Downtown's recent growth driven by less-than-household-name companies

Downtown Minneapolis is hot, six years into the economic recovery.

Here are a few trends, courtesy of data from the Downtown Council, information from companies and interpretation from commercial real estate veterans Russ Nelson and Anna Coskran of downtown-based NTH.

There are nearly 40,000 downtown residents, more than the population of most Minnesota municipalities. The workforce is estimated at 140,000 to 170,000.

Downtown's 15 largest employers range from Target (7,500) to the Federal Reserve Bank (1,015). However, the trend is flat to negative among big employers. Target has declined from 12,000 three years ago, a result of restructuring-related layoffs and transfers to its Brooklyn Park campus. And Ameriprise Financial has declined by a couple of hundred to about 5,000.

Nelson and Coskran say the big tenants, including Target, haven't given up much space to subtenants. And workstations in open floor plans with fewer private offices are serving more employees with less space. So, no growth from the giants is foreseen.

Still, about 200,000 square feet of net office space was absorbed last year. The recent occupancy growth is led by small firms that employ a few dozen to hundreds. And most are not household names.

They include the expanding likes of software firms Code42 in Riverplace; JAMF, moving into the refurbished Washington Square complex; and Ability Network in Butler Square. They also include SPS Commerce, Calabrio, YA, Colle+McVoy, Weber Shandwick, CBRE, Varde Partners, and other digital-marketing, technology, software, specialty food and other small businesses jamming historic structures like the TractorWorks building in the Warehouse District, lately known as the North Loop.

There is 1.5 million square feet of office space under construction, including the Xcel Energy headquarters and Wells Fargo buildings. It will take a lot more growth to fill the space left vacant by these moves.

A commercial real estate panel last month sponsored by the Minneapolis Building Owners and Managers Association concluded that downtown and the North Loop are the hottest markets in the Twin Cities area thanks to business trends, employers and workers who want transit options, access to entertainment and more. Even snowmobile-maker Arctic Cat plans to move up to 200 workers to a new North Loop headquarters in 2016.

The vacancy rate for prime downtown office space has dipped below 12 percent, historically a very low rate. Most of the new building has been for specific clients, such as Xcel and Wells Fargo, and refurbishment of used space.

The under-construction "T3" building by Hines Interest in North Loop, is expected to open in September as the first speculative office building in 15 years. Seeking premium rents, it will be a big test of the durability of the downtown office surge, according to Nelson.

Residential housing and downtown security

Nearly 1,000 new rental units opened last year in downtown Minneapolis, including 4Marq, Latitude 45, the Paxon and Pillsbury A-Mill. And the condo market is rebounding with a couple of just-announced developments. Downtown continues to lose affordable "workforce" housing to upscale conversions, as it increasingly becomes a neighborhood of the affluent and professional classes, a trend for the last 35 years.

The Minneapolis Police Department, the Downtown Council's business-funded Downtown Improvement District (DID) and observant citizens have helped reduce crime, particularly among the 100 highest repeat offenders, for a sixth year in a row. Downtown homelessness has dropped in recent years, thanks to an outreach collaboration among businesses, churches and nonprofit agencies that seek to get these folks help and a place to live.

Downtown is a friendlier place in no small part because of the DID's blue-clad roving "ambassadors."

Ada Townsend, the DID's Ambassador of the Year, was honored at the council's annual meeting this month. She and her colleagues greet and assist citizens, help keep the streets clean, alert police as necessary and give downtown a good name.

"I like the interconnection between businesses and our customers downtown," Townsend said. " I like the collaboration with the city, police and first responders. We all work together, collaborating in a harmonious way, to improve Minneapolis."

The solar power industry in Minnesota is rapidly adding workers.

A new census said 1,995 Minnesotans work in solar energy, up 131 percent in two years. Another 410 jobs, a 20 percent increase, are expected to be added this year, said the report by the Solar Foundation, a Washington, D.C., research nonprofit.

The list of jobs includes sales and distribution, the category that gained the most, plus manufacturing, installation and project development. Solar system designers are paid the most, $31.25 per hour, the report said.

The job growth is fueled by state and federal policies that promote solar, community solar gardens and large utility-scale projects like Aurora Solar, which is putting large solar arrays at 16 sites for Xcel Energy, said the report.

Last week, the Forest Lake School district said it completed a 1.9-megawatt solar project atop six school buildings.

The report, which was partly funded by the Minnesota Commerce Department, said the state had 26.6 megawatts of solar power through the third quarter. One megawatt equals 1 million watts, which generates roughly the equivalent of the power used in 200 homes. In a statement, Commerce Commissioner Mike Rothman projected Minnesota will have at least 1,000 megawatts of installed solar by 2020.

DAVID SHAFFER

Xcel Energy reported that its business customers, taking advantage of conservation-and-rebate programs, saved enough electricity and gas last year to power every home in Woodbury and Edina for a year.

Xcel revealed the numbers at its recent Energy Efficiency Expo, which drew 600 business customers and trade partners.

Award-winning companies include Medtronic, Delta Air Lines, the University of St. Thomas, Cloverleaf Cold Storage, the Buerkle Automotive Group and Anheuser-Busch's malt plant in Moorhead.

Wells Fargo was recognized for 20-plus years of "participating in almost every energy- efficiency program Xcel has to offer," according to Xcel. "Wells Fargo's willingness to form a strategic business partnership with Xcel and engage in conservation improvement programs not only helped meet their sustainability goals, but also provided Xcel incredible and unique insight into business customer's needs and challenges."