As the COVID-19 pandemic wanes, much of Rochester’s economy is revving back up.
However, one area -- Rochester’s downtown core -- seems to be bouncing back more slowly.
The one thing that downtown in 2021 doesn’t have that it did pre-pandemic is as many workers to buy coffee, eat lunch, take breaks to grab snacks and generally provide a foundation of activity. That's a foundation that has traditionally been there for Mayo Clinic visitors and other Rochester residents who drive in for downtown meetings or Happy Hour gatherings build upon.
Key to downtown’s economy is the approximately 20,000 Mayo Clinic employees, about half of Mayo’s Rochester workforce. Restaurants, retail stores, nail salons, coffee shops and more count on those Mayo Clinic employees as their primary customers.
Today, the Post Bulletin begins a four-week series examining the state of the economic recovery. Will downtown bounce back? If so, how? Why is it hard for employers to fill many unfilled jobs? What is the future of the home office? These questions and others will be addressed in the course of the series.
The pandemic forced much of Mayo Clinic’s non-clinical workforce to work remotely. Now as the threat of COVID-19 lessens, many of those employees are continuing to work from home, for at least part of the week. The impact is hitting downtown harder than other parts of Rochester due to the density of Mayo’s presence in downtown.
"Approximately 2,900 staff who were previously based in downtown Rochester will now work off campus a majority of the time,” stated Mayo Clinic Spokeswoman Ginger Plumbo. “This number evolved as Mayo Clinic continued to assess the workforce beyond the initial group of non-clinical administrative staff.”
That number has risen from the one Mayo Clinic reported in October 2020, when it stated that 1,500 former downtown employees were working from home.
Many of Mayo Clinic’s employees live outside of Rochester in nearby communities, like Stewartville, or in the Twin Cities area, so eliminating a daily commute is a big personal benefit. For Mayo Clinic, it means the end of what was a constant hunt for more downtown office space.
However, removing that many bodies from downtown means Rochester’s post-pandemic downtown will look different than before.
Plumbo points out that the current number of downtown employees is “very similar to the number of Mayo employees based downtown as recently as 2018, and the downtown economy was thriving then as well.”
Yet, that is not a comfort in 2021 to downtown restaurants that once were packed with lunch customers or to quiet stores that once had long lines at their cash registers.
“We depend on foot traffic. I used to see Mayo employees come in here two or three times a day. Now I’m lucky if I see them once a week,” said John Williams, who runs the Eagle Store in the heart of downtown.
Downtown still important to Mayo
Erin Sexton, director of Enterprise Community Engagement at Mayo Clinic, acknowledged that there is a transition happening, though she emphasized that downtown is still very important to Mayo Clinic.
“Things will be different… I think there’s going to be a little bit of learning all the way around this summer to see how people start to reutilize and frequent the downtown, because, obviously, downtown's a big part of who Mayo Clinic is,” she said. “We sit downtown. Our patients and our visitors utilize the downtown businesses.”
Part of those changes involve Mayo Clinic changing many of its traditional offices in the Ozmun East Building to “drop-in” workstations for hybrid workers and creating “collaboration spaces” in the Siebens Building and Rosa Parks Pavilion Building for groups to work on projects.
When pressed for details about Mayo Clinic’s future downtown presence, Mayo Clinic’s Chair of Facilities Doug Holtan said it is developing.
“We know right up front is going to be a learning process... We're also assessing how we are using our campus as we freed up space from those that are working remotely primarily,” he said.
Part of the evolution of Mayo Clinic’s downtown presence will be reducing its footprint as it needs less office space.
“As we have leases coming up for renewals in the next one to two years, we will be looking very hard at not renewing those leases in the short term,” said Holtan. “We have talked to a lot of business owners about that as we plan for our changing business needs.”
That translates to ending leases in downtown buildings, like the historic Massey Building at the corner of First Avenue Southwest and Second Street.
However, Holtan did stress that Mayo Clinic will continue to need to lease space downtown to meet its office and research needs beyond the buildings it owns.
“We have three major downtown buildings where we have leased space -- the US Bank Building, the BioBusiness Center and the Wells Fargo Building. We have longer term leases on those buildings and we will continue to use them,” he said.
Mayo Clinic also has a large presence in the One Discovery Square complex as an anchor tenant with many spaces housing partnerships with companies like Thermo Fisher Scientific, Exacts Sciences and Boston Scientific.
Mayo Clinic may also end up leasing some space in the much larger Two Discovery Square center being built next to the original one.
“We're looking at potentially having some presence, but a much lower or much smaller footprint ratio. We really want that space to be for industry partners and not for us to have a majority footprint,” he said. “If there is a true business or a partnership with industry, we may look at some space in the building. But definitely, we don't want to just have a large footprint.”
Beyond Mayo Clinic, many other commercial spaces are currently unused or in transition in downtown.
‘Late-night life that is safe and fun’
Two popular late-night watering holes, Legends and Dooley’s, closed and those spaces remain unused, as does the former Fusion Lounge/Top Shots spot and the Bar Buffalo space. That leaves Kathy’s Pub as the primary late-night hot spot for young people.
“I’m sure Kathy's would like to see other bars and restaurants open up around them to take some of the pressure off of them. The more businesses you have, the better you do,” said Rochester Downtown Alliance Executive Director Holly Masek. “I'm hoping that some kind of late-night life that is safe and fun, can come back for younger people. They really, really do want that, but everybody wants to feel good about it… In my mind, more activity is generally better as long as it is kind of respectful and under control.”
While there are several empty storefronts in downtown, Masek said that many are filling up.
Looking at the block of South Broadway where the RDA’s office is located, she said all of the open slots have new tenants committed. That includes the recently closed Nellie's on 3rd Kitchen and Bar, which is transitioning into a Thai restaurant, and a former art gallery, which is slated to become a tattoo studio called Sorry in Advance.
The former Big Brad’s on Broadway bar is being revamped for a new tenant, Treedome. Treedome, an “entertainment-focused creative studio,” is moving from Winona to downtown Rochester.
Treedome’s Production Director and co-founder Nate Nelson said moving into Rochester’s core is a good fit for his growing business.
“From our perspective, we’ve seen dramatic shifts as Rochester has become one of the larger hubs for the area music scene,” he said. “It’s a super walkable area. Plus we’re not dependent on Mayo employees.”
It was also attractive that his team members are friends with many of the other tenants in that block, including Cafe Steam’s Will Forsman and Luke Austin of Sorry in Advance.
"One of the big reasons why we focused on downtown is the feel of that block. We think it is a good encapsulation of this new wave of arts and culture in the area,” said Nelson.
Overall, Masek is very optimistic about the future of downtown as the number of residents in the area grows. She said the number of people living downtown has doubled since 2010. While the number of downtown employees might be on the downswing, she said studies show elsewhere that residents spend seven times the dollars that day workers do in a downtown area.
While the mix of businesses might be changing to better match the evolving demand, she still sees people interested in Rochester’s urban core.
“I feel really positive about it. I really like the uniqueness of the businesses that have opened over the last year. And I've got a lot of respect and appreciation for the ones that made it through with just huge amounts of innovation and adaptation,” said Masek. “A lot of negative messages went out over the last year about COVID hotspots downtown... about construction downtown... about parking downtown. People need to flip the mindset and celebrate how interesting downtown is.”