23 July 2023
In 2017, three years before the pandemic hit, the Minnesota Housing Finance Agency signed a 10-year lease for a floor of office space within Treasure Island Center in downtown St. Paul, otherwise known as the former Macy’s building. Some 10 or 20 employees still show up regularly to the state agency’s Wabasha Street headquarters, but upwards of 90 percent of the workers no longer work from the office. As “occupied” downtown workspace goes, the floor sits largely vacant.
“Thank you for calling Minnesota Housing,” says the recorded greeting on the phone line. “Currently all staff are working remotely and our offices are closed.”
A similar scenario is playing out nearby at the Golden Rule building off Seventh Street, where both the Minnesota Department of Health and Minnesota Department of Human Services maintain satellite locations that remain underutilized in the era of remote work.
By mid-2024, both field locations will close and workers will relocate as the state moves forward with a $20 million effort to upgrade seven buildings on the state Capitol campus for a hybrid workforce.
Regardless of when office leases are scheduled to officially expire on paper, St. Paul’s downtown workforce isn’t just on the verge of shrinking — it’s already shrunk. And in many cases, it’s the public sector that is working remotely, as much as and in some cases more so than the private sector. That’s left major downtown employers like Ramsey County and the state of Minnesota on the verge of consolidating their leased office spaces into a few key buildings.
“The hybrid work environment is here to stay in both the private and public sectors,” said Curtis Yoakum, a spokesperson for the Minnesota Department of Administration. “Planning complements the state’s recruitment and retention strategies to ensure that we have the workforce that continues to deliver high quality services.”
Outside of the state Capitol complex, the state of Minnesota maintains some 14 agencies and 6,300 employees throughout St. Paul, mostly but not exclusively downtown, in leased and state-owned spaces. It remains to be seen how many will be moved into the Capitol campus once renovations are complete.
Worker exodus
As of June, Securian Financial — downtown St. Paul’s largest private employer — has mandated that most employees return to work in person a minimum of twice per week. Private companies nationally have begun doing the same.
Among government offices, requirements vary, but some are still fully remote.
“If the state took the position to bring people back and mandate it, then the cities and the counties could use the state as a model,” said Tina Gassman, president of the Greater St. Paul Building Owners and Managers Association. “I’m not saying five days a week. Make it three. Embrace hybrid. If the governor would step forward and do something like that, it would provide so much stability.”
With an eye toward sustaining an economically vibrant city, St. Paul and Ramsey County officials recently joined with the St. Paul Downtown Alliance, a business coalition, to promote an ambitious strategy of growing downtown by 20,000 residents and 20,000 workers.
Inside City Hall, some observers have noted a certain irony to those goals — state, city and county office workers have largely given downtown St. Paul a wide berth since the start of the pandemic, even when their jobs explicitly entail economic development and other business dealings.
Based at 390 Robert St. in downtown St. Paul, the Metropolitan Council — the seven-county metro’s regional planning agency — maintains a telework policy that allows most office staff to work fully remotely with approval from their managers. Employees who report in person at least three days per week generally have assigned office space, while other workers can sign out “hotel” spaces, or floating cubicles. Division directors are usually in the office four or five days per week, said John Schadl, a Met Council spokesman. Most workers are not.
St. Paul mayor leaves downtown
At the height of the pandemic, downtown St. Paul lost employers, residents and workers, leaving nearly one in four offices in downtown St. Paul — some 1.7 million square feet — vacant and available for lease as of early 2022. Among the departures was St. Paul Mayor Melvin Carter, who after about 18 months living downtown relocated from the Kellogg Square Apartments in late 2022 and moved his family to the city’s East Side.
The mayor, who declined an interview on the topic, continues to work largely remotely more than three years after the start of the public health crisis, using his third-floor City Hall offices on downtown Kellogg Boulevard as more of a satellite location than a headquarters as he crisscrosses the city on official business. On-site staffing in the mayor’s office appears light.
“Between ribbon cuttings, community engagement events, visits to local businesses and meetings at City Hall, the mayor’s schedule brings him to every neighborhood in our city,” said Kamal Baker, a spokesman for Carter’s office.
Carter is hardly the only former downtown denizen to prefer remote work. After running the Lobby Shoppe, a gift card and convenience store with a coffee counter, in Securian’s 401 Robert St. building for more than 20 years, Pat Wolf saw the bottom drop out when area employees went fully remote in 2020. By late 2022, the Lobby Shoppe location was shuttered.
