Looking for the hottest economic region in Minnesota? Drive about an hour southwest of the Twin Cities and you’ll find it in Greater Mankato.

With one of the fastest-growing economies in the state, a revitalized downtown and a growing mix of restaurants, retail, entertainment venues and everything else a big city offers—without the traffic jams—residents, visitors and businesses are thrilled with the area’s newfound economic exuberance.

As a result, Mankato’s rejuvenated downtown scene is attracting businesses at the fastest rate the city has seen in decades. One of the first to relocate is ISG, an architecture, engineering, environment and planning consulting firm that moved to Mankato’s city center in 2011. Since then, around 25 stories of downtown office space has been and is being built there, says Chad Surprenant, ISG’s president and CEO. “Young people want the hustle of something; [they] want to see the energy of a more urban setting.” And young talent is just what ISG and other area businesses hope to attract as they grow their businesses. Of the company’s 265 employees, 100 work in downtown Mankato.

“Most of what we need and want is in Mankato,” Surprenant says. That includes a diverse economy, myriad entertainment and recreational opportunities, an enviable public and private school system and five area colleges that enable employees’ future growth.

What’s more remarkable is how the efforts of a relatively small but diverse group of Mankato business and civic leaders has, within the last five to 10 years, ignited this region’s economy in unique ways.

In 2016, Greater Mankato had the highest gross domestic product (GDP) growth rate in the state—and third highest in the Upper Midwest.

Another sign of success: From 2014 through 2016, the Greater Mankato area had more than $491 million in capital investments, through 284 projects. And the area has one of the lowest unemployment rates in the nation—2.7 percent in December, according to the U.S. Department of Labor.

Meanwhile, accolades keep coming, for everything from schools and health care to quality of life and affordability (see Greater Mankato Area Accolades). Schools.com ranks Greater Mankato second on its list of the 25 best college towns in America, citing its job potential for the 5,000 students who graduate each year from Minnesota State University Mankato, South Central College, Gustavus Adolphus College, Rasmussen College and Bethany Lutheran College.

Contributing to the area’s growth is a well-educated and diverse population. According to Bukata Hayes, executive director of the Greater Mankato Diversity Council, 44 different languages are spoken in the area. By 2030, he says, the white population is expected to grow by approximately 3 percent, the non-white population by approximately 117 percent.

Staying put

When you consider the charm of the city, located in the scenic Minnesota River Valley, and factor in the number of graduates who remain to start their own businesses or provide growing businesses with the talent they need, it’s not surprising that the area continues to prosper.

According to Minnesota State Mankato, 20 percent of its graduates stay in the area, a figure that has been relatively consistent over the past five years.

Jim Beal is a prime example. Although he didn’t graduate, he grew up in nearby Pipestone, studied at Minnesota State Mankato for two years, then joined the Navy. After his discharge in 1972, he and his wife returned to the area, settling in North Mankato and later building a house in Eagle Lake, where he served as mayor from 2000 to 2004. Today, he and his son Jason are partners in Mankato-based JBeal Real Estate Group.

Like many of the area’s businesspeople, Beal wears more than one hat, also serving as chairman of the Regional Economic Development Alliance (REDA). That organization is composed of the cities of Mankato, North Mankato, Eagle Lake, Lake Crystal and St. Peter, as well as Blue Earth and Nicollet counties, all of which share a common goal: to grow development in the region.

“REDA allows smaller cities to sit at the same table with Mankato, North Mankato and the two counties,” Beal says. With the Greater Mankato area’s designation in 2008 as a Metropolitan Statistical Area (MSA), more people have been inquiring about the area, he says. “Companies around the world, when they want to build a plant, for example, start with the list of MSAs to find a good place with available workers.”

Facilitating the collaboration between the cities and counties is Greater Mankato Growth Inc., formed in 2007. Today, the organization has four business units: Greater Mankato Growth (the area’s Chamber of Commerce and economic development organization), Visit Mankato, City Center Partnership (Mankato and North Mankato’s downtown development group) and GreenSeam, which promotes investment in ag-related businesses in southern Minnesota and northern Iowa.

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“It’s very unique; it’s one of the only business development organizations in the state,” says Jonathan Zierdt, GMG president and CEO. “We’re just a player; we help bring people together to identify new opportunities.”

New development

Growth has boomed in the city centers of Mankato and North Mankato in recent years, which had 113 commercial and industrial building projects totaling $43.6 million in 2016 alone.

