St. Paul taking steps to grow its businesses in the downtown area

Downtown St. Paul, as vibrant as it has been for 50 years thanks to more restaurants, cultural and sports amenities, still has a problem and an opportunity. There's not enough business.

The residential, nonprofit and government sectors dominate and consume more downtown real estate than businesses. Downtown looks better than 40 years ago because there are fewer vacant lots, a revived Lowertown and more food, art and sport venues. There's more activity.

"We started with building the residential population," said CEO Doug Baker of Ecolab, a major downtown employer and adviser to Mayor Chris Coleman. "We now have to focus on more business and workers. Businesses pay higher taxes and use less public services."

Baker, 58, a Minneapolis native and 29-year Ecolab veteran, has become a champion of downtown St. Paul. A couple of years ago he decided not to consolidate 2,000-plus downtown employees in a new headquarters he considered building on Ecolab-owned land in Eagan. Instead, Baker moved Ecolab from an antiquated building on Wabasha Street into the larger former Travelers, nee St. Paul Cos., headquarters near Rice Park.

Over the last generation, St. Paul lost the St. Paul Cos. to takeover by New York-based Travelers Cos., Cray Inc. to Bloomington and growing software company When I Work to Minneapolis' North Loop. The Twin Cities' biggest legal, accounting and other professional services firms, for the most part, have consolidated into Downtown Minneapolis, the larger commercial and financial center.

Downtown St. Paul's commercial office space, about a third of it occupied by state and local government employees, has shrunk by about 5 percent to 16 million square feet, over the last decade, some of it becoming residential development.

In July, Coleman and business partners moved to address the issue of how to grow businesses and private-sector jobs.

Coleman, a Democrat and business lawyer who is running for governor after 12 years as mayor, has seen job growth in the city since the Great Recession of 2007-2009, but at a slower pace than in Minneapolis and some suburbs.

In July, flanked by young business leaders, rising entrepreneurs and political allies, Coleman formed a 19-member "innovation cabinet" with the goal of adding 3,000 St. Paul jobs over the next three years. The cheapest, most-effective strategy always is to grow the businesses you have, as opposed to trying to lure firms across city or state lines with generous subsidies.

The city, working with developers, also has a goal of increasing office space by 200,000 square feet and adding 2,000 tech-related jobs by 2020.

Mollie Scozzari, a spokeswoman for Coleman, said public sector jobs downtown actually are decreasing while private-sector employment is rising.

Meanwhile, the downtown office-vacancy rate, partly because of conversions to residential, has declined from 20 percent in 2011 to 16.6 percent in 2016.

"Our focus is more jobs, not necessarily commercial office space, as more and more employers are putting more and more employees in less commercial-office space," Scozzari said in an e-mail last week. "The reason we have focused on 200,000 square feet of modern office space is that we have heard from the 'innovation cabinet' and others that this is what is needed to specifically grow tech and innovation jobs downtown."

The innovation cabinet includes Scott Burns, CEO and co-founder of Structural, Don Ball, co-founder of Coco, the co-working space that debuted in Minneapolis in the old Grain Exchange in 2009; Jonathan Anderstrom, president of Creed Interactive, a digital strategy-and-design firm; Andy Reeher, president of growing Reeher LLC; Jenna Pederson, co-founder of 612 Software Foundry and Hack the Gap, which attracts more women into software and technology; and several government officials.

The recent acquisition of Ecolab's old headquarters by local owner-developers who plan to spend up to $20 million to acquire and refurbish the building for small businesses, is a welcome move, as is the refurbishment of the block-away abandoned Macy's department store on Wabasha Street.

Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at nstanthony@startribune.com.