Downtown Minneapolis plays an essential role in the vitality of the City. It is an economic powerhouse, a cultural center, and home to tens of thousands of people. But, like every place, it has issues that need careful thought to ensure it continues to be an asset of the City.
What Is Downtown?
Downtown plays an essential role in the economic life of the City of Minneapolis, the Twin Cities, the State of Minnesota and nationally. It has a diverse economy, featuring a wide range of professional firms and a large hospitality industry. It is home to five Fortune 500 company headquarters. In 2024, it had 166,000 jobs, by far the largest concentration of employment in the state. It also has the highest paying jobs in the region, on average. It also has good paying jobs, and many union jobs, for low-skill workers.
Downtown is also the center of culture in the Twin Cities and the State of Minnesota. It has many unique sports, theatre, music, convention space, and cultural institutions like US Bank Stadium, the Guthrie Theatre, Target Field, and Orchestra Hall. Many of the region’s highly regarded restaurants are located here. It draws several million people annually for events and activities that can only be enjoyed in Downtown.
Downtown is home to a rapidly growing residential population. As of the end of 2024, there were 60,549 residents living Downtown. This marks an increase of more than 39% since 2017, when there were only 43,456 Downtown residents. This is close to the same population as Eden Prairie or Burnsville.
Minneapolis government depends on the money raised from Downtown. Downtown’s property tax base provides a highly disproportionate share of revenues relative to its land area. It also provides a disproportionate share of parking revenues, sales taxes, entertainment taxes and other revenues. These revenues are then used to provide services to the rest of the City and especially to lower income residents.
The Evolution of Downtown
Downtown Minneapolis has evolved over the decades. Perhaps the clearest example is the transition away from a regional shopping destination in the 1970’s and 1980’s to Downtown’s current role as a major employment center, major cultural center and major population center.
But evolution never ends. In the aftermath of COVID-19 and civil unrest following the murder of George Floyd, Downtown is undergoing a period of reinvention and economic re-set. Several key issues are worth noting.
- Impact of remote work: There has not been an exodus of companies out of Downtown, but for many employers, workers are just in the office fewer days of the week. This has meant a significant reduction in the workday population in parts of Downtown. It should be noted that these issues are concentrated in only some parts of downtown. North Loop, on the other hand, is thriving.
- Less daily buying power: With fewer workers Downtown compared to the past, fewer dollars are spent in support of breakfast and lunch-time restaurants and remaining retailers. This has reduced the number of businesses in these economic sectors in some parts of Downtown.
- Higher office vacancies, lower valuations: Businesses use less space with remote workers. There is a vacancy rate in excess of 25% at present. Older “Class B and C” buildings are particularly affected. It is expected that this space will be absorbed over time, however, as businesses grow, and some companies change their work from home policies.
- Lower property tax revenues: Less leased space eventually translates to lower valuations and property tax yields, a process that continues to play out. The City is seeing a reduction in property tax revenues from commercial buildings, but the decline is stabilizing.
- Resurgence of event attendance: On the positive side, people attending sports, theatre, musical performances, convention meetings and other activities exceed pre-COVID levels. This has helped hotel occupancy recover and fueled the success of dinner-oriented restaurants.
- Success of North Loop: Although parts of the Downtown are struggling, it is important to remember that parts of Downtown are also thriving. North Loop is a prime example of a successful “live, work, play” environment which is a model for the future of downtowns overall. Expansion of this environment will be vital to Downtown long-term.
- Residential growth: More people are living in the greater Downtown area than ever before. Rental vacancy rates are healthy, and condo resale values are strong. There are fewer new units in the development pipeline in coming years in the City overall, however, so that trend bears watching.
- Growing “foodie” reputation: Downtown is home to award-winning establishments operated by chefs with national reputations, including James Beard nominees and awardees. It is expected that this will continue to grow, especially as the population in Downtown continues to grow.
Moving Forward
The next evolution of Downtown builds on recent population growth and the unique attractions that gather people for entertainment and social interactions. The city, metro region and state will be well served as this evolution ushers Downtown into its next season of growth and vibrancy. City policy makers, partnering with the private sector, will be play a critical role in coming years in helping downtown thrive. Looking to the future of Downtown Minneapolis, several priorities for city policy makers stand out.
- The live, work, play environment we see in North Loop needs to be extended throughout downtown. There is a lot of conversation about the decline of downtown, but it is not accurate. Parts of downtown are thriving. We need to extend this model throughout the whole downtown.
- Office to residential conversions: Several older office buildings with high vacancies and limited future leasing appeal have the potential for conversion to housing. (The Downtown Council estimates that 3 million square feet could be converted, close to 10% of the office inventory.) This approach both builds the Downtown residential population and gives new life to otherwise obsolete buildings. This also helps retail and restaurants thrive as well as extending the thriving residential areas to new parts of Downtown. The City may need to provide help in terms of financing or zoning changes to help make these conversions happen.
- Public safety: Overall reported crime declined 10% from 2019 to 2024 but negative perceptions still impede full recovery. Improving late-night weekend safety, and maintaining a visible, multi-faceted approach with effective policing as the core strategy is essential for further progress.
- Late night economy: One attraction of Downtown is the concentration of bars and clubs, especially in the Warehouse District. Improving the late-night experience, especially from a safety standpoint, will enhance this attribute.
- Multi-modal transit build-out: Downtown has too high of a density to be solely reliant on cars. There simply isn’t enough space to have enough parking ramps to meet the needs of everyone going Downtown. A high degree of transit service is critical to Downtown, even as commuting trends are evolving post-COVID. City support for completion of various transit lines under construction and planned, and providing mobility options throughout Downtown, will build on this advantage.
- Nicollet transformation: A major issue is whether to transition Nicollet Mall from a street oriented towards bringing commuters Downtown to a street that elevates the pedestrian experience. Transit remains vital to Downtown but Downtown has evolved where large portions are a live, work, play environment while other large portions are focused on worker commuters. It may make sense to move the commuter transit close to the part of downtown with higher concentrations of commuters. Careful planning to maintain transit access where it is most needed and investment to transform the physical condition of Nicollet will be necessary for success.
Conclusion
Downtown is a vital resource to Minneapolis, the State of Minnesota, and nationally. It is moving into its next season of growth and vibrancy. In this upcoming election, we need city policy makers, partnering with the private sector, who can encourage new business growth, support cultural institutions, and create new housing development. Our city, our state, and our country depend on it.
