Minneapolis Downtown Council: ‘Defund the Police’ Rhetoric Killing Deals
[Editor’s note: On Wednesday, the Minneapolis Charter Commission voted to keep a major police overhaul proposal off the November ballot.]
In the wake of the killing of George Floyd by Minneapolis Police in late May, a movement to “defund the police” has gained momentum. The concept has the backing of the majority of the Minneapolis City Council.
The Minneapolis Downtown Council business association is trying to get a message to City Hall: the rhetoric about dismantling the police force has already killed some real estate deals and has many downtown companies now looking to move to the suburbs.
The Downtown Council has convened an informal group of downtown office brokers, developers, and dealmakers who work to attract investors to downtown Minneapolis to get on-the-ground market intelligence about the mood of the central business district. The office market was already under pressure in the Covid-19 pandemic.
Steve Cramer, president and CEO of the Minneapolis Downtown Council, noted that talk of defunding the police quickly generated national and international headlines and that there was immediate fallout.
“That had a really measurable impact on economic vitality for our city,” said Cramer. “Measured by companies that had leases that wanted to tell their broker, ‘Get me out of here.’ Measured by companies that were looking at coming into Minneapolis that put that on pause. Measured by investors who paused or canceled outright investments in new projects…It really was a pretty dramatic effect.”
Cramer could not cite details, noting that brokers and others who were providing the information did not want to identify specific companies or deals.
But Cramer added: “Nobody’s making this up.”
According to information gathered from tenant representation firms, within less than six weeks a total of 45 companies have either canceled plans to move downtown or are actively scouting space in the suburbs. Per the real estate insiders, 13 of those companies have more than 100 employees; one has over 600 employees.
The numbers gathered by the Downtown Council show:
- 10 suburban or out-of-state employers have canceled searches for downtown office space
- 8 downtown companies have chosen to relocate to the suburbs, citing safety concerns
- 27 downtown companies are either considering or are actively seeking space in the suburbs to leave downtown
A two-page summary of the anecdotal information that the Downtown Council collected to share with public officials included numerous dire stories, including:
- “Five firms that were looking for office space in downtown (from outside of downtown) have eliminated downtown Minneapolis as an option. Two large firms (over 100 employees) that were looking to move to the Twin Cities from out of state, and had Minneapolis on their list of options, have canceled plans to do so due to the unrest.”
- “Large institutional investors who provide the majority of the capital to both market rate and affordable housing developments have already slowed down or paused on new investments in Minneapolis.”
- “We are hearing from our equity investors, that they are either very skittish or simply excluding investment in Minneapolis right now.”
But Cramer said he is not the prophet of doom and gloom.
Behind the scenes, the Downtown Council has been connecting with Mayor Jacob Frey and 10 out of the city’s 12 council members to communicate their concerns.
“I’ve been here now for almost seven years,” said Cramer of his tenure leading the Downtown Council. “Those are probably the best conversations I’ve seen between the downtown business community and our City Hall elected officials in that period of time. I was encouraged by that. I don’t know what it’s going to translate to long-term.”
The Downtown Council has already outlined its position on the discussion of the Minneapolis Police Department: “Bottom line, we say yes to reform and reinvention of policing led by our police chief with broad-based community support. To the notion of ‘dismantling’ the MPD, we decisively say no!”
Cramer remains optimistic.
“I think we can turn this around. I’ve described it as a trickle,” said Cramer of companies and investors stepping away from downtown Minneapolis. “We just don’t want that trickle to become a flood.”