Nicollet Mall Economic Impact Study

ECONOMIC IMPACT OF NICOLLET MALL RECONSTRUCTION

Prepared for the City of MinneapolisMarch, 2014

Redevelopment Economics, Finance and Strategy

2288 University Ave WestSaint Paul, MN 55114

ph) 651.645.4644www.donjek.com

INTRODUCTIONNicollet Mall is a twelve-block pedestrian and transit mall that since its 1968 construction, has

served as a prominent symbol of Minnesota and its largest city, Minneapolis. During a period

of stress on downtown retail and commercial districts, public and private investment in Nicollet

Mall and adjacent structures helped to sustain downtown as a bulwark of the regional and state

economy. Today, national market trends in housing and office are shifting, and remarkable

growth in downtown Minneapolis presents a clear example of this change. Building on the

public-private partnership model that put the mall in place in 1968, the City of Minneapolis,

Minneapolis Downtown Council, and other private partners are collaborating to propose a $50

million reconstruction of Nicollet Mall.

The City has commissioned a targeted economic impact analysis to evaluate existing market

trends and quantify certain economic effects of the reconstruction project. This report summarizes

research and analysis conducted on an area comprised of over 2,000 parcels across 47 city

blocks.

HISTORY AND PLANS FOR REINVENTIONNicollet Avenues importance as a commercial spine in

Minneapolis dates to the 19th century, when value of the street

frontage supported early development of retailers such as

Daytons, Donaldsons and Powers. By the mid-1950s, many

residents of the region were choosing to leave previously

established neighborhoods for suburban areas, where more

dispersed housing was coupled with shopping centers easily

accessible by car. In response, civic and business leaders in

Minneapolis proposed and in 1968 constructed the nations

first transit mall extending from Washington Avenue to 12th

Street, to strengthen appeal both for retail and downtown investment.

Over nearly half a century, Nicollet Mall presented a model that inspired many other American

cities to introduce transit malls into their downtown landscape, including comparable cities

of Denver, Chicago, Portland, and Madison. Several of these systems have, over time, been

dismantled and returned to general use by cars, a concept considered and rejected in the past

in Minneapolis. Nicollet spans across the densest concentration of jobs and market value in the

state. Its reconstruction and elevation as a must-see destination is presented as a top priority

in the Intersections Downtown 2025 Plan developed by the Minneapolis Downtown Council,

and adopted by public and private stakeholders.

In 2013, the City of Minneapolis coordinated a Nicollet Mall design competition to invite p

roposals for the streets future. The selected proposal, submitted by James Corner Field

Operations, has been adopted by the City and its private sector partners as the framework for

investment and reconstruction of Nicollet Mall.

2 ECONOMIC IMPACT OF NICOLLET MALL RECONSTRUCTION

NICOLLET IN CONTEXT Downtown Minneapolis, surrounding Nicollet as a central north-south connection,

maintained more stability as a center of trade and employment through the

mid- to late-20th century than many similar central business districts. Recent years

have brought a significant and visible increase in investment, primarily by private

parties in residential and office development, and firms moving to or expanding

in downtown Minneapolis. Over 130,000 people work in downtown Minneapolis

each day, reflecting both stable small firm activity and continued investment in

downtown employment locations by larger employers such as Xcel Energy, US

Bancorp, Ameriprise, Wells Fargo, and Target. Downtown, as a center for

headquarters within a region where 19 Fortune 500 firms are based, has benefited

from investment and activity required to provide research and development,

professional services, marketing and design, both to larger firms based in the

region and to larger external markets.

Goals established by the Downtown Council also suggest an opportunity to

maximize Nicollet Mall as a destination and amenity for residents. The Council is

targeting a doubling of downtown population to 70,000 residents, addition of

three million square feet of office space and 200,000 square feet of retail, and

introduction of 1,100 hotel rooms into the downtown market. The need to

leverage Nicollet Mall as a public square, providing public space for this range of

users, is expected to grow with the added concentration of people downtown.