“Our city center, over the past 10 years, has really blossomed,” says Mankato city manager Pat Hentges. “It’s spurred entertainment downtown and, with the Tailwind project, our downtown is the place to be with a corporate presence.”

He’s referring to Profinium Place, part of a long list of projects by the Tailwind Group, a Mankato-based development firm that has been a leader in downtown development in Mankato and North Mankato. The seven-story multi-tenant office tower is home to several professional services firms, including Tailwind. The project spurred development of two additional buildings: Ridley Tower, a four-story office building, and Block 518, which includes retail space and approximately 20 residential units.

“The presence of many strong local businesses, regional shopping and entertainment, and higher education [institutions] are great contributors to making Mankato a great place for Tailwind,” says Michael Sather, director of finance and a partner in the firm.

Also developing projects in both downtowns is Mankato-based Brennan Cos., which consists of Brennan Construction and Brennan Properties. It was the general contractor for the Children’s Museum of Southern Minnesota in Mankato and was involved in five other projects that are adding new energy to the downtown areas, including the historic Landkamer building.

“The size of Greater Mankato means new projects continue to keep us busy, yet the close community means that we get to see the benefits of great projects like the Children’s Museum impact our friends and neighbors,” says Mike Brennan, president of Brennan Cos.

Another project, which is awaiting City Council approval, is the Eide Bailly Center, a $21.8 million, seven-story, 73,000-square-foot mixed-use building that would include retail and office space, with a restaurant, rooftop event center, patio and adjacent parking ramp. If approved, construction is expected to begin this year; it would be led by local commercial developers Rob Else and Tony Frentz, partners in Neubau Holdings.

Based in Mankato, Neubau Holdings started its first project in 2008 and now owns and manages six buildings, four of which underwent extensive renovations. Before completing work on the historic Graif Building, built in 1892, Frentz and Else purchased and renovated the adjacent property, a six-story, 44,000-square-foot building known today as the U.S. Bank Center.

“The company was founded with the intention of creating something positive and purposeful in downtown Mankato to assist in the revival of the city center,” says Frentz.

Coldwell Banker Commercial Fisher Group, is another major player in the revitalization of downtown Mankato. The company is redeveloping the Ridgely Building into a combination of offices and apartments, and doing the same with a former auto shop.

“We’ve been a part of downtown for many years and continue to play an active role there and in Old Town,” says president, broker and owner David Schooff. “It’s important to keep the city center going. I like to see these buildings brought back to life.”

Vibrant downtown

The reinvigoration and redevelopment of the city centers in Mankato and North Mankato is the focus of the City Center Partnership. “We are the bridge between the city and the business community for both cities,” says director Megan Flanagan. “It’s two cities, but one downtown connected by Veterans Memorial Bridge. It’s a high-energy place [that’s] drawing new businesses and residents.”

The downtown area has also attracted many visitors in search of dining and entertainment opportunities to Old Town, Belgrade Avenue and South Front Street. North Mankato’s Belgrade Avenue hosts several exciting events, including Blues on Belgrade, Beer on Belgrade, and Bells on Belgrade, a family holiday event with Santa Claus and horse-drawn rides.

“Five or six years ago, we had downtowns all over the region. Today, downtown Mankato is the urban center for the entire region,” says GMG’s Zierdt.

Events such as Alive After Five, which offers free evening concerts in August at the Civic Center Plaza, and attractions such as the CityArt’s Walking Sculpture Tour, which features sculptures throughout the downtown area, continue to attract increasing numbers of residents and visitors to downtown Mankato.

“We started the Public Art Initiative in 2011, and we’ve put up more than $2 million of art since then,” Flanagan says. “Public art has brought a lot to the community; it’s a source of pride, improves aesthetics and brings people downtown. The city’s collection now consists of 17 permanent sculptures, some purchased by the city, others by area businesses and residents who then donated them to the city.”

Verizon Center, which is owned and operated by the City of Mankato, is another popular attraction. The 5,000-capacity arena hosts the Minnesota State Mankato’s Mavericks hockey team.

Built in 1995, Verizon Center “was a major impetus for growth in the downtown Mankato area,” says Burt Lyman, executive director. “There are nearly 25 restaurants and bars within walking distance of the Verizon Center, and it is estimated the center and surrounding dining establishments draw between 300,000 and 400,00 visitors to the area and generate an excess of $41 million in economic impact annually.”

The center’s staff also manage and schedule the 4,000-seat Vetter Stone Amphitheater in nearby Riverfront Park. Each year the facility hosts a four-day RibFest. In 2014, the Star Tribune named it the No. 4 outdoor venue in the state.

