Why Minneapolis is the new capital of 'the North'

It's been one year since Pete Kane founded Startup Venture Loft (SVL), a coworking hub and business accelerator in Minneapolis' North Loop. Since then, more than 30 early-stage companies have moved into the space.

Kane is developing a native startup financing ecosystem, centered on SVL and other Minneapolis coworking spaces and accelerators like CoCo and Treehouse Health, that rivals counterparts in San Francisco and Boston. Venture capital funds and angel investors are looking at SVL, too.
 
As Kane sees it, Minneapolis is a city with world-class urban assets, but the northern metropolis still suffers from a dated reputation beyond those in-the-know. Outsiders hear "Minneapolis" and think Fargo, Mary Tyler Moore, funny accents, long winters and perhaps the Mall of America, that quintessential monument to suburban-style consumerism.
 
Yet that's starting to change as redevelopment efforts bear fruit and word gets out. Minneapolis's booming startup scene is one of many signs that the city is evolving.
 
"Our culture of innovation, and the companies that thrive on it, are putting Minneapolis on the map," says Eric Dayton, who owns several successful businesses near Startup Venture Loft. He's leading the charge, along with local academics, businesspeople and civic leaders, on an ambitious effort to position Minneapolis as the capital of the "North" -- a vast cultural, linguistic and economic region that covers 10 percent of the Lower 48's landmass.
 
"We need to make sure we're getting credit beyond our borders for everything that's happening here," he adds. "If we can do that, we can compete with any city in the country for talent."
 
Homegrown success stories include: accelerating business and population growth in core neighborhoods; a comprehensive, goal-driven vision for the future; cutting-edge models of community-building and place making in formerly disinvested neighborhoods; and a wholesale embrace of arts and culture in the public planning process.
 
Setting clear and ambitious goals
 
In late 2013, outgoing mayor R.T. Rybak outlined a plan to grow the city's total population to 500,000 -- a nearly 30% increase -- by 2025. Skeptics scoffed about a growth rate more typical of the Sun Belt than the Frost Belt.
 
But Minneapolis policymakers have taken Rybak's directive to heart, progressively amending the city's Plan for Sustainable Growth to encourage higher-density development around the University of Minnesota, the Lake Street corridor and the Green and Blue METRO light rail lines, and making small but important zoning changes like the Granny Flats Amendment, which permits self-contained rental units on owner-occupied lots zoned for single- or two-family use.
 
Meanwhile, in downtown Minneapolis, the Minneapolis Downtown Council's far-reachingDowntown 2025 Plan has catalyzed growth, development and innovation.
 
The plan's 10 goals, to be reached by 2025, cover everything from population growth (70,000 downtown residents) and transit (creating a "downtown circulator," most likely a streetcar loop) to quality of life (housing all homeless downtown residents) and national thought leadership (launching the Minneapolis Ideas Exchange, an Aspen Ideas Festival-style gathering).
 
About 40,000 people already lived downtown at the end of 2014, with 2,000 additional apartment and condo units planned or under construction across nearly two million square feet.
 
"For the first time in decades, we're seeing ... people moving inward toward the downtown area," says Steve Cramer, Downtown Council president and CEO. The neighborhood "is becoming safer and more vibrant, improving the overall experience for those living, working and visiting here."
 
Thanks to Be in Business Downtown, a Downtown Council offshoot that offers practical support for relocating businesses, local and national companies are also embracing downtown Minneapolis' unique connections and synergies. Aimia and Dunham Engineering, for instance, moved hundreds of employees from suburban campuses last year. XCel Energy, a major utility, is building a 400,000 square foot office building on Nicollet Mall.
 
More than two million square feet of office space is planned or under construction across downtown, including the cutting-edge T3 building, around the corner from Pete Kane's Startup Venture Loft. Confident that downtown Minneapolis has reached a critical mass of density, developers are aiming higher: If built, the 80-story Nicollet Gateway Tower would easily be the city's tallest building. To connect the burgeoning district with outlying areas, more than a dozen light rail, streetcar and bus rapid transit lines are planned or under construction.
 
