The Saint Paul Downtown Development Corporation (SPDDC) has unveiled creation of an investment fund supporting projects to reinvigorate the city’s struggling downtown.

Two longtime downtown employers, Securian Financial and the nonprofit Bush Foundation, have invested $30 million. They are the lead investors in the Saint Paul Downtown Investment Fund, which was formally announced in a Thursday release.

The fund’s capital will aid the SPDDC’s commercial, residential, and mixed-use real estate development projects. The development corporation launched last year as a real estate-focused subsidiary of the Saint Paul Downtown Alliance.

“An investment fund is a critical step to advancing the work of the Downtown Development Corporation, and ultimately, to benefit all stakeholders of downtown,” SPDDC president Dave Higgins said in the release. He described the fund as critical to sustaining SPDDC projects and said it would encourage further investments.

Already, the fund’s capital has been used by the SPDDC to acquire four downtown properties—including the Alliance Bank Center and the Empire Building.

The fund will also support downtown-revitalization initiatives to eliminate substandard property conditions, to invest in pedestrian-oriented changes to public spaces, to convert office spaces to residential spaces, to attract and retain jobs, to nurture minority- and women-owned businesses, to further civic space restoration and historical preservation, and to increase the volume and variety of housing.

The fund’s key investors noted the breadth of downtown’s economic impact.

“The strength and vibrancy of downtown Saint Paul … matters for the health of the city and the region more broadly,” said Jen Ford Reedy, president of the Bush Foundation. “At the Bush Foundation, we are glad to put our assets to work this way.”

Chris Hilger, president and CEO of Securian, noted the insurance and financial services giant is committed to St. Paul “for the long run.”

The SPDDC busied itself last year buying downtown properties left behind by Madison Equities, whose collapse contributed to an overall real estate mess. Those properties are: the Alliance Bank Center building, the Capital City Plaza Parking Ramp, and the Empire Building with its adjacent Endicott Arcade. Last month, the group also bought the mortgage note of the U.S. Bank Center building, another former Madison Equities property.

All are ripe for redevelopment. Except for the parking ramp, they appeared high on a list of candidates for office-to-residential conversion. That list, released in November 2024 by architectural and design firm Gensler, identified 10 especially convertible properties in St. Paul’s urban core.

The SPDDC’s acquisitions make for good conversions because employers want larger floor plates, Saint Paul Downtown Alliance president Joe Spencer tells TCB on Thursday. “[Employers are] looking for floor plates in the neighborhood of 30,000 square feet, 50,000 square feet,” so they can fit the most employees on one floor. The Alliance Bank Center, U.S. Bank Center, and the Empire buildings don’t fit that bill.

Meanwhile, office-to-residential conversions should make for a better commercial office market, and Spencer says this happens two ways:

In the short term, these residential conversions take poor-quality offices offline, improving the downtown vacancy rate. “You’re lowering the denominator,” he says, and ultimately upping property values.

In the long term—and more importantly, he says—office-to-residential conversions strengthen the retail market, which then strengthens the office market. “If you can imagine a central business district that only has workers around from 9 to 5, the shops there don’t have as much business in the early morning hours.” They’re less busy in the evenings, too. But add a coffee shop, a grocery store, a gym—“that’s an environment that’s more attractive to office workers,” and employers theoretically follow.

As well as announcing its new fund, the Saint Paul Downtown Alliance on Thursday concluded a downtown skyway pop-up surveying respondents’ perceptions of and visions for downtown. “In late February, the Alliance will go into a deeper dive on the design process,” Spencer says.