Office building shake-up stirs uncertainty over downtown St. Paul

The recent announcement that Madison Equities, the biggest property owner in downtown St. Paul, plans to sell six office buildings, among other assets, only adds to the uncertainty facing businesses still reeling from the pandemic. Downtown has never been the same since working remotely became a thing.

The Pioneer Press says some business owners feel as abandoned by the city as the empty offices of the workers that used to patronize them, including thousands of government employees no longer required to show up in person.

Diehard skyway vendors have expressed frustration with what some describe as off-again, on-again support from City Hall in light of a downtown office market shaken by the pandemic and the post-pandemic era of remote work.

Many state, city and county municipal offices — as well as the regional Metropolitan Council — have consolidated workspaces or gone fully remote, as much if not more so than their private-sector counterparts.

That development was followed up by news that TKDA, one of St. Paul’s oldest companies, would soon be leaving the city for offices in Bloomington. St. Paul Mayor Melvin Carter’s tepid statement in reaction to TKDA’s imminent departure gave no indication of what efforts, if any, city hall made to dissuade the venerable firm from leaving.

“TKDA has played a pivotal role in the success of our downtown for over a century … We are grateful for our longstanding partnership, and we wish them well as they continue serving our community and communities across the nation.”

But the response of one vendor reveals the vulnerability of enterprises, big and small, that rely on employees of companies like TKDA to make a living.

Bilal Salim, who has been cutting hair at multiple venues downtown for 20 years under the name Mr. B., mused Friday that he might look into relocating from the Alliance Center into the Town Square complex on Cedar Street.

Then Salim learned that within months, Town Square’s UBS Plaza will be losing a major tenant. Design and engineering firm TKDA announced Thursday it will leave St. Paul–where it was founded in 1910 — and relocate to an existing office building on Old Shakopee Road in Bloomington in early 2025, taking some 300 downtown employees with it.

U.S. Bank recently announced a similar exit from the U.S. Bank Building downtown to St. Paul’s West Side.

“I don’t know how you’re going to bring the businesses back,” said Salim, who has advocated for greater law enforcement presence in the skyways. “We need to do something to bring downtown back — something.”

Carter has floated the possibility of converting office buildings to residential space, funded in part by a tax credit under consideration by state legislators. But it’s no silver bullet, even if the tax break becomes a reality.

Still, new housing units on the market would find they have competition, as a flurry of residential buildings downtown have hit the market in the past month, most of them within the past 10 days…

Then there’s the difficult backdrop of high interest rates and the city’s projected population growth, which has slowed, as well as some St. Paul policy decisions unpopular with the private sector, such as rent control, which took effect in 2022 before a major revision took hold last year.

Perhaps the single most effective thing Mayor Carter and Gov. Tim Walz could do would be to require government employees to go back to work in their downtown offices again. But that option appears to be off the table for good.