Convention business is back in downtown Minneapolis. So is spending around sporting events and theater performances. But the skyway economy is still shaky, with office traffic stuck at about 55% of what it was before the pandemic.
Twin Cities return to office is still spotty — will that change after Labor Day?
Although conventions and sporting events are bringing crowds, it's still a mixed bag for office buildings downtown.
September 1, 2022 at 3:23PM
Downtown boosters are hopeful that number will bump up another 10% after Labor Day as another round of businesses set some structure to return-to-office policies.
In St. Paul, downtown office tower managers say the return there remains spotty as well. Many white-collar workers are still working exclusively or mostly at home. And it remains to be seen if that will change anytime soon.
Most office activity takes place on Tuesdays, Wednesdays and Thursdays, said Steve Cramer, head of the Minneapolis Downtown Council. The momentum for return to office flattened over the summer as vacations and summer schedules took over.
"We've made a little bit of progress. That is the good news," Cramer said. "What's doing very well are the white-linen tablecloth spots that cater to theatergoers and conventioneers."
But he said the retail economy of shops and casual lunchtime restaurants that depend on office activity is "a mixed bag." About 400 skyway and ground-floor shops are now open, up from 200 last year but still down from the 700 storefronts before the pandemic, Cramer said.
A recent Downtown Council survey of downtown company leaders found that about 20% of firms had not yet asked employees to return to the office on a regular basis.
"They were not expecting to implement their return-to-work policies until after Labor Day," Cramer said. "So we may not see this [increase] until the end of the year."
At City Center on Nicollet Mall, about 35% to 40% of workers have returned, said Ryan Strand, real estate manager for the complex. That should rise to 40% to 50% next week after children return to school and parents have more time to head into offices, he said.
Still, lunchtime lines are back at Naf Naf Grill and Los Ocampo at City Center, Strand said.
The return of regular business such as conventions has boosted downtown as well.
"A number of large conventions were here this year that were not in 2020 or 2021. So you had conventioneers coming in and filling up hotels and going to restaurants," Cramer said. "So the entertainment venues are knocking it out of the park."
The Shriners packed the Minneapolis Convention Center this year, as did 10,000 psychologists and thousands of Olympic hopefuls at the USA Fencing national championships in July. Last week, 2,000 Delta Sigma Theta sorority members came to town for their Midwest regional conference.
The downtown restaurants that survived the pandemic are seeing decent traffic due in part to less competition than years ago and strong fan support for the Vikings, Twins, Timberwolves and Lynx.
The upscale Fogo de Chao and Fhima's at the City Center and Gavin Kaysen's new Mara Restaurant & Bar inside the new Four Seasons Hotel building are all busy as night life regains momentum, Strand and Cramer said.
In St. Paul, downtown boosters are also pleased to see bigger crowds return. The city and businesses have poured millions into free public events designed to funnel more people to food fairs, concerts, and theater and sporting events.
As for returning office workers, reports are mixed. The Infor Commons office building on St. Peter Street has seen 35% of tenants return.
The 37-story Wells Fargo Place, however, has had 60% to 70% of its workers back since last year, with the usual late-summer slowdown caused by the State Fair and pre-Labor Day vacations, said senior property manager Heide Kempf-Schwarze.
Jerry Hersman, vice president of Frauenshuh Property Management, which manages the Infor Commons, said he's not sure that traditional office traffic at his buildings will pick up dramatically after Labor Day.
"I don't really see that changing much prior to year-end, unless the pending recession really comes quick and hard, and employers can dictate a bit more 'Get back to the office' with their people," Hersman said. Many company CEOs "would like their employees back in seats, but their senior managers are telling them, 'No, it would be counterproductive, and we will lose staff.' "
AT&T said it will rescind work-from-home options at the end of September. In response, 8,000 AT&T workers in Minneapolis and elsewhere signed petitions and held news conferences last week asking management to reconsider. Workers cited rising gas prices, child-care costs, crime and productivity as reasons remote work should continue.
On Thursday, the Society for Human Resource Management (SHRM), which represents more than 300,000 human resources professionals, noted that surveys show more companies will ask workers to be in the office more regularly after Labor Day. The organization cited studies showing that more than half of employees want either hybrid or fully remote options, with 34% preferring fully remote positions.
In a newsletter Thursday, SHRM officials cited recent Gallup polls showing the trend back to the office will not slow.
"Fully remote work arrangements will continue decreasing" before leveling out at 20% long-term, SHRM predicted.
Pending sales were up double digits for the first time this year.