"Minneapolis boosters often make aspirational comparisons to Denver and Seattle," because their metro areas are about the same size, says Carl Runck, director of development for Ryan Companies. But the more apt, and perhaps more ambitious comparison, is Chicago, which is also "flat, cold and defined by its proximity to fresh water." Echoing Dayton's language, he continues, "Minneapolis is the capital of the North...and should be the first non-coastal city that knowledge workers and business leaders think of after Chicago."
 
Historic buildings and modern infrastructure
 
Ambitious visioning and modern amenities have undoubtedly driven downtown Minneapolis' growth. But so have historic assets in place since the city's infancy.
 
The Mill District, just southeast of the central business district, once boasted the world's largest collection of flour mills. Dozens of mills used the power of St. Anthony Falls to pulverize raw grain for shipment across the continent. Internal combustion proved more efficient than water power, though, and the last mills closed by 1970. But most remained standing, their empty hulks blighting the Mississippi riverfront.
 
The Historic Mills District Master Plan, first drafted by city of Minneapolis planners in the late 1990s, sowed the seeds of a resurgence. Charmed by the Mill District's rich history and authentic urbanism, young professionals, creative workers and active retirees flooded into the neighborhood. Eventually, so did cultural and educational institutions.
 
Wholesale loft conversions began in 2000, with development accelerating after the opening of the Mill City Museum in the ruins of the Washburn 'A' Mill. New residential construction filled in surface parking lots built to handle overflow from the nearby Metrodome. Urban pioneers used Mill Ruins Park, a pretty riverfront space with views of the iconic Stone Arch Bridge, as a backyard.
 
By the mid-2000s, the Mill District was becoming a vibrant hub for high culture. In a major coup, the iconic Guthrie Theater relocated to the Mill District from across town. The Mill City Farmers Market also began operations in 2006, and the MacPhail Center for Music opened a year later.  
 
The Mill District is now among the city's most affluent Census tracts. "The average per capita income in some [Mill District] condo buildings is $200,000 or more," says Carl Runck. "The area is truly the Gold Coast of Minneapolis."
 
Today, prosperity is spilling over into surrounding areas. Cranes litter Downtown East, a once-sleepy expanse of parking lots and light industrial buildings just south of the Mill District. Downtown East is home to the new Vikings stadium, an obvious economic anchor, but lacks the Mill District's historic charm.
 
Yet developers and community leaders have big plans for the area. Wells Fargo is building a 1.1 million square foot, LEED certified office complex here, for instance. Nearby, a four acre public park called The Commons will rise on a former parking lot, surrounded by high-rise apartment and condo buildings -- shades of Central Park in downtown Minneapolis. The Mill District's rising tide, it appears, is lifting Downtown East's boat.
 
Neighborhoods as labs for development
 
Any city with global ambitions needs strong, self-sufficient outlying neighborhoods in addition to a robust downtown. Minneapolis' most disadvantaged districts are finding innovative ways to create new opportunities for local residents and stakeholders while minimizing negative impacts of gentrification.
 
Along North Minneapolis' historically disinvested Penn Avenue, a new BRT corridor, Hennepin County's Penn Avenue Community Works (PACW) program tries to empower local residents to shape their future.
 
To make the BRT planning process more accessible, Hennepin County Economic and Community Development manager Patricia Fitzgerald sought out input and engagement from local community leaders, business owners, artists and residents. Artists Wing Young Huie and Ashley Hanson distributed transit surveys disguised as restaurant table-toppers. A pop-up ping pong tournament anchored a listening session in which Fitzgerald's team -- including Hennepin County employees wearing conspicuous "Government People" T-shirts -- asked locals about their ideas for the future. And place making installations at key intersections played up the corridor's historic and cultural identity.
 
PACW is one of several initiatives around current and future transit corridors. All have three "conditions for success," says Fitzgerald: "focus on the people, don't sell the community short and develop a framework for equity that benefits everyone, not just outside investors."
 
Across the Mississippi River, in Northeast Minneapolis' Holland neighborhood, privately-owned cooperatives -- not government agencies -- are driving the place making and development conversation on bustling Central Avenue, a potential streetcar corridor.
 
