Strength in Minneapolis drives resurgent economy

Antoinette Smith had just arrived in the Twin Cities when a guy in a truck noticed her Illinois license plates at an intersection. "You from ­Chicago?" he called out. Turned out they both were.

"There's a lot of opportunity here, isn't there?" the man said, driving off.

Smith, 34, who came to Minnesota in 2011 for a sales job at a software firm, has found that to be true. Last fall she took a job with Code42, a fast-growing company in Minneapolis where she is learning to write software.

"Some weeks, I get one recruiter call every single day," said Smith, who lives in St. Paul.

The surging market for professional workers in Minneapolis is a key reason the Twin Cities enjoys the lowest unemployment rate of any large metropolitan area in the country. Employers in the city have added 25,000 positions since 2009, twice as many as the five other largest cities in the metro combined. About a third of these new jobs are in higher-paying fields such as management, recruiting, advertising, real estate, consulting, public relations, engineering and software development.

The vitality marks a dramatic comeback for the state's traditional commercial capital, which steadily lost jobs through the first decade of the millennium while heavyweight companies like General Mills, Medtronic and UnitedHealth were hiring in the suburbs.

As the business nerve center of a part of the country that's expanding, downtown Minneapolis is drawing strength from the oil boom in North Dakota and the sustained farm boom across the corn and soybean states, said John Spry, an economist at the University of St. Thomas.

"Today, America's region of low unemployment is the Plains," Spry said. "It's a great position to be in, to be the regional hub for the area of the country that's doing the best."

The re-energized Minneapolis professional sector has helped counteract four years of stagnation in St. Paul's job market, and it is fueling a wave of construction that goes far beyond the new Vikings stadium and office complex rising on the east side of downtown. Big new condominium and apartment buildings are going up downtown and in Loring Park, and are marching along the west end of the Midtown Greenway.

The strong job market is the logic behind new stores and restaurants. A new Whole Foods is open for business on Hennepin Avenue. A high-end watchmaker from Detroit just opened a shop on Washington Avenue. A Minnesotan returned from New York City to start a restaurant in the thriving North Loop neighborhood.

The job search is not easy for everyone. Long-term unemployment remains high by historical standards, as does the number of people working part-time because they can't find a good full-time job. Wages in Minnesota and the nation are stagnant.

But thanks to bursts of job creation in Minneapolis, and Eagan, Maple Grove, Blaine and Woodbury, unemployment in the Twin Cities has fallen to 4 percent, the lowest level of any metropolitan area in the nation where more than 1 million people live.

Job growth in Minneapolis and the rest of the Twin Cities "feed off of each other," said Toby Madden, an economist at the Federal Reserve Bank of Minneapolis.

"Growth in the inner city can spur growth in the surrounding communities, and that growth in the surrounding communities can spur growth in the inner city, which is a virtuous cycle," he said.

Nowhere is the strength of the Twin Cities economy more apparent than in the North Loop, the Warehouse District between Target Field and the Mississippi River. Washington Avenue and the streets around it are patrolled by leashed French bulldogs and dotted with boutiques and restaurants that cater to professionals and empty-nesters.

Scott Wenner, who lives in St. Paul but has worked as an animator in the North Loop for 11 years, said the neighborhood is full of creative jobs and professionals who work downtown and to the west. He was eating pizza outside Black Sheep, under an umbrella spinning in the breeze.

"These people are responsible for this place," he said, gesturing to the restaurant. "It's definitely been a huge change."

When Ann Yin, 46, opened Local D'Lish, a deli and grocery on 2nd Avenue N. in 2008, the main businesses nearby were neighborhood stalwarts Ribnick Fur & Leather, Moose & Sadie's and Deja Vu, the strip club. Momentum in the neighborhood had been building, with people moving in, but then the bottom fell out of the condo market and construction mostly halted.

"It sat kind of still for a bit," Yin said, but not for long. "Then it's like, wow, people are moving in. Wow, the development's started again," she said. "Now it's just an explosion."

Eric and Andrew Dayton bought a building on the street about the time Yin opened her business, and launched the Bachelor Farmer, Marvel Bar and Askov Finlayson in 2011.

Now a French restaurant is going in across the street, Local D'Lish just had its best year yet, Bill Ribnick gets calls from developers who want to buy his building and Eric Dayton is trying to figure out how to use the building next to Askov Finlayson, which they bought in 2012. A block away, workers swarm on scaffolding at the Paxon, another new apartment building.

"This would have been almost beyond our most optimistic hopes," Eric Dayton said of the neighborhood's growth.

Both St. Paul and Minneapolis lost thousands of manufacturing jobs in the downturn, and neither has recovered them.

But growth has returned in professional work, and Minneapolis is the hub of banking, finance, law, accounting, advertising and public relations. The number of management jobs in Minneapolis grew 24 percent from the end of 2009 to the end of 2013, by nearly 4,000 positions. Average pay for those jobs, according to the Bureau of Labor Statistics, is $36 per hour.

Minneapolis also added 1,000 jobs in advertising and public relations, 2,000 in computers and software, 3,900 in real estate and leasing, and 7,500 in health care in that period.

"Minneapolis enjoyed what looks like a real estate, leasing and corporate headquarters boom," said Laura Kalambok­idis, the state economist. The jobs "tend to be well-paying, and they tend to attract highly educated people."