In October, the city will host its ninth Mankato Marathon, which brings in more than 4,000 runners from Minnesota and surrounding states. “In 2014, Trip Advisor named this among the best marathons to travel to,” says Anna Thill, president of Visit Mankato. “Through events like this, it’s an opportunity for people to see what we have; we’re looking for bounce-back visitors.”

Addressing the challenges

“Mankato has changed dramatically during the 22 years I have been city manager,” says city manager Hentges. “Employment has grown partly because our economy is very diverse; manufacturing, services, medical and government are almost all equal. That has provided a certain amount of stability in our population, which has grown an average of 2 to 2.5 percent per year. We’re growing at a higher rate than most regional centers throughout the state.”

That growth has brought with it a need for housing. “We’re building 150 single-family homes now,” Hentges says. “We run a little below some of the other regional centers in terms of income level, but the [26,000-plus] students in the [Greater Mankato] population influence those numbers.” On the other hand, he says, a single person earning $13 to $14 an hour could purchase a home in the city, where the average single-family home costs $190,000.

The problem: A worker who needs child care would need to earn $23 to $24 an hour to pay for a mortgage, day care and transportation. In fact, lack of affordable day care is a statewide challenge, often preventing parents from entering the workforce. Southern Minnesota needs 27 percent more licensed child-care providers to meet demand, according to the Center for Rural Policy and Development.

To address the shortage, Blue Earth County recently launched a program to provide grant-funded forgivable loans for new child-care providers, and the Southern Minnesota Initiative Foundation is partnering with organizations to provide support, grants and loans to individuals who want to start child-care programs.

Like elsewhere in the U.S., the Greater Mankato area is working hard to create, attract and retain talent. For the first time since 2001, there are more job vacancies in the area than the number of unemployed people, says Shane Bowyer, talent initiative consultant for GMG.

By 2020 the area will need 3,000 more workers to replace retiring employees and to fill new jobs, according to GMG’s Zierdt.

GMG is attempting to fill those vacancies by matching jobseekers with job openings through greatermankatojobs.com and GreenSeam Talent Exchange. GMG’s Executive Talent Council, made up of local business leaders, also is working with area school districts and colleges to help students identify career paths and opportunities in the region.

Helping spread the word about the Greater Mankato area is moremankato.com, which launched in November and had an impressive 11,270 hits in its first two months, including from as far away as Hawaii, New York, Florida and Washington.

“Our overall goal is to showcase our community in a way we haven’t done before,” says Bridget Norland, GMG’s director of marketing and communications. “The site is a living, breathing thing. It has nine virtual tours now, but we would like to double that.”

Ag is king

The cornerstone of the Mankato area’s economy is agriculture and ag-related businesses—everything from farming, manufacturing and technology to biology, marketing and engineering.

“It’s a huge part of our economy,” says Sam Ziegler, director of GreenSeam. “Our goal is to see businesses that are here thrive and expand and to see new companies start up. In the past 20 months or so, there’s been half a billion dollars invested here.”

Agribusiness represents $36 billion in economic activity and drives $1 out of every $3 in the area’s economy, adds Ziegler.

The Mankato area is home to two of the largest soybean-crushing facilities in the world —CHS and ADM—and processes almost 300 semi-loads of soybeans a day.

“Almost 1,000 business here are connected to ag through products, services and technology,” says Ziegler. “And 28 percent of the workforce is employed in ag-related businesses.”

GreenSeam works with local schools and colleges to ensure that the area attracts and retains students who become part of the ag workforce. “That’s one of our biggest challenges,” Ziegler says. “We’re working with K-12 and higher education to make sure parents and students understand the opportunities in ag. They don’t have to have their fingers in the dirt or be controlled by what Mother Nature does.” A college student, for example, can earn a degree in IT, accounting or engineering and land a job that is connected to agriculture.

The future workforce

The Greater Mankato area boasts K-12 and higher education options that any area would envy. “We have a 92 percent, four-year [high school] graduation rate; the goal of the state is to be at 90 percent,” says Mankato Public Schools superintendent Sheri Allen. “Why is it so high? I think it’s about our talented staff, our community partnerships and the value of education in our region.”

One program that helps students succeed is the district’s Youth Employment Acceleration Program (YEAP). The earn-as-you-learn program was established in 2013 with three local businesses: EI Microcircuits, MTU Onsite Energy and Kato Cable, and offers students 2,000 hours of experience at those companies.

