Recent shifts in downtown Minneapolis, including fewer office workers and the absence of alternative uses to replace them, have led to abandoned sidewalks and impacted public perception and safety. The following article delves into vacancy and safety problems in downtown Minneapolis, the current initiatives for revitalization, and the overall outlook for this area.

Downtown Next, an action plan published in 2023 by the Minneapolis Foundation, outlines the main problems with the current downtown environment. The plan calls out the single-use nature of downtown which discourages many demographics from engaging with the area. Development in the region has historically catered to career-aged office workers, resulting in a host of issues that limit its broader appeal and functionality. The impact of COVID-19 has exacerbated these problems, as more professionals work from home and relocate out of downtown. This shift has especially hurt retail spaces, which were designed around a skyway system that is primarily utilized by workers, not visitors. Many sidewalk level spaces, which visitors are more likely to use for retail, are lobbies for offices that are experiencing increased vacancies and serve less of a purpose (Minneapolis Foundation).

This decision to expand the retail offerings downtown can be supported by the findings in the Real Estate Investor Survey published by PwC in the second quarter of 2024. This survey concluded that the retail sector in Minneapolis will be in the recovery phase by the end of 2025. The recovery phase is “characterized by tightening market conditions and a shift in supply/demand balance leading to reduced vacancy rates, more balanced rental growth, and a stabilization of overall cap rates” (PwC). Additionally, the findings of the survey support a shift away from office space, concluding that the office sector in Minneapolis will be in the recession phase through 2026. This phase consists of “high vacancies, negative rental growth, and high overall cap rates” (PwC).

The sudden decrease in activity resulting from COVID-19 has also contributed to concerns of safety. Some people are hesitant to visit downtown because there is less “safety in numbers”. However, according to the Minneapolis Foundation, negative sentiment is reinforced in the media regardless of whether people are having positive experiences or not. Thus, the perception of danger has contributed to less activity even if the level of safety has not improved since the pandemic.

In response to safety concerns, the city is building its unarmed safety initiatives through the Office of Community Safety. As outlined in the Ward 7 Newsletter by the City of Minneapolis in May of 2024, these initiatives involve using the violence intervention expertise at the John Jay College of Criminal Justice to assist community vendors. These experts will engage directly with community members in public spaces to prevent and address violence, often by building relationships and providing support and resources.

Despite the issues described above, there has been significant improvement in tenancy and general activity in the years since the pandemic. In October 2021, the city reported the number of restaurantgoers to be 49.3% of the pre-pandemic level and 37.5% building occupancy. In August 2023, the city reported the number of restaurantgoers to be 109.0% of the pre-pandemic level and 65.0% building occupancy. We expect these improvements to continue in line with the expectations given in the investor survey, with the retail sector improving quickly and the office sector improving gradually in the next three to five years. The initiatives being implemented by the Minneapolis Downtown Council and the City of Minneapolis also contribute to our positive outlook for downtown Minneapolis.