Downtown St. Paul comes alive with excitement on nights when 18,000 Minnesota Wild fans stream into the capital city to watch an NHL hockey game. Wearing their green and red jerseys, many patronize area bars and restaurants before or after the Wild’s 41 home games. The Wild bring vitality to the area surrounding the Xcel Energy Center. But that high energy is absent on many days and nights in much of downtown. And in 2024, there’s been a constant drumbeat of ominous headlines emanating from downtown.
Some businesses, including the TKDA engineering firm with about 300 employees, are leaving. U.S. Bank didn’t renew its lease for nine floors of office space in the U.S. Bank Center. Many state and other public employees like to work from home, so remote and hybrid work has driven the closure of skyway businesses.
Civic leaders acknowledge downtown has become a magnet for homeless and addicted people, and some visitors don’t feel safe when they witness drug deals, panhandling, or criminal behavior on light-rail. Unless they’re attending a major event where there will be safety in numbers, some people say they are choosing to bypass downtown St. Paul because they don’t want to be hassled or risk becoming a victim.
Beyond public safety concerns, the commercial real estate market downtown has a high vacancy rate. Several office buildings went up for sale this past spring, following the death of downtown property owner Jim Crockarell in January. His Madison Equities portfolio includes the First National Bank Building, once a high-status location. The building is now half-empty.
Some of his properties have additional problems. An incensed Mayor Melvin Carter spent time in late August cleaning out parts of the Lowry Apartments, which tenants said was an unsafe and poorly maintained building. Then a Ramsey County district judge appointed a receiver to take over management.
With diminished foot traffic downtown, the restaurant sector has been hit particularly hard. For example, Barrio, in downtown’s Lowertown district, closed in September, and Saint Dinette, located near CHS Field, says it expects to close in 2025.
Accelerating housing conversions
Carter, first elected in 2017, says he recognizes that downtown is at a crossroads, and it needs effective public leadership and substantial private investment to revitalize the city’s core.
Sitting for an interview in a third-floor conference room at City Hall, Carter characterizes the current situation as “rocky roads underfoot.” But he says there’s a “compelling future out there for downtown St. Paul.” The mayor and the Saint Paul Downtown Alliance, a coalition of business, government, and nonprofit leaders, want more people to live, work, and visit St. Paul.
“We’ve got to be willing to think differently about every single thing,” Carter says.
Roughly 10,000 people live in downtown St. Paul, and a Downtown Alliance plan calls for adding 20,000 people over several years.
“We have a really troublesome vacancy rate with regard to office space,” Carter says. “Our residential buildings are 92% full.” He sees multiple benefits to converting office buildings to housing.
Carter anticipates that strategy would increase the property tax base and expand the housing supply, and the larger residential population would attract service businesses downtown as well as new employers.
The vacancy rate in St. Paul’s central business district was 26.9% in the second quarter of this year, according to a report from Cushman & Wakefield.
Ward 2 council member Rebecca Noecker, who represents downtown, says that community leaders need to act with a sense of urgency on repurposing office buildings. “Our downtown commercial real estate right now is our biggest opportunity,” she says. Noecker and Chris Hilger, CEO of Securian Financial, are co-chairs of a downtown real estate work group, an effort of the Downtown Alliance.
This fall, Gensler, a global architecture and design firm, will release a report in which it recommends best uses for about 20 downtown St. Paul buildings.
Joe Spencer, president of the Downtown Alliance, contracted with Gensler, which is studying a variety of building characteristics and will provide a detailed analysis for each structure. However, in advance of the study’s release, Spencer cited the Park Square Court building at 400 N. Sibley St. and the Empire Building at 360 N. Robert St. as good candidates for housing conversion.
Bill Baxley, a Minneapolis-based design principal for Gensler, says his firm gathers data about each building and assesses its conversion potential by looking at five key areas.
The site criteria involve the building’s location and whether it has access to transit, good views, and a walkable area. The building form is assessed to determine whether housing units could be reasonably configured. The size of the “floor plate” is an important factor because it takes into account the distance between windows and the building’s core.
