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Minneapolis hopes to convert empty downtown office spaces into housing: "They have to find a new life"

Minneapolis hopes to convert empty downtown office spaces into housing
Minneapolis hopes to convert empty downtown office spaces into housing 02:14

MINNEAPOLIS -- With more people working remotely than ever before, leaders in Minneapolis are trying to figure out what to do with all of the empty office space downtown.

Minneapolis Mayor Jacob Frey said the transition to remote work was inevitable but the pandemic likely sped up the project by at least five years.

"We can't just be clinging white knuckle to what once was which was filling all of these commercial buildings with a bunch of office space," he said. "I'm a believer that we'll get back to somewhere between the range of 75 to 80% occupied. Seventy-five percent of people coming back into work, but what do we do with the remaining 25%?"

President and CEO of the Minneapolis Downtown Improvement District Steve Cramer estimates about 220,000 people are employed downtown but only 64% come into the office sometime during the week, leaving a lot of offices sitting empty.

READ MORE: Downtown Minneapolis seeing more monthly visitors than before pandemic, study shows  

The demand for traditional office space has also declined as more businesses are opting for new innovative layouts.

"That's the concern," Cramer said. "Some of these older office buildings just are not going to compete for diminished overall office demand, so they have to find a new life and if there's not a new life for them, then the concern is they would just sort of set into some level of decline and we don't want that to happen."

Cramer said that in terms of downtown's recovery from the pandemic and the unrest, one of the statistics that is back to where it normally should be is downtown living.

He added 57,000 people live downtown. That's up 3% in the last decade and continues to grow.

Minneapolis seeks solutions for vacant downtown office buildings 03:00

Renovation on the NorthStar Center building begins next week to help meet the growing demand. Frey hopes this project is just the first of many that will take downtown Minneapolis into the future.

"We have a housing crisis and there's still a whole lot of people wanting to live in our city," he said. "A lot of people want to live in our city and we don't necessarily have the supply to accommodate it. This is an opportunity. It's an opportunity to create more housing for people who need it. It's an opportunity to shift some of this vacant commercial spaces and make sure there's activity throughout downtown."

Construction will be complete next summer and by then the NorthStar building will be home to more than 215 apartment units complete with extensive amenity space and skyway connection.

Twenty percent of the units will be affordable housing. The rest will target those making at least 80% of the area median income, including teachers, firefighters and service workers.

The city of Minneapolis is chipping in $6.9 million in tax increment financing to help make the $92 million project a reality.

Cramer said providing more space for people to live downtown creates a ripple effect for more businesses to come back.

"They have to do their dry cleaning, they have to get their prescriptions, they might want to do some shopping and that creates some demand for retail that has diminished because of the less people coming downtown to work," he said. "So we're trying to trade off more permanent residents downtown for less downtown office workers coming in this era of remote flexible work policies."

The concept of converting downtown office buildings into living units isn't a new one in downtown Minneapolis as the Soo Line Office building is now home to the Soo Line City Apartments and the Rand office building is now the Rand Tower Hotel. Both buildings have been around since the 1920s and the NorthStar since 1916.

The city said the older buildings can be better candidates for the conversion partly because of the layout and position of the windows among other things.

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