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Mayor's vision for downtown Minneapolis: Convert empty offices into housing

Minneapolis is already providing $6.9 million in tax increment financing to support one $92-million project.

MINNEAPOLIS — With more people working remotely, many offices in downtown Minneapolis are vacant. Now, city leaders are sharing plans to fill the empty space.

"This whole concept of remote work, where people are working from home in some form, was probably inevitable but it got expedited by like five to eight years by COVID-19," Mayor Jacob Frey told KARE 11. "I'm a believer that we're going to get back to somewhere around 80 percent occupancy but that remaining 20 percent, we're going to have to change and the change should be, among other things, to residential."

The first housing project is underway. Developer Sherman Associates is converting the old, 13-story Northstar Center East office tower into 216 residential units. The city is providing $6.9 million in tax increment financing to support this $92-million deal, which also includes state and federal historic tax credits.

Most units will be "workforce housing" for those who make at least 80 percent of the area median income. 

"For teachers and police officers," the mayor explained, "people that are working that are already contributing greatly to our city and we want to make sure that they can afford to live here."

Around 20 percent of the units will also be "affordable housing" for those who make 50 percent of the area median income. Construction for is set to last 16 months and should be move-in ready by late summer of 2024.

While it's unclear how many office spaces in total are vacant downtown, Minneapolis Downtown Council reports employee occupancy is 64 percent back to where it was before the pandemic and says the number of people living downtown is growing.

"It's very positive and is a great example of the kind of strategy that when you find the right building and you put the right financial package together it can really be a new life for a building," MDC president and CEO Steve Cramer said of the Northstar project.

Other office buildings that will convert into housing are yet to be announced but Frey says "it's not going to end with Northstar East."

"There's going to be a number of other buildings that are making this transition," Frey said. "We intentionally set the city up 10, 15, 30 years ago, where all of the commercial would be in one place, all of the office would be in one place, and then all of the residential would be in a different place. That's not what's working. What's working is when you've got this beautiful diversity of use and people all in the same neighborhood."

"If you look at the neighborhoods that are the most successful throughout the country, North Loop being one example, they have a beautiful diversity of use," Frey continued. "Sure, you’ve got the business woman but you’ve also got a cook. You’ve got someone else that’s been working the night shift at an industrial plant. You’ve got someone else who is walking their dog and the stroller with the other hand. With that, you get this dynamic that’s exciting and that's what a city is about."

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