Gensler also looks at the building’s envelope, which involves how much solid wall exists in comparison to window sizes. The last factor that’s scored is for services, which includes parking and the mechanical, electrical, and plumbing systems. Since 2020, Gensler has evaluated more than 1,400 buildings in more than 130 cities.
“There’s tremendous opportunity to get more housing in the central business district,” Baxley says. While some questioned the financial wisdom of all the Madison Equities properties going on the market at the same time, Baxley says there’s a potential benefit. If multiple properties become housing conversions within the next few years, he says that would have a “dramatic impact right away.”
The floor plates in several downtown St. Paul buildings are smaller than those in office buildings in larger U.S. cities. “Those smaller floor plates, in particular, become an opportunity to convert to housing more effectively,” Carter says, because they allow access to natural light that’s compatible with housing.
Incentives for housing conversions
In the coming months, Noecker expects a variety of steps will be taken to spur conversions.
“One of them is to waive permitting fees,” she says. “We have a million dollars in the mayor’s proposed budget for those fee waivers.” She’s also weighing multiple options for creation of an acquisition fund.
The city of St. Paul will return to the Minnesota Legislature during the 2025 session to seek a special housing tax credit. “We need a financial incentive for these conversions to happen, and we don’t have the cash sitting around in the city’s coffers to do that,” Noecker says.
B Kyle, president and CEO of the St. Paul Area Chamber, is a leader in advocating for the tax credit. During this year’s legislative session, a bill was introduced to facilitate the conversion of underutilized buildings, and eligibility wasn’t limited to St. Paul. The proposed tax credit could equal up to 30% of the costs of conversion.
“The conversion cost is high, as you might imagine,” Kyle says, so the chamber will be working with city leaders and the Downtown Alliance to make the case for the tax credit.
“We have limited Class A office space in downtown St. Paul,” Kyle says. “We have an abundance of Class B and C.” She contends it makes sense to allocate some of the lower-rated space to housing, increase the number of residents living downtown, and ultimately become a more attractive place for businesses to locate.
Tina Hoye, a real estate broker and president of Minneapolis-based NTH, Inc., has been involved in numerous projects and leases in downtown St. Paul.
“People care about St. Paul and are trying to figure out ways to make it better,” says Hoye, a longtime St. Paul resident and former chair of the St. Paul Area Chamber. “There are a lot of commercial buildings that [already] have been converted to residential,” she says. “I certainly support that continuing, but it’s not a silver bullet, and it’s expensive.”
The city’s rent control ordinance and high interest rates and high construction costs have constrained housing development in St. Paul, she says. She predicts that further building conversions likely will need multiple incentives.
“Look at Sherman Associates,” Hoye says. “They’re doing the Landmark Towers [project] and they got a bunch of tax-increment financing for it because it wasn’t going to pencil out otherwise.” That $97 million project involves building market-rate apartments on St. Peter Street, and the city allocated $12 million in tax-increment financing for it.
Carter says that federal tax credits also should be created for housing conversion, because St. Paul is among many large cities that have been hurt by hybrid and remote work. “I think the federal government is going to have to invest in downtowns around the country,” he says.
Is downtown safe?
As the CEO of the Minnesota Wild, Matt Majka spends time downtown on days, nights, and weekends. He feels safe.
“I’m frustrated by perception versus reality when it comes to safety,” Majka says. “I don’t begrudge that people have real perceptions that downtowns are unsafe. But as someone who works at an organization that is back to work 100%, my experience has been that the reality is not what I’m hearing the perception is in terms of safety.”
Majka praises St. Paul police officers who patrol downtown, and he thinks the ambassadors employed by the Saint Paul Downtown Improvement District do a good job keeping the area clean and increasing safety. Commercial property owners on the west side of downtown, including Ecolab, Securian Financial, and Travelers, have been paying special assessments to fund the work of the ambassadors.
They generally work from 7 a.m. to 11 p.m., and during shifts they are in contact with local police, private security officers, and a safety communications center, according to the Downtown Alliance’s Spencer.
