightlife. "'Billy Elliot' is coming to the Orpheum in December."

Who dat?

Neal St. Anthony • 612-673-7144 • nstanthony@startribune.com