Why downtown is the fastest growing neighborhood in Minneapolis

Office towers still dominate the Minneapolis skyline, but they don't shine as brightly as they once did. So the spotlight is now on housing.

Although hybrid work sucked much of the vibrancy — and thousands of workers — out of the financial district, downtown is now home to the fastest-growing neighborhood in the city.

With a population that exceeds many suburbs, including Vadnais Heights and Mounds View, downtown has become an under-the-radar neighborhood that's still growing. More than 1,000 new apartments are in the pipeline, including a pair of high-rise apartment towers that are near completion and about a half-dozen empty offices buildings likely heading toward conversion into rentals, eroding what had been a monoculture of office buildings.

"Downtown had been one- or at most two-dimensional, and that's part of what we're looking to change," Mayor Jacob Frey said.

City boosters — and optimistic investors — are banking on the arrival of thousands of additional downtown dwellers such as John White Jr. and Wendy Fossum, who live with their dog in a historic office building that for a time was the tallest tower downtown but later converted to apartments.

"I'm from a small town, and living in the middle of downtown is something I really wanted to do," White said. "We felt confident that downtown Minneapolis would bounce back one way or another."

In 2020, there were 11,485 people living in a roughly 17-block-long area — the Downtown East and West neighborhoods — a 63% increase from the previous 10 years, according to the latest census figures. In Downtown East alone, the population more than doubled.

Those gains don't include people living in the bustling North Loop and other downtown-area neighborhoods, nor does it include the hundreds of new residents who moved downtown during the past three years. One of those is Jena Lipham, who lives in a new 10-story apartment building next door to Thrivent's also new corporate campus.

Like many downtown dwellers, Lipman walks to work.

"I wanted to really live in the city and walk everywhere," she said.

Lipham, who grew up in the southern suburbs, said her two French bulldogs have been the catalyst for meeting many of her neighbors. Though parks are scarce and nearly every apartment building has its own dog run and pet spa, pedestrians are as likely to be holding leashes as they are briefcases.

Just a few days after moving this summer, Lipham met another downtown resident who also has two French bulldogs.

"We've hung out almost every day since we met," she said. "It really does feel like a neighborhood, in a weird way, even though it is heavily commercial or office buildings. You just run into the same people on the street. ... There is just a good energy around here. Everyone seems happy and active, and I love it."

As a neighborhood, downtown doesn't yet have everything it needs, Lipham said. Though there's a Starbucks and a daycare on the street level of her building, she laments the lack of casual restaurants.

"I've found it a little difficult to find places nearby that aren't full-blown fancy sit-down restaurants," she said. "I'm not a big DoorDash girl, but it's kind of the only option sometimes."

There's a Target, Trader Joe's, Whole Foods and a Walgreens within walking distance of her apartment, but she sometimes drives to big-box and clothing stores in the suburbs to stock up on essentials.

Downtown stores are "smaller than I'm used to, and that makes sense, as we're in the city, and it's still kind of in revival mode," she said.

Many of the essentials are in the more established neighborhoods that surround the Central Business District (CBD), including Elliot Park, the North Loop and Loring Park, all of which have more green space and more children.

Most of the housing units in the urban core are one- and two-bedroom rentals, although there are some high-end condos and row houses. As of 2020, there were 8,225 housing units within the Downtown East and West neighborhoods. That's a 74% increase in the past 10 years in an area that includes the CBD and the Mill District, a leafier zone along the Mississippi River.

More housing is on the way. Sherman Associates is midway through construction of 330 new apartments and a 217-unit office conversion. The company also plans to demolish a former Wells Fargo data center and build two towers. Ryan Companies — which is based downtown and recently co-developed the Eleven on the River, a 42-story condo tower in the Mill District — is putting the finishing touches on a 345-unit apartment tower across the street from U.S. Bank Stadium.

Hundreds of additional rentals are likely as office building owners look for new uses for their struggling properties. A variety of tax credits will help finance many of those conversions, so they'll target working-class renters who currently can't afford to live downtown.

Already, downtown rents are among the most expensive in the metro, but it's also one of the few places in the metro where it's a renter's market. The average vacancy rate in the area recently topped 8%, forcing many landlords to offer concessions, often two months' free rent.

Those deals are one of the reasons Gigi Bisong moved downtown this summer. She'd been living in the West End area in St. Louis Park, but she missed the more urban environment of the city. Generally, she said, downtown was a better value than the North Loop and other downtown-area neighborhoods.

She pays $2,300 for her one-bedroom apartment but nabbed a couple months of free rent when she signed her lease. She loves the finishes and amenities in her building, including the rooftop patio space where she can work remotely and teach yoga and meditation classes.

She, too, laments the lack of retail. But she said when it comes to crime, perception is worse than the reality, though there have been some minor incidents, including package thefts.

"I've lived downtown and am from the city, so I'm not scared or thinking I have to move," she said.

Frey said further crime reduction is a top priority, as is providing support and policy changes aimed at making the area more friendly to people who want to live there.

As downtown loses key attractions (the YWCA recently announced plans to sell its building on Nicollet Mall) and crime remains above pre-pandemic levels — although serious crime has fallen compared with last year — city leaders are focused on finding ways to bring office workers and residents to the city's center.

This year, the mayor announced the findings of a task force that included residents and other stakeholders. Key recommendations were to take buses off Nicollet Mall, at least intermittently, and change state alcohol laws to make it more attractive for visitors and potential restaurants that want to establish outdoor dining.

Joe Tamburino, a longtime downtown resident and criminal defense attorney who was on the task force, thinks those recommendations don't go far enough to serve the people who live there.

"We are the only neighborhood in Minneapolis that is gaining in population but simultaneously losing significant commercial resources," he said. "A lot of people downtown have some disposable income, but we have to go out of downtown to spend that."

Still, Tamburino said there are plenty of perks, including proximity to the North Loop, the Guthrie Theater and to the river, which is just four blocks from his condo.

"If you like music, theater and entertainment, you can't be in a better area," he said.

Even a daytime mugging in 2021 hasn't scared Tamburino away. "It made me want to stay more," he said. "Why should I leave?"

Irma Davila agrees. She said while crime is always a concern, she's never had a problem, even when she returns from a late night out with friends.

Davila moved downtown from Nashville in February 2021 in the dead of winter. It was in the midst of the COVID-19 shutdown and the lead-up to the Derek Chauvin trial, when the city prepared for unrest by boarding up buildings and installing cyclone fencing.

Yet she quickly fell for life in a changing city.

Like many downtown residents, she works from home and doesn't have a car, so she's able to get just about anywhere — without a winter coat — in the skyway, where she's developed friendships with store clerks and others.

She lives across from a light rail stop and loves hearing the train's horn, but she also has easy access to Uber. The convenience, she said, clearly outweighs any challenges.

Fossum and White agree. They said they moved from the Lowertown neighborhood in St. Paul during the pandemic because even in its altered state, downtown had more to offer than their previous neighborhood.

"It's not back to the way it was before," White said. "But it's building back up into something a little different."

Star Tribune staff writers MaryJo Webster and Jeff Hargarten contributed to this story.