From Owatonna to Red Wing, Minnesota's small downtowns see resurgence

OWATONNA, Minn. — Downtown Owatonna is on the National Register of Historic Places, a draw for many people, especially architecture buffs, who travel just to stare up at the ornate depictions of agrarian life at the National Farmers Bank. But six years ago, like many small city downtowns, it was struggling.

Many storefronts along Cedar Avenue — its main street — were empty. And some buildings with operating businesses were deteriorating.

"It was desolate down here," said Lauren Kozelka, 30.

Yet, it now is seeing a resurgence with new business owners like Kozelka, who bought long-standing Kottke Jewelers in 2021, being part of the solution.

Small wins are big business for small city downtowns.

"The scalability and visibility is a lot more powerful in a smaller community," said Emily Kurash Casey, director of community programs for the nonprofit Rethos, which operates the Main Street program in Minnesota. "It's easier to see a dent versus when you have a town like Minneapolis."

For Owatonna, sidewalk renovations and the razing of an old theater for a new hotel also reinvigorated the downtown hub.

Yet, like much larger downtowns such as Minneapolis, small cities must continue to put resources into their Main Streets to transform with the communities around them. While a win can boost the whole downtown, a closure or two can also have an outsized negative effect.

Residential opportunities in this day and age are important, said Michael Burayidi, an urban planning professor at Ball State University in Indiana who has written several books on downtown revitalization.

So is promotion. The businesses themselves also need to stay relevant, he said.

Cities and building owners can help with that. For example, in Northfield, Minn., when a DVD store closed, a skateboard shop expanded into the space in a downtown supported by the college populations of Carleton and St. Olaf.

Entrepreneur Andrea Hanson has been updating Red Wing's business core, one storefront at a time. Five years ago, she opened her women's clothing boutique Phileo Style on 3rd Street. She now is in a prime spot on Main Street next to Red Wing Shoes, which itself underwent a big facelift a few years ago.

Hanson — who grew up in Red Wing and worked at many of the small gift shops that populate the historic downtown — renovated her store spaces as she moved and has worked to bring in other retailers to backfill her.

Hanson, 41, took on her biggest challenge yet in spring 2020 with her husband, Chad when they purchased the building that housed Josephson's men's clothing store and the crumbling upstairs space that had been vacant for over a century.

"This building called to me," Hanson said.

The couple renovated the upstairs into four apartments and also had to help facilitate a plan for the 144-year-old Josephson's, whose owner retired last year. Hanson worked to bring in St. Paul landmark business Heimie's Haberdashery.

"All downtowns are struggling right now," said Heimie's owner Anthony Adler. "City cores are an extreme gamble."

But while the core customer base is smaller in Red Wing, there are also opportunities in smaller downtowns with cheaper real estate and funding incentives, Adler said.

"I believe that retail needs to be saved in small cities, small downtowns," he said.

The key also is to fit the space with the tenant. Red Wing Bicycle Co. owner Andrew Petersen, 39, moved into his current space on 3rd Street earlier this year. His old space was too narrow to properly display his wide array of bikes.

"It's really made everything we do easier," he said.

Petersen benefited from another of Red Wing's creative projects to keep the downtown strong. He won the 2016 Retail Challenge contest, and along with it $40,000 in goods and services to open his store. Now, Petersen is involved with the city's latest retail challenge.

The retail improvements are coming as two projects are about to bring 70 apartments to the downtown.

"We are on the cusp of a different type of downtown where people live downtown," said Megan Tsui, executive director of Red Wing Downtown Main Street.

Red Wing in the past year also has made a bigger effort to embrace its Indigenous roots through public art and events in conjunction with the Prairie Island Indian Community.

The retailers also have banded together more in recent years, which has allowed for events such as boutique crawls, Hanson said.

Owatonna has a history of venerable small retail businesses such as the Owatonna Shoe Co., century-old Costas Candies and Kottke Jewelers.

