Economic challenges for downtown Rochester are expected to linger for at least six months after a viable vaccine is found for the coronavirus.
“We believe recovery is going to be slow and arduous,” said Shuprotim Bhaumik, a partner with HR&A Advisors Inc.
The real estate and economic development consulting firm was hired by the Destination Medical Center Economic Development Agency to provide insights to short- and long-term impacts of the coronavirus pandemic.
Speaking during a webinar Friday afternoon, Bhaumik said study of past pandemics and economic downturns show consumer confidence is unlikely to bounce back immediately with a vaccine.
“It takes between approximately two and three quarters for consumer confidence to come back,” he said.
Additionally, Erin Lonoff, a HR&A principal, said the impact of Rochester’s 30% decline in economic activity earlier this year is likely to last beyond the end of 2022, regardless or whether a vaccine is available at the end of this year or the end of 2021.
“We’ve estimated that by the end of December 2022, Rochester’s economy is going to have significantly recovered but will still be about 2 to 7% lower than pre-COVID levels,” she said.
Part of the projected decrease in economic activity is tied to unemployment changes, with citywide office employees expected to remain down by 400 to 1,300 in late 2022, when compared to 2019. Lonoff said that includes continued furloughs, as well as people who transition to working from home.
“These are the jobs that are no longer physically in Rochester, spending money,” she said.
Additionally, she said retail jobs are expected to remain 1,100 to 2,400 below earlier levels.
While the report appeared dour, Bhaumik and Lonoff pointed to options for improving potential outcomes.
They include continuing efforts to support existing businesses, prioritizing public infrastructure to draw people downtown, reusing existing real estate in new ways, diversifying the economy and supporting new development.
“We start recovery from a position of strength,” Bhaumik said of Rochester’s position, noting that DMC efforts have addressed some of the recommendations and the city is seeking solutions where other communities are not.
Lonoff also said the position could provide benefits in areas that have been cited as concerns.
Drawing on her own experience in deciding to move from New York to Minnesota after the pandemic led to improved remote-working options, she said others may be drawn to Rochester while keeping jobs in other communities.
“I think that’s the kind of silver lining we want to talk more about,” said Patrick Seeb, the DMC EDA director of economic development and placemaking.
Lonoff offered other options for rethinking opportunities, such as using vacated spaces to fill community needs from long-term housing to potential education space amid distancing requirements.
As the DMC EDA wraps up work related to its plan for the second five years of the initiative, Seeb said it’s also continuing to consider its role for addressing issues amid the pandemic.
The DMC five-year update is slated to be reviewed by the Rochester City Council during its meeting at 3:30 p.m. Monday in council chambers of the city-county Government Center at 151 Fourth St. SE. The meeting will livestream at www.rochestermn.gov/agendas and be available on Spectrum cable channel 180 or 188.