How To Save and Grow Minneapolis Businesses

A Business Community in Crisis

It is clear that Minneapolis businesses are struggling. From 2019 to 2024, the City lost over 15,000 jobs. Towers in downtown are empty. Storefronts in neighborhoods are vacant. My brother, who does remodeling work in the Uptown area, tells me that many of his clients are fixing up to sell and get out. This is not good.

The regional organization charged with economic development is the Greater MSP Economic Development Partnership. It works to attract major businesses to the Twin Cities. The problem is that it is hard to attract companies to the City of Minneapolis, with its partially vacant downtown buildings, aging neighborhoods and schools, and reputation for crime. There are literally greener pastures in the suburbs, especially given the availability of suburban office parks and industrial land.

What can Minneapolis do to improve its immediate prospects and long range (2050) future? I would propose a macro strategy for downtown and a micro strategy for neighborhood commercial areas.

Macro Strategy: Recruit Gazelles

It’s no secret that Minneapolis, especially downtown, has a real estate crisis. Yes, there has been some companies calling workers back to downtown offices, but many office tenants have found that they just need less space. The taxable value of downtown real estate declined over 13% from 2023 to 2024 and it is going to be an issue for years to come.

And make no mistake, downtown is the cash cow for the city, paying much more in tax revenues than it consumes in tax services. A study by a Drake University economist showed that downtown Des Moines was paying $19 in tax revenues for every $1 in tax services it consumes. So, if Minneapolis wants to have the money to pay for good police and fire protection, good schools and parks, and other city services, it cannot depend on residential property taxes. It must have a strong commercial sector.

But who are going to be the users of downtown commercial buildings? Companies fall into three categories: mice (mom and pop businesses with a couple of employees that have no real growth potential); elephants (large corporations that employ lots of people but grow slowly or not at all); and gazelles (small companies that employ five people today but fifty people in five years and five hundred in ten years).

The macro strategy should focus on finding and supporting the gazelles – the companies that have the potential for swift growth, companies that will soak up vacant office space in downtown and neighborhoods. Dan Gilbert, CEO of Quicken Loan, has been filling vacant space in downtown Detroit with gazelles. He has a whole company that seeks out and recruits gazelles and provides them with the incentives they need to occupy his buildings. The Quicken Loans family of companies seems to announce another office move to downtown at least once a month. Because of this work, there has been a visible influx of creatively based businesses moving to downtown Detroit. Pluto, a downtown Birmingham-based marketing agency, built out an eclectic office in Corktown last spring. 1xRUN, a fast-growing Internet start-up that sells limited editions of art prints, made the move from downtown Royal Oak to Eastern Market at the end of last year. You can see the work that they are doing at: www.recruitdetroit.com This work has been transforming downtown Detroit.

Minneapolis could do likewise by creating a firm to recruit gazelles. This would give real, long-term growth by creating a network of growing businesses downtown. Recruitment should be  based on Richard Florida’s creative class research. Technology, talent and tolerance are the legs of his three-legged stool. The new enterprises that this would attract would help to fill up downtown office buildings and neighborhood commercial structures and would provide a customer base for shops and restaurants.

Micro Strategy: Non-Profit Community Development Corporations

Throughout the city, there are key districts, some large like Uptown, Dinkytown and West Broadway, that desperately need help. The City’s only community-based business groups are the Special Service Districts where the City provides sidewalk plowing and graffiti removal and none of the supports that businesses need. CPED is not set up to work at the neighborhood level. The micro part of this strategy City needs to create a network of non-profit community development corporations or business improvement districts that can provide the management, maintenance and marketing assistance that commercial areas need.

There are successful models around the country.

• In Pittsburgh, East Liberty Development Inc. https://www.eastliberty.org bought an entire block in the heart of a neighborhood business district and renovated it, renovated a historic theater, developed affordable housing, and incubated women-owned businesses. This led to revitalization of the whole commercial area, which also improved residential parts of the community.
• The Oakland Planning and Development (OPDC) https://www.opdc.org, pioneered affordable rental housing at the neighborhood level and launched a business improvement district organization, Oakland BID. Again, this work to support businesses at the neighborhood level has been transformational for the neighborhood.
• The Lawrenceville Corporation, https://lvpgh.com successfully transformed a blighted warehouse district into a very desirable residential and business district.
• The Manchester Citizens Corporation, https://www.manchestercitizens.org/ is in an historic black community, with 70% of its population being people of color. It preserved and renovated historic ownership homes without gentrifying the community. It also linked historic preservation with economic development.

Conclusion

The future for Minneapolis looks pretty bleak right now. This is an economic development plan that could produce results now – and a healthy growing economy in the future, if the City just chooses it.

Editors note: A draft version of this story was initially published. It has been updated with the final copy.