Downtown St. Paul program pairs small businesses with empty storefronts (and zero rent)

Alexandra Johnson was searching for a storefront to move her dog sporting equipment business, Jack and the Pack, out of her garage. The old Heartthrob Cafe space on the ground floor of downtown St. Paul’s Wells Fargo Place had been vacant for more than a decade.

All they needed was a matchmaker.

Enter the nonprofit St. Paul Downtown Alliance, which has been pairing small businesses with empty storefronts through its Grow Downtown program since 2022.

“It’s been more successful than we thought it would be,” said Joe Spencer, the Downtown Alliance’s president. “And also more impactful.”

He and other downtown boosters are touting the program as a win-win-win: Business owners get free retail space for six months without having to commit to a long-term lease. Property owners boost their curb appeal and often end up with a tenant who sticks around. And downtown St. Paul becomes more vibrant, shedding eyesore vacancies and gaining foot traffic from new retail workers and customers.

So far, 14 of the 18 businesses that participated in Grow Downtown remain in the locations they were placed, filling 27,000 square feet of retail space that would otherwise sit empty.

Johnson started Jack and the Pack in 2021 after struggling to find a her dog, Jack, a harness for sports like dogsledding, bikejoring and Canicross (cross-country running with dogs). She asked brands whether she could sell their gear and offer customers a place to get their dogs sized and fitted.

By 2023, after building a customer base through social media and dog sporting events, she was looking for retail space. A friend mentioned the Grow Downtown program, and Johnson drove to scope out empty storefronts. The former cafe space on Wabasha Street caught her eye for its large windows.

There was a vetting process: The Downtown Alliance contracts with Kruger Real Estate Advisors, led by former St. Paul Port Authority President Lee Kruger, who looks at applicants’ business plans and projected revenues to help evaluate if they might be able to afford the space in time. The storefront also needed a few improvements, which the property owner and Johnson both helped cover.

Now in addition to equipment for sports, Jack and the Pack offers treats, toys, leashes and training sessions. Johnson said families often stop by after a visit to the Children’s Museum across the street to shop and pet her dogs, who accompany her to most shifts.

“We’re really happy we’re here,” Johnson said. “You need to have your ducks in a row, but [the Grow Downtown program] was super worth it for me. And I hope other people are taking advantage of this, too.”

Similar pandemic recovery programs have come and gone across the country. So far, the St. Paul program has succeeded because it doesn’t rely heavily on public or philanthropic support, Krueger said. After six months, it’s up to the business and property owner to decide if and how to move forward.

Short-term leases aren’t common because they often aren’t worth the work they require for property owners and commercial real estate brokers. That’s why Krueger, who previously worked in retail leasing, handles the initial agreement. If a longer-term tenant emerges before six months is up, property owners are also allowed to ask businesses to leave with 30 days notice.

“Now the retailers have got a sales history and they’ve got an ability to look at what they can afford, how they’re trending,” Krueger said. “If they’re seeing their business grow, then they can kind of make their next deal more based on a little bit of a track record.”

For instance, he said, after a few months in a Hamm Building storefront across from the Palace Theater, the owner of Petek Trading Co. realized the location wasn’t the best fit for the clientele base of her Turkish gift shop. So she found a new spot a few blocks down, on W. 7th Street, where customers often stop in before and after dining at Hope Breakfast Bar.

Lucille’s, an alcohol-free bottle shop, moved into that vacated space in August. Owner Alexandra Zauner said she and her business partner — both from St. Paul — had been touring spaces in the city for months searching for the right fit.

The pair launched Lucille’s in the fall of 2023, hosting a number of pop-up events across the Twin Cities. They wanted a home base to host more events and provide space for people to socialize without the presence of alcohol.

“A lot of people will come in and say, ‘I haven’t been downtown in years,” Zauner said last month, after ringing up a customer who drove from Rogers to sample a few drinks before making a purchase. “I do feel like even though our events are smaller, we bring people downtown.”

Knowing that has made her more conscious of some of the downsides of doing business downtown. Parking can be hard to find on a busy day, so Lucille’s is looking to potentially lease spots in a nearby lot. They’re also in talks with the Hamm’s Building’s property management team about the possibility of getting a sink.

“Even though we have this large building, we’re still considerably a small business,” said Lillie Rosen of Halverson and Blaiser Group, which manages the building. “Being able to work with other small businesses and help them out is a great benefit.”

Spencer said he expects many businesses will pay little or discounted rent after their six-month contract is up — evidence of the value they bring to the buildings. That’s the case for Trinity House Coffee, which opened in the skyway level of Wells Fargo Place in early 2023.

More than a decade after he started selling African-grown coffee beans online, owner Gerry Exom was connected to the Downtown Alliance through an entrepreneurship program he did with St. Paul’s Neighborhood Development Center.

Property managers have extended Exom’s free lease for the time being. The space was vacant long before he moved in, he noted, and it’s a convenient coffee option for the buildings’ office tenants.

“One reason this location is so attractive to us is because it gives us opportunities to cater to both the affluent community in the offices here and also the disadvantaged community that surrounds this area,” said Exom, who is a disabled veteran.

The storefront’s commercial kitchen allowed Exom to slowly build up a catering business to complement the coffee. In recent weeks, orders have ballooned — so much so that he’s talking about the possibility of opening a second location. Krueger, who was recently contracted by the Minneapolis Downtown Council, recently took Exom on a tour of a prospect there.

St. Paul is still searching for more businesses, too, preferably those with a track record online or at events like farmers markets. Those interested can apply on the Downtown Alliance’s website.

“This is a pretty unique opportunity for businesses to have,” Spencer said. “They’re not saddled with a lease that kicks in that they can’t afford. I think that’s part of what has helped some of these businesses that did end up to be viable — part of it’s giving them a shot.”