Lee Jones was a journalist in London covering the financial crisis in 2008, so he had a grim perspective on the economy when he and his wife, a native of Buffalo, Minn., moved to the Twin Cities at the end of 2010. But he found a job within three months — in public relations at One Simple Plan.

"I thought it would be harder," he said. "I was coming from London where I had friends who were struggling to keep their job."

Jones, 29, still works at One Simple Plan, doing work for a mix of large and small clients like Surly Brewing, Dunn Bros., the Minnesota Craft Brewers Guild, Sun Country Airlines, Lumber Liquidators and Kramarczuk's

"There's a lot of growth for our clients, and obviously that helps us," Jones said.

Signs in the job market point to further improvement, said Anthony Rodari, a recruiter at Target who moved to Minneapolis from Des Moines, Iowa, almost two years ago and lives near the Walker Art Center.

"A lot of jobs are starting to open up," he said. "The search for talent is becoming more competitive."

Rodari, 33, mostly recruits entry-level business analysts out of colleges like the University of Minnesota, St. Olaf College, Carleton College, the College of St. Benedict and St. John's University. Software engineers, especially, are at a premium. The company is hiring aggressively in the Twin Cities, but also, Rodari said, "we have been looking more on other ends of the country to try to relocate talent to Minneapolis."

St. Paul also has a growing professional sector, even though its overall job numbers have been flat since the bottom of the recession.

The state capital has seen 8.5 percent growth in professional, scientific and technical jobs since the end of 2009 — 552 new positions. Technology firms like Cray, Microsoft and GovDelivery all are adding positions in the city.

"St. Paul has historically been a blue-collar manufacturing, beer-producing town," Mayor Chris Coleman said. "What makes me optimistic about those numbers is if you look at the trend on the jobs of the future, we're doing well."

ThisCLICKS, a young firm that started in St. Paul, employs 30 people and is hiring. The company sells software that allows small businesses to manage scheduling and payroll, and revenue has grown by double digits month-over-month for the past 18 months.

At a celebration of the company's new offices in the Drake Building across the river from downtown, the mayor looked on while CEO Chad Halvorson crushed an old-fashioned time clock with a sledgehammer on the patio outside the building.

"I love seeing this company here. I love seeing this growth," Coleman told the crowd. "This is an important symbol for the city of St. Paul."

Leaders in St. Paul hope that a series of major investments will spark the same kind of growth Minneapolis is enjoying. The new light-rail line through the heart of the city, a new Saints ballpark on the edge of Lowertown, a renovated Palace Theater and several new apartment projects may be catalysts.

While St. Paul is adding health and education jobs, its dependence on government has put the brakes on growth over the past four years. Nearly one in seven of the city's jobs are in public administration, a sector that has grown only 2 percent since 2009.

That reflects a shift that was hastened when First National Bank of St. Paul merged into what became U.S. Bank in the last part of the 20th century, said David Lanegran, a geographer at Macalester College.

"The presidents of First Bank here were real pushers, they really had this sort of sense of St. Paul, lived on Summit Avenue, engaged in all kinds of activities," Lanegran said.

The First National Bank boardroom is now a government conference room for the state economic development agency.

"St. Paul's downtown has kind of shifted its focus from being a central business district to being a regional center with plenty of residential development," Lanegran said.

That's just fine with Antoinette Smith, who says she can easily get more apartment for her money in St. Paul than in Chicago or Minneapolis.

A shift toward a residential St. Paul is less appealing to leaders in the community. What ends up happening on the site of the shuttered Ford plant in St. Paul — where 1,600 jobs were lost — will be pivotal, said Matt Kramer, president of the St. Paul Chamber of Commerce. No plans have yet been firmed up.

"We can't turn it into a giant park. There needs to be jobs there," Kramer said. "There's a term for communities that don't have industry: They're called bedroom communities. I don't want to live in St. Paul when everybody gets up in the morning and drives to Minneapolis to go to work."

The stronger job market in the west half of the Twin Cities is reflected in the rising share — 18 percent, as of 2011 — of Ramsey County workers whose jobs are in Hennepin County. It also has helped fuel an apartment boom and metrowide housing recovery.

Since 2011, 4,000 apartments have been built or rehabbed or are under construction in downtown Minneapolis and the North Loop. Downtown St. Paul has added about 1,000.

"As Minneapolis is adding jobs, you're going to see that directly correlating with demand for apartments," said Lance Steiger, an associate director for Cushman Wakefield/Northmarq. "They're tied together at the waist."

Home prices have been rising fast. In April, the median sale price was $224,500 in Minneapolis and $161,000 in St. Paul, according to data from the Minneapolis Area Association of Realtors. Those figures represented 19 percent and 15 percent gains over one year.

To economists, job growth in Minneapolis is good for the whole metro area, said Steve Hine, the state's labor market economist.

"Whether that strength is coming from one particular geographic location or another is I think less consequential than the fact that the metro area as a whole is doing very well," he said.

And it is, from Topper Anton's perspective. He moved back to Minneapolis in September after 10 years in New York, mostly to be closer to family. But Anton, 29, found that he could easily find work as a freelancer producing broadcast commercials for advertising agencies.

He lives in Uptown, but has been working near Loring Park since January and is thinking of getting an apartment in the North Loop. The strength of the local economy is noticeable to him.

"The nightlife here, the restaurant scene, all that stuff is thriving," Anton said. "I think part of that is because people are working."

Adam Belz • 612-673-4405 • @adambelz