Foot traffic in downtown St. Paul increases but still about half what it was in 2019

Foot traffic in downtown St. Paul is around half of what it was in 2019, but building managers are hopeful that recent activity bodes well for the coming months.

"We are actually seeing people come back to work," said Clinton Blaiser, CEO of the Halverson and Blaiser Group, which manages the 20-story Osborn370. "You can actually go and see people in the lobby, having coffee and meetings. It's kind of a buzz."

The return is uneven, though, said Blaiser, whose firm also manages the Northwestern and Hamm buildings. Downtown's large corporations, including Ecolab and Securian, have hybrid staffs and are not back full time, resulting in "scattered attendance."

Still, the latest analysis by the St. Paul Downtown Alliance looked at August traffic patterns and found "steady" progress, alliance President Joe Spencer said while giving an update to downtown building managers.

In March 2021, traffic was only about 10% of 2019 numbers. In spring 2022, it was 45%.

Evening foot traffic "bounced around, between 70 to 95 percent of 2019 numbers [because] I think people want to see hockey games or go to the opera and go to restaurants," Spencer said. "Our [daytime] worker numbers are bouncing between 50 and 55 percent. It's interesting to look back. Last fall, pedestrian traffic was really bad. It crashed."

Heidi Kempf-Schwarze, president of the Greater St. Paul Building Owners and Managers Association (BOMA), told members during a market update meeting Monday that after several COVID-19 setbacks, "I'm happy to report that the momentum has continued with employers bringing employees back in greater numbers and more business being done in person."

The Downtown Alliance and city of St. Paul have invested millions in hosting public concerts, art fairs, theater and food truck events and launched public safety initiatives to get more workers and patrons to return to downtown.

The uneven nature of current work trends was highlighted earlier this month in a nationwide survey conducted by the umbrella trade organization BOMA International.

About 86% of the nearly 1,300 U.S. businesses surveyed insisted their traditional office spaces were still "vital" to having a successful business.

That number "really jumps out at me," said BOMA International President Henry Chamberlain during a phone interview. The perceived vitality means "people will go back to the office. They realize that, contrary to perception, it will continue to be important."

Commercial real estate watchers had feared that the pandemic could permanently harm the industry. As of the second quarter, office vacancy rates were still at a sobering 30% in Minneapolis and 25% in St. Paul, according to the global commercial real estate services firm Cushman & Wakefield. Today, signs of recovery are emerging.

BOMA International found that 72% of surveyed office tenants planned to renew their leases. But more than half expected to reduce their square footage when their lease expires in one to four years.

Shifting space needs plus the speed with which office workers returned to downtowns varied by region, Chamberlain said.

Businesses in the U.S. Southwest didn't strongly support remote work options, while companies in California and the Northeast did, he said.

States and cities that locked down hard during the height of COVID-19 are seeing workforce returns that are generally taking longer than in areas that kept the doors open, Chamberlain said.

The study, which surveyed both corporate employers and their employees across the country, revealed other differences.

Some 46% of tenant employers preferred a hybrid work schedule with employees in the offices one to four days a week. About 28% wanted workers back full time.

Just 24% of employees wanted to work in their offices full time.

BOMA's study also found that workplace concerns about hybrid work and COVID infections remain "transformative" but "are now taking a back-seat to economic pressures" such as inflation and supply chain disruptions.

With the added pressure, corporate tenants were looking for more value on their leases and wanted to see property owners upgrade spaces, which would help attract workers. Seventy-one percent of building managers reported having already invested in hygienic "no-touch" systems in bathrooms and elevators, heating/air conditioning upgrades, fitness centers, and improved rooftop, outdoor and cafe amenities for tenants.

A third of tenants will continue technology investments and already provide commuter incentives, professional development offerings and social events designed to attract and retain workers, the national survey found.

Tenants leasing large spaces (5,000 to 50,000 square feet) were also more likely to redesign offices to have fewer private cubicles and more collaborative spaces. The national trends have found their way to St. Paul, where Ecolab, Securian, Travelers, U.S. Bank and Wells Fargo have large operations.

Blaiser said that when Halverson & Blaiser redeveloped the former Ecolab headquarters on Wabasha Street into the Osborn370 business incubator building two years ago, it dedicated an entire floor to a shared amenities floor for all tenants.

"We are starting to see more people hang out in there, whether they are an Osborne tenant or not," he said.