Yet, a few eyesores like the long-vacant Arnold House hotel were having an outsized effect. The city demolished the hotel in 2017, making way for Arrow Hardware to build a modern store.

Arrow announced last week it is closing, but the building won't be empty for long. Faribault Ace Hardware plans to open there in a few months, said Mark Umbreit, one of the managers for Faribault Ace.

The new Arrow location allowed Torey Statlander, 57, whose restaurant had outgrown its space in a nearby strip mall, to move into Arrow's old building and add an events space.

Another key project was the construction of the Courtyard by Marriott hotel that opened last year at the site of a former theater across the street from Torey's Restaurant and Bar.

The hotel opened as the city completed $4.5 million in streetscape improvements along Cedar Avenue and near downtown's Central Park, which included wider sidewalks and pedestrian-friendly alleys.

"The timing was really great, actually, coming out of the pandemic because people wanted a place to gather, and our community has told us that they wanted downtown to be that place and that it just hasn't been," said Lisa Cochran, main street director of the Owatonna Area Chamber of Commerce & Tourism.

Businesses — eight this year — also have taken advantage of the city's forgivable loan program for building renovations, which gives out loans of up to $20,000 for businesses that renovate their buildings.

"It was immediate," Kozelka said. "The smiles, the walkability."

Every change added momentum. Now an infrared fitness studio is about to open along Cedar Avenue. The city recruited an Italian restaurant after a residents' survey last year showed they wanted one. A 70-unit apartment building also is underway with a brewery underneath it in an underutilized industrial area along the nearby Straight River.

"The whole vibe downtown, I think, is positive," Statlander said.

In 2018, Outside magazine placed Crosby, Minn., on its list of "Best Places to Live." Outside noted that the mountain bike trails were drawing lots of visitors and new businesses.

"The town has changed a lot in the last 20 years. It had seen its better days in the mining era," said Cheryal Hills, executive director of the Region 5 Development Commission.

The Cuyuna Lakes State Trail has developed over the past two decades.

"It's become one of the go-to spots for trail enthusiasts across the nation," Hills said.

As the trails have drawn bikers and others to town, the influx of people has driven a revival of downtown Crosby and attracted new businesses including coffee shops, breweries and equipment rental operations.

Victual, which opened in 2019, offers artisan cheeses and gourmet foods "not normally found in northern Minnesota," said Paul Kirkman, president of the company.

"If it were not for the bike trails, I don't think we'd be there," Kirkman said.

Nick Miller was part of the first wave of new businesses located in Crosby because of the trail. His Iron Range Eatery opened in 2017.

"There's a lot of business in that town now. Business has been good," Miller said.

Carleton and St. Olaf colleges guarantee a steady flow of customers each year for Northfield's downtown, which sits near both campuses. Even with that stability, the city needs to continually work to keep its central business district strong.

One recent example: A DVD store went out of business after many years, replaced by Northside Boards, which had outgrown its space, said Jane Bartho, president of the Northfield Area Chamber of Commerce & Tourism.

Also, Quality Bakery closed during the pandemic and had not reopened. Husband and wife Devin Johnson and Erin O'Donnell took over the space and opened Robin's Egg Bakery in November. Next year they want to start serving breakfast, Johnson said.

"It's in a strong three-block historic stretch" that also includes the couple's Makeshift Accessories Gallery, said Johnson, who with his wife operates a property management company as well.

"There's an ongoing flood of new people coming into town all the time," Johnson said of traffic from the colleges.

Like Red Wing and Crosby, the city also relies on foot traffic from Twin Cities residents, though.

"Given that we are 40 miles south of the Twin Cities makes Northfield perfectly accessible for day trips and tours," Bartho said.

Still, Kurash Casey of Rethos said an important part of revitalizing small downtowns is to make sure efforts are geared to serve the people who live in the area.

"Thinking about and planning a downtown for the people that live in the community tends to build places for the people who want to visit."