If You Lived Here,You'd Be Downtown By Now

Demographics, interest rates, and shrinking office rentals make for a downtown residential boom

The air may be filled with exhaust fumes and car horns during the rush-hour crawl down Washington Avenue on a Friday afternoon, but barely 200 yards away, John Fenn and Jill Breckenridge are out for a stroll in First Bridge Park, enjoying the unseasonably warm weather beneath the trees along the banks of the Mississippi River.

Fenn, a playwright whose A Servant's Christmas has become a holiday staple at the Great American History Theatre, spends an hour walking or skiing in the park each morning. He and Breckenridge, an award-winning poet, own a 1,580-square foot loft in the Itasca Building, an old lumber warehouse at 708 First Ave. N. Back in the 1980s, Itasca was one of the first downtown commercial/residential renovation projects developed with the help of tax increment financing (TIF) by the city of Minneapolis. A friend of a friend recommended the Itasca to them nine years ago. They liked the ease with which their warehouse loft let them carve out living quarters and separate offices for both writers. In 1995, there weren't many places like it downtown.

"Compared to what's happening now, I guess we were pioneers. Certainly none of this used to be here," Fenn says, gesturing at the suburban-looking decks and screened-in porches that comprise the backyards of a section of The Landings, an opulent, multiblock array of townhomes overlooking the park and the Mississippi on the other side of West River Road. "There's a little more traffic along the parkway now, but it's not intolerable," Breckenridge says. Adds Fenn with a raised eyebrow, "And it certainly has taken our property values and scooted them up." "There's no way we could afford where we live if we bought it now," Breckenridge emphasizes. "We're very lucky."

A residential housing boom is steadily changing the character of downtown Minneapolis, especially along the riverfront, where high-priced condos and town homes are sprouting like weeds, extending back along First Avenue North and throughout what is now known as the "North Loop" area of the city. It is difficult to quantify accurately--the city's new department of Community Planning and Economic Development admits that it receives almost weekly requests for reliable downtown housing figures, but has been unable so far to assemble any cogent ones. Much of the data on the city's housing websites is broken down only to the "Central Community" level, which encompasses an area greater than downtown proper, and uses information from the 2000 census, which can't account for the growth of the last three years.

And that recent growth has been phenomenal. One of the more respected firms with regard to downtown housing is Maxfield Research Inc., which prepares market feasibility studies for realtors. Maxfield President Mary Bujold says the first signs of a viable market for new housing downtown became apparent in 1994. From 1994 to 1997, a total of 80 housing units were "absorbed" downtown, meaning that they had been sold but perhaps not yet occupied because the building was under construction. Since then, the rate of absorbed housing has steadily risen, from 406 units from 1997 to 2000 up to 1,035 new units since 2001. In addition, Bujold says that approximately 200 more units have been definitively planned, and that 3,400 downtown units are in the initial planning stages. Even given Bujold's caveats about the latter figure--"some may happen, some may not; some could take two years, some could take ten years"--this boom seems destined to make a substantial impact on a downtown that currently, according to Maxfield's estimates, contains approximately 11,000 total housing units.

There are a variety of reasons for this enormous new supply and demand. Traffic congestion has made the suburban commute increasingly frustrating for people who work in the city, some of whom have decided to park the car and buy a condo. Then there are folks like Fenn and Breckenridge, who in demographic parlance are baby boomers turned empty nesters. With the kids grown and gone, and more disposable income on hand, many want to indulge in the plethora of restaurants and nightlife options the city has to offer. (According to Maxfield, 56 percent of those who own their living space downtown are over the age of 45, while 71 percent of downtown's renters are younger than that.) Another factor is the ongoing low interest rates, which reduces the financial burden for builders, buyers, and renters alike.

In some respects, the spike in downtown residency represents a belated vindication of the Sharon Sayles Belton administration, which was criticized for approving tax breaks and other sources of financing to development projects in the mid- and late '90s. During her mayoral tenure, Sayles Belton was roasted for providing favors for the Brighton Development Corporation, dealings made more controversial by her friendship with Brighton executive Peggy Lucas. But now those millions of dollars' worth of government subsidies are widely regarded as a catalyst to the current housing boom. "It is clear that the private sector wasn't going to do anything about historic preservation or cleaning up [contaminated land sites]--but we did and it was a good investment," says Seventh Ward City Council member Lisa Goodman. She is referring to numerous projects, among them the historic preservation aid Brighton received for Lourdes Square and the city's decontamination of the site upon which Sherman Associates built The Landings beginning in the mid-'90s. "I urge people to remember what that area [along the river] was like. It could have remained in industrial use instead of becoming a crown jewel for our city."

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