« Previous Post | Main | Next Post »

Empty Offices

Filed under: Imported

Saturday's Star Tribune contained an editorial heralding the opening of U.S. Bancorp's publicly subsidized new headquarters on the West Side Flats, just across the Mississippi River from downtown St. Paul. The $60.5 million, 350,000 square foot office building will house 2400 employees. Of course, U.S. Bancorp (which had profits of more than $900 million last year) could not pay for the building itself: taxpayers picked up at least $15 million of the bill.

What the Strib's editorial failed to question is why the city is subsidizing additional office space when it is already stuck with a glut of empty buildings. According to the most recent Towle Report, during the twelve-month period ending in June downtown St. Paul office buildings had a whopping vacancy rate of 28.7 percent, tops in the Twin Cities. (Minneapolis was a close second at 28.5 percent.) The normally boosterish Towle Report characterizes the situation as "grim."

But even this figure likely underestimates the dire state of St. Paul's commercial real-estate market. Because such surveys are voluntarily reported, building owners won't necessarily own up to the extent of their difficulties. "Buildings with horrendous vacancies will not tell them," says commercial real-estate broker John Mannillo.

St. Paul's purported downtown renaissance has been fueled by huge public subsidies doled out to businesses that have then often failed to deliver on promises, gone out of business, or left town. Hopefully U.S. Bancorp will at least stick around for awhile.

Posted by Paul Demko at August 21, 2003 6:04 PM

« "Someone's always stealing my underwear and my toothpaste." | Main | St. Paul's Destiny »