“There just weren’t enough people around to make it economically feasible,” said Wolf, who maintains a second Lobby Shoppe nearby in the Golden Rule building. “I had so much inventory of cards left over, because I couldn’t fit them all into the Golden Rule when we closed. … I took thousands and thousands of dollars in loss in both stores.”
Wolf added: “At Golden Rule, I’m barely hanging on.”
Diminished property value
The departure of downtown office workers isn’t just a question of who will prop up skyway convenience stores, lunch counters, restaurants and other small businesses.
St. Paul City Council member Jane Prince met with building managers affiliated with BOMA a few weeks ago and she called their outlook little short of alarming.
If office buildings lose value due to vacancy, homeowners will likely have to pick up the tab for public services through higher residential property taxes. Commercial properties often pay two or three times what residential properties do for the same square footage. Their downgrade would have ripple effects.
“They told us just how serious the downtown occupancy issue is, and how concerned we should be about the diminishment of property value,” Prince said. “If they’re not financially viable, we’re going to start seeing a reduction in the property taxes we collect as values drop. That is a huge concern for me. When our commercial values go down, it (shifts tax burden to) the residential tax base. … Commercial and industrial tax rates are higher.”
Multiple approaches to remote work
In downtown St. Paul, different corners of the public sector have approached the era of remote work somewhat differently, but most have left it up to department heads or division directors to decide whether to allow remote work, and how often.
“The majority of our workforce, including emergency response personnel, public works employees, water, library and parks staff were on the frontlines during the pandemic, without an option to work from home,” said Baker, the mayor’s spokesman. “As we continue to recover, the administration has encouraged city departments whose staff worked remotely during the pandemic to adopt an office-first posture.”
The city council has made it a point to require legislative aides to work from their downtown offices four times per week, with flexible Fridays, said council President Amy Brendmoen.
But most city department leaders have been careful not to enforce a strict mandate on their workers, given shortages in the labor force.
“I agree that I think the public sector can and should lead the way in encouraging employees to return to work some days a week, but I also know that it’s a really competitive environment for workers, and mandates aren’t necessarily an effective tool,” said council member Rebecca Noecker, who represents downtown. “We want the best possible talent working in the public sector, and we need to be offering the most flexible and competitive work environments so we can retain the best possible talent. We have a labor shortage right now.”
Nationally, however, employers like Amazon and Salesforce have begun to push back and require some level of weekly attendance.
Last summer, Securian set a goal of having 50 percent to 60 percent of its employees back in person on any given day, without explicit mandates. It didn’t work.
“That goal was not achieved,” said Jeff Bakken, a Securian spokesman. “While many companies are mandating employees work at least three days, or more, per week in the office, we believe a minimum of two days is the right standard for Securian Financial.”
Due to the nature of their work — it’s hard to work remotely when you’re paving streets, for instance — about 47 percent of Ramsey County employees still work on-site at least four days per week. Another 40 percent have been designated “hybrid” employees, meaning under the county’s “Flexible Workplace Policy,” they’re expected to come in to perform on-site job duties at least twice weekly.
And 13 percent of county employees, like social workers, have been designated “mobile,” meaning they work out of multiple sites in the community because their jobs are resident-facing.
County Manager Ryan O’Connor is officially designated a hybrid employee and typically in the office at least two or three days per week, though he’s often called to meetings throughout the county, according to county spokesperson Rose Lindsay.
Consolidation looms
After remote work and then hybrid work, a looming buzz word for the public sector is “consolidation.”
With an eye toward both maintaining a commitment to downtown St. Paul and maximizing opportunities for a hybrid workplace, the county recently purchased the former Ecolab Global Communications Center building at 360 Wabasha St., which is predominantly office space. Approximately 400 county employees from various leased spaces downtown and the county’s Metro Square building will be relocated to 360 Wabasha in January.
Among those employees are staff from the Ramsey County attorney’s office and the Ramsey County sheriff’s office. The renovated space at 360 Wabasha and Metro Square will be designed for the “new flexible workplace environment,” according to a written statement from Lindsay, with “spaces for focus work, collaborative work and engagement with residents. … Designing spaces to be welcoming and accessible for all is key to our design principles.”
Noecker, the council member who represents downtown, said if downtown is fun, safe and vibrant, remote workers will want to live or co-work there, and employers will follow.
“Whether or not they work for a company that is located downtown or located somewhere else, it’s about making downtown the place where they want to do their work,” Noecker said. “People can work from anywhere now.”
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