With big-name retailers like Nordstrom Rack and Marshalls leaving, it’s been a bruising few weeks for downtown Minneapolis. Plus, two prominent downtown properties are now set to go up for auction: The Hilton – the largest hotel in downtown Minneapolis – and LaSalle Plaza.

It’s against this backdrop that Minneapolis mayor Jacob Frey this week unveiled plans for a new work group to tackle growing retail holes downtown. At a press conference at the Young-Quinlan building on Wednesday afternoon, Frey announced the formation of the “vibrant downtown storefronts work group” composed of 22 individuals. The group includes former Minneapolis mayor R. T. Rybak, restaurateur David Fhima, and the Greater Minneapolis Buildings Owners and Managers Association (BOMA) president and CEO Sarah Anderson.

Minneapolis Downtown Council president Steve Cramer and Juxtaposition Arts managing director Gabrielle Grier are serving as co-chairs.

The mayor has tasked the group with coming up with recommendations to help guide the future of downtown retail. Slated to meet for the first time in mid-January, the group is expected to issue its first recommendations in April, Frey said.

As for what the group might recommend? Frey admitted that “we don’t exactly know what those recommendations are going to be.” But he made it clear he’s leaving it all in the hands of the group.

“The cities that are going to succeed now going into the future are not the ones that are going to cling white-knuckle to what once was,” Frey said. “The cities that are truly going to succeed are going to embrace change, are going to move with the times, and … most importantly, are going to listen to the best datasets and the most experienced experts.”

For now, the effort doesn’t include any funding to help business owners pay rent, but it is a possibility down the road. “I’m very interested in what the work group has to say. I’m not putting anything on the table, but I’m not putting it off either,” Frey said. The idea to use government money to help fill empty storefronts isn’t entirely novel: In St. Paul, for instance, a downtown advocacy group this summer launched an effort to provide free, limited-term leases for a handful of businesses.

Frey noted that the city already has some subsidies available for business owners through programs with the Minneapolis Downtown Council.

Frey and other speakers characterized downtown Minneapolis as the “economic engine” of Minnesota as a whole. Disinvesting in it, they said, could have consequences for all Minnesotans.

“The tax base of downtown is so important,” said Michael Rainville, a Minneapolis councilmember and member of the work group. “If that tax base isn’t protected, if it doesn’t grow, then the renters of Minneapolis and the homeowners of Minneapolis are going to have to pay more in taxes.”

Juxtaposition Arts’ Grier, meanwhile, said that her organization has the ability to “interrupt patterns of disinvestment within our city.”

“I’m really happy to be able to think about the reinvigoration and reinvention of what is possible for downtown,” Grier said.

The group also plans to listen to concerns from downtown residents, Frey said. “A big question is: What do residents want in downtown? We have a ton of residents that people – going back before R. T. Rybak – pushed to get in downtown. We have them now. We want to keep them.”

Frey noted that the downtown population has been increasing over the last few years. In 2021, the population in downtown Minneapolis bumped up 5.6 percent to 56,077 residents, according to the downtown council’s latest statistics.

A destination mindset

Mich Berthiaume, curator of Dayton’s Project holiday market and member of the new work group, maintains that “downtown has to become a destination.”

“Pickleball, mini golf, ice skating, food, shopping—it’s simply reinventing, with a hook,” she said.

If anyone can convince Twin Citians to go downtown, it’s most likely Berthiaume. On Black Friday, the holiday market at the Dayton’s Project had shoppers lined up at 6 a.m. for the limited edition re-release of Santa Bear, an old Dayton’s holiday tradition.

“We had people asking if they could get Santa Bear online,” said Berthiaume. “When we explained that it was an in person shopping experience, they hopped in the car and came downtown. It’s the Field of Dreams philosophy—build it, and they will come.”

Meanwhile, fellow work group member and president/CEO of the Minneapolis Regional Chamber Jonathan Weinhagen said that the goal is to “reenvision what that retail experience is.” But he conceded that “I’m not certain that anybody has the answer yet.”

“I’m hopeful that this working group can be a starting point to innovate and to incubate what the answer is, but as I talked to my peers across the country, nobody has the answer to what the future of retail in that space in their downtown looks like.”

This is not the first time a downtown redevelopment work group or committee has formed, Weinhagen noted. But everything shifted during Covid, he noted. People live and work differently now, so cities need to find creative ways to adjust.

“The biggest difference is – if you look at a pre-pandemic, post-pandemic – is we have a little bit of a clear understanding of where the future of work is headed,” he said.

Optimism in some corners?

Despite the impending exit of City Center’s last remaining big box retailer, Marshalls, which will close in January, the tower’s senior real estate manager Ryan Strand of Ryan Cos. says he remains optimistic that retail can thrive downtown.

“The traditional retail anchor model is a troubled approach – it was pre-pandemic,” Strand said. “But there’s still plenty of room for experiential concepts, boutiques. We’re looking at all available opportunities.”

He pointed to the success of Bad Axe Throwing, an entertainment concept that opened an approximately 8,000-square-foot space at City Center in 2021. “It’s on us to get a little more creative,” Strand said, offering doggy day care as another example. “Wouldn’t it be great to bring your pet to work?”

Of course, that would presume people are going to the office. As of March, the Minneapolis Downtown Council reported that 44% of the usual downtown workers had returned to their offices in some capacity.

City Center is 90% leased, but only about 30 to 40% occupied since Target continues to pay rent on nearly a million square feet of office space in the building that it vacated in 2021. But while the property may not have a cash flow crisis, the lack of traffic is an issue for retail businesses.

“Our skyway restaurants could use some foot traffic,” Strand said. “They’ve all survived with significantly lower foot traffic and we continue to work with them because it’s a major amenity for our office tenants. We’re waiting for the next step of workers being downtown two to three days a week. We’re seeing more and more tenants focus on that schedule—as employers mandate it, that will help.”

Over at the IDS Center, leasing agents report an occupancy rate of 75%, according to Accesso Partners, which handles leasing in the building. This year, Accesso said it signed leases worth more than 307,000 square feet, including renewals from Starbucks, Huntington National Bank, and Sit Investment Associates. In total, IDS has 1.4 million square feet of office and retail space.

Still, the departure of Nordstrom Rack leaves a big hole on the first floor of the IDS, and there are no immediate plans for the space.

Editor-in-chief Allison Kaplan and associate editor Winter Keefer contributed to this report.