An ensemble of modern office towers

Minneapolis and the Minnesota Orchestra

There is a loft apartment for sale for over $2 million in an adaptively reused industrial building in the Mill District with a river view, near but not in, downtown Minneapolis (https://www.zillow.com/homedetails/700-S-2nd-St-W70-Minneapolis-MN-55401/61624273_zpid/). Just try to wrap your mind around that, my elite, coastal friends. Let’s unpack this a bit. First, this means that some broker, who presumably knows the Minneapolis market thinks they can get over $2 million for an apartment, not a McMansion, not even a house – but an apartment in a dense-ish urban neighborhood in the mid-west. It also means that there are likely at least a couple of dozen people in the metro who have the capacity to come up with, let’s say $450,000 cash and the income to support a monthly mortgage payment (without taxes and operating costs) of roughly $13,000!!!!! And those are people want to live in a loft and not a single-family home. And, not in New York, or even Chicago. This is true, in a city where the conventional wisdom has given the downtown up for dead in the wake of the pandemic and the reaction to the murder of a Black citizen by a white police officer that became national news. At the same time, walking around the Nicolette Mall, once the 100% location in Minneapolis (and only a few hundred yards from that expensive loft), it is obvious that it is no longer the city’s commercial center.

What, my friends, is happening here?

The Mill District

It’s nuts. The forces of 21^st century capitalism have arbitrarily abandoned the traditional downtown, while market preferences have moved slightly, and only slightly, elsewhere. This is the destruction of hundreds of billions of dollars of real estate value on what can only be described as a post-pandemic whim. The action has moved only blocks away – with a couple of adjacent neighborhoods booming with activity. Some of this is as a result of work from home – with bobos (bourgeois bohemians) not wanting to get out of their pajamas and go to work in proximity with other people. Some of it is racism, in the wake of the George Floyd reckoning – a modern incarnation of white flight.  What’s particularly interesting about downtown Minneapolis is the havoc real estate capitalism has wreaked on the historic downtown. There aren’t many office buildings downtown that date to before the 80’s. Most of the office building stock is quite modern (glass and steel). There are very few early 20^th century masonry commercial structures left in the downtown. I would imagine part of the current market rejection of downtown is the characterlessness and soullessness of the efficient international style of commercial architecture from the period of 1980-2000. That emptiness of the exterior envelope is also reflected in the working environment contained inside these buildings – with most people employed in cubicles or open spaces. You certainly can’t blame middle management for wanting to abandon those white-collar industrial working conditions. Continue reading →