Holland has an uneven history. When Eastside Food Cooperative (EFC) opened here, in 2003, Central Avenue was better known for petty crime and empty storefronts than novel business models. Skeptics wondered if the area could support a pricy grocery store. But the neighborhood bought in, and EFC thrived. A decade on, the cooperative anchors a blocks-long food corridor that has some of Minneapolis's best-regarded stores and restaurants, including Holy Land, a national Middle Eastern food distributor.
 
Just across the street, newly formed Northeast Investment Cooperative (NEIC) has a vision of shared ownership that provides local residents and business owners -- many recent immigrants -- with leverage in the planning process, making them more likely to benefit from changes to the neighborhood and avoid displacement due to streetcar-induced rent hikes.
 
NEIC takes advantage of lax state laws, unique in the United States, that permit Minnesota-based cooperatives to offer shares across state lines and promise unlimited rates of return. These factors boost growth potential and make membership financially attractive.
 
That's good news for members, who stand to profit from rising real estate values without having too much power over their neighbors. "Our diversity of ownership means that no one person has control over our real estate, and no one stands to get rich by selling," says Watson. "But our owners would still benefit tremendously" if the streetcar comes.
 
Artists as urban stakeholders
 
Virtually every Minneapolis construction project and community initiative taps into the city's well of creative assets. Collaboration between artists, neighborhood associations, government agencies, nonprofit organizations and private companies has long defined planning, design and development here, but synergies -- and ambitions -- have accelerated in recent years.
 
Take Box Fresh, a collaboration between the Marcy-Holmes Neighborhood Association (MHNA) and The Soap Factory, a local cultural organization. Earlier this year, Box Fresh tapped six local artists, selected on the strength of their previous work and connection to the Marcy-Holmes area, to paint colorful nature scenes and abstract designs on graffiti-ridden utility boxes at busy intersections. The designs are permanent, and the project's success has other neighborhood associations mulling similar initiatives.
 
"For over a decade, Marcy-Holmes has conceptualized its streets as an urban gallery," says MHNA's Chris Lautenschlager. "[Box Fresh is] a showcase for professional artists."
 
With a $12,000 budget, Box Fresh is a modest project. But like the wall murals and community gardens that dot Minneapolis' cityscape, it offers some evidence that artists and creative workers have found a place at the table when it comes to enlivening the city's neighborhoods and strengthening connections among diverse, busy residents.
 
More ambitious work is happening along South Minneapolis' Chicago Avenue corridor, between 32nd and 42nd Streets. There, $400,000 in grants from ArtPlace America and the Bush Foundation are funding the multi-year Arts on Chicago place making initiative, a collaboration between the Pillsbury House & Theater, Upstream Arts, Third Place Gallery, the Powderhorn Park Neighborhood Association and other stakeholders. About 20 individual place making projects, each one a splash of color and creativity in a mostly residential area, are either complete or in progress: design-forward bike racks, colorful bus stop wraps, a photo essay featuring local business owners, full-size building murals.
 
Over the next decade, the Bush Foundation grant will fund housing for up to a dozen artists-in-residence, possibly providing real estate equity as part of their compensation. Mike Hoyt, Pillsbury House creative liaison, wants these artists to "own the dirt" they live and work on.
 
"We're empowering local creatives, turning them into stakeholders," he says. Eventually, with more grant funding or income generated by Arts on Chicago's commercial activities, Hoyt envisions a real estate cooperative, similar to NEIC, that would buy up and manage buildings around the district.
 
It's a novel idea in a city that's never been afraid to experiment.
 
"When you present a new idea in New York, people ask what's in it for you or tell you it'll never work," says Tom Fisher, "North" booster and dean at University of Minnesota School of Design, who spent two decades on the East Coast before succumbing to Minneapolis's charms. "Here, the response is invariably 'let's try it!'

As The Line's Innovation and Jobs News Editor, Brian Martucci tells the stories of the innovators, ideas and companies that drive the Twin Cities' creative economy. In addition toThe Line, Brian writes for Issue Media Group's Michigan publications and wears various hats in the ever-evolving blogosphere. When he's not uncovering and telling others' stories, you can find him biking along the Mississippi riverfront (weather permitting).