From 2021 through 2023, Spencer says that quality-of-life crimes dropped 40% in the section of downtown covered by the district. He defined those crimes as vandalism, graffiti, and aggressive panhandling. “It’s not violent but makes people uncomfortable,” he says.
That type of behavior rose during the same period in Lowertown, which is not part of the district but will be added beginning Jan. 1. Lowertown is the eastern section of downtown where TPT, Mears Park, and CHS Field are located.
Andy Brehm, a corporate lawyer who lives in St. Paul, argues the city needs to do a better job of reducing all forms of crime, otherwise it will deter more people from visiting downtown. He recalled a recent trip to the St. Paul Farmers’ Market adjacent to CHS Field. “There were people doing drugs on the street,” Brehm says. “When you have low-level crimes being tolerated, it gives off an impression of lawlessness.”
Not far from the Xcel Energy Center, Catholic Charities installed a 6-foot-tall fence around Dorothy Day Place, which operates permanent housing and emergency shelters. Catholic Charities put up the fencing after assaults and overdoses occurred near its campus.
Council member Noecker says that downtown St. Paul is on the front lines of the opioid crisis. “We are seeing more and more people overdosing and just walking around in the throes of addiction,” she says. “Our police officers are directed to enforce the law,” she says, but adds that the drug issue presents many challenges.
The St. Paul Fire Department, she says, is beginning a new program in which personnel will carry Suboxone, in addition to Narcan, to respond to addicted people. While Narcan saves lives by reversing an overdose, Suboxone is used to treat opioid addiction. The city of St. Paul is paying for these costs through funding from legal settlements reached by pharmaceutical companies.
The city has received about $4 million so far, which will rise to $14 million by 2038, according to John McCarthy, director of the city’s Office of Financial Services. That money can be used for treatment, prevention, and other strategies.
Expand events and entertainment
Brehm, who also serves as a Republican political analyst, describes the state of downtown St. Paul as “very precarious,” but he emphasizes that city leaders could take two quick steps that would increase the number of people willing to come downtown.
“Make sure there’s zero tolerance when it comes to crimes, including panhandling,” Brehm says. The second step: “The mayor should call St. Paul employees back to the office five days a week.”
In his recent budget address, Carter stressed the importance of city employees working in their city offices, but he didn’t state a required number of office workdays per week.
Carter agrees with Brehm on the importance of getting more people into the downtown area. “We’re doing an incredible job of attracting big events,” Carter says. When he delivered his budget address in August, he mentioned the recent Minnesota Yacht Club Music Festival and the 2026 World Junior Hockey Championship tournament.
Carter also threw his support behind proposed renovations for Xcel Energy Center, which is closing in on 25 years in operation.
The Minnesota Wild’s parent company manages Xcel Energy Center for hockey games and other entertainment events. “We are fully recovered from Covid in terms of business performance,” Majka says, adding that 2024 has been a strong revenue year. “Concerts and other events that we hold inside Xcel are as good or better than they’ve ever been from an attendance and vibrancy standpoint.”
But he notes that the facility, which is owned by the city of St. Paul, needs upgrades.
“There have been significant public contributions to both Target Field and U.S. Bank Stadium, so we would like to enjoy that kind of support as well,” Majka says. “But we will absolutely make a significant commitment to the improvement of our campus.” A price and specific plan have not yet been disclosed for a renovated arena.
As public and private leaders consider a vision for the future, the Chamber’s Kyle says they need to avoid thinking small. She recently attended the funeral of popular Mayor George Latimer. “He thought big,” Kyle says. “We can’t limit ourselves. You have to think big enough to inspire the heart of the people.”
She pointed to the Osborn370 building as an example. The former Ecolab tower was turned into a center and creative space for entrepreneurs, she says.
Mayor Carter was born in 1979, which was early in Latimer’s tenure as mayor. Now the spotlight is on Carter to produce for downtown St. Paul. “What stresses me out,” Carter says, “is the thought about how we raise the resources to deliver on this big vision we have for downtown.”