PROPOSED RECONSTRUCTIONThe City of Minneapolis and the Minneapolis Downtown Council propose to take advantage

of the need to reconstruct Nicollet Mall, by drawing on forward-thinking design that reflects

a range of current and intended uses. The proposal, developed by design firm James Corner

Field Operations, is intended to emphasize the close proximity of the Mississippi River, the core

of the downtown business district, and the Loring Park area. More specifically, the plan focuses

on three sections to propose changes to Nicollet Mall:

Build a Mississippi Woods segment along the northern section of Nicollet between

Washington Avenue and 4th Street, to provide public space for new development

that includes a 26-story apartment tower, recently announced development of the

Ritz Block, expected expansion of Xcel headquarters, and the Minneapolis Central

Library. Adding trees and gardens, performance space and lighting, and maintaining

street right of way for bicycles and buses is designed to support projected residential

and office growth in this zone of Nicollet.

Prioritize the heavily used middle segment between 6th and 8th Streets by establishing

the Nicollet Island area, to support the core of the downtown Minneapolis employment

concentration. Reconstruction in this segment is proposed to include wide stairways

facing each other and connecting the skyway level and street level, with intermediate

space used for the farmers market and seasonal events and amenities.

ECONOMIC IMPACT OF NICOLLET MALL RECONSTRUCTION 3

Highlight Nicollets arts and entertainment focus, and point toward Loring Park, by

creating the Loring Woods segment south of 12th Street. This section is proposed to

include a wide variety of tree types and sizes, to provide a destination for visitors,

residents and workers downtown.

The City and the Minneapolis Downtown Council have together proposed financing the $50

million reconstruction project with public and private sources:

Assessments are expected to be used to raise capital from benefiting owners of property on

and near Nicollet Mall.

4 ECONOMIC IMPACT OF NICOLLET MALL RECONSTRUCTION

ECONOMIC BENEFITS OF NICOLLET RECONSTRUCTIONThe reconstruction of Nicollet Mall has been designed and proposed as an investment in a next

era of use and success for downtown Minneapolis. Over the last 45 years, Nicollet Mall has

provided a unique addition to the central business districts network as downtowns only transit

and pedestrian mall. Following a protracted public dialogue about the transition of Nicollet to

transit mall, the new malls transformation prompted $50 million of redevelopment in the

following three years.

The current proposal is to reconstruct Nicollet Mall, rather than transition from typical street to

transit and pedestrian mall. The opportunity is also different: The reconstruction is proposed

to support and coincide with a marked increase in the development appetite for residences

and office uses downtown, particularly along Nicollet. As a result, economic benefits will be

directly produced by, or in other cases supported by, the reconstruction of Nicollet Mall. These

benefits are produced primarily in six interconnected ways that merit individual discussion.

Stimulating statewide business activity and employment. Initial economic impact of the Nicollet Mall reconstruction will occur during design and construction of the project. The budgeted

$50 million of spending will flow through the economy, creating additional economic activity

and jobs in the Minneapolis-Saint Paul region and statewide. These impacts will occur in the

construction sector and in other sectors, as dollars are spent and cycle through the regional

economy. The estimated economic consequence of the $50 million reconstruction is $105.5

million in additional spending within Minnesota, and creation of 860 full-time equivalent jobs (FTEs).

Expanding visitorship. Convention and meeting visitors attending events in downtown Min-neapolis are important to the Minneapolis-Saint Paul region, and to Minnesota. In 2012, nearly

28 million visitors spent $6.88 billion in the region. Visitors spend an average of $79 per day

of their visit, and an average over $185 per trip, excluding transportation costs. Nicollet Mall

reconstruction will strengthen the regions attractiveness for convention business, which could

translate to increased visitors over time. Such increases translate into elevated spending levels,

and additional collections of Minneso