“They designated people within their businesses to work with us,” Allen says. “Students and parents love it; it’s helped engage them differently,” and students can move right into employment.

EI Microcircuits is a contract manufacturing company with three facilities in the area and has acquired additional land for future expansions. The company has had five students participate in its YEAP program; two of them became full-time employees after graduation.

The company also provides internships for area college students and is a founding contributor of the mechatronics program at South Central College. Since the program’s inception in 2009, the company has had an average of 12 students a year, who earn credit while gaining real-world experience.

ISG is another local business that’s partnering with higher education. The company helped start a civil engineering program at Minnesota State Mankato and eagerly hires its graduates.

“Creating connections to industry is critical for the university and our students,” says Minnesota State Mankato president Richard Davenport. “The main mission of our Strategic Partnerships division is to connect with the business community to provide career opportunities and experiences for our students, while sharing the expertise of our faculty and staff and our university resources with the business world.”

Minnesota State Mankato’s largest programs include nursing, psychology and communication studies, and it is the only college in Minnesota to offer a four-year degree in aviation.

In 2016, 94 percent of Minnesota State Mankato graduates were employed, with 88 percent working in fields relating to their majors and 13 percent continuing their educations.

Like Minnesota State Mankato, South Central offers customized training for area businesses, working with them to identify gaps and develop training programs to meet specific needs.

“If you look at new technology that an industry needs to implement to stay competitive, we can provide it,” says South Central College president Annette Parker. “For example, we can update farmers on technology that will help them get better yields. With our customized training programs, we are pretty much in every county in Minnesota.”

South Central College is a community and technical college with campuses in North Mankato and Faribault. Founded in 1946, it was the first technical school in the state. Today, it’s home to approximately 5,000 students and works with another 11,000 students through its workforce development programs.

South Central also partners with area businesses through apprenticeships and internships, providing its students the opportunity to learn on the job while working toward a degree. The college’s job placement rate for fiscal 2016 was 93 percent.

Healthy living

As the Mankato area has grown, so too has the need for health care. That need is met by several health care providers, including the Mayo Clinic Health System, which has five facilities in the Greater Mankato area.

During the next 18 months, Mayo will invest more than $75 million in its Mankato campus, says Dr. James Hebl, regional vice president of the Mayo Clinic Health System.

Mayo also has a helicopter base at the Mankato Regional Airport, which allows it to transfer patients to the Mayo Clinic in Rochester. “Full, comprehensive care can be provided in Mankato,” Hebl says, “but for the more complex, acute needs, we connect with Rochester.”

Like other businesses in the area, Mayo partners with area colleges for the employees it needs. That includes working with Minnesota State Mankato amd Bethany Lutheran, South Central and Rasmussen colleges to provide education and clinical rotations for their nursing students, and partnering with Minnesota State Mankato to develop curriculum and provide clinical instruction for the Simulation Center at the university’s new Clinical Sciences Building.

“This is a good area for us,” Hebl says. “It’s the second-fastest-growing Metropolitan Statistical Area in the Upper Midwest, and it’s a key area for a regional medical center.”

Mankato’s health care providers also include the Mankato Clinic, which is owned by 95 physicians. “We also have about 60 advanced practice providers, so we have more than 150 providers and a total of 780 providers and staff,” says CEO Randy Farrow. “We cover 28 different specialties, and we have a strong pediatric and OB-GYN practice, along with all the ‘-ologies.’ ”

Mankato Clinic has 12 sites in five communities in the area, including a sleep center, a children’s center and its main clinic, which is attached to the hospital. The Star Tribune listed the Mankato Clinic among its top 150 workplaces in Minnesota in 2015 and 2016. “People come and they stay; that translates to good care for our patients,” says Farrow.

A unique culture

GMG chair Ron Vetter credits the area’s success to the spirit of collaboration among its communities. “I think we’ve got a unique culture,” he says. “There’s an inherent expectation that leaders embrace; they do what’s best for the greater good rather than for them personally. If you’re here, you’re included and you give back.”

Residents and business leaders are committed to maintaining the area’s status as an economic hot spot and a great place to live. In planning for its future, city leaders turn to members of its Young Professionals group: people under 40 years old who are emerging leaders, says Vetter. “We want to know what they want the community to become, and a lot of what we do is in answer to their needs and desires. We want them to stay here and lead us into the future, to shape the community as we go forward.”

Vicki Stavig is a Bloomington-based freelance writer.