Mayo Clinic investment up nearly $62 million as other DMC private investment lags in 2022 report

ROCHESTER — Some private development in the Destination Medical Center district slowed last year, but an estimated $172.6 million in investment by Mayo Clinic provided enough to trigger $30 million in state DMC infrastructure funding for at least the next 10 years.

“I would expect the private industry to be a little bit more impacted by economic uncertainty, and I think we did see that,” DMC Corp. Board Chairwoman Pamela Wheelock said. “I think we did see that.”

At the same time, she pointed out that Mayo Clinic’s structure provides the opportunity to see investment across economic cycles.

Mayo Clinic reported $172.6 million in investment last year, which was up from the $110.5 million it reported in 2021.

“That’s the largest annual investment Mayo has made since we began programming (for DMC) in 2013,” said Doug Holtan, Mayo Clinic’s chairman of its Department of Facilities and Support Services, who added that Mayo Clinic has reported $934 million in investment since 2013.

It’s part of approximately $199.1 million in new private investment last year, according to a report to the Minnesota Department of Employment and Economic Development approved by the DMC Corp. executive committee Thursday morning.

DMC Economic Development Executive Director Patrick Seeb pointed to the overall increase of approximately $43 million in additional annual investment, when compared to 2021.

“We are trending upward following the pandemic,” he said.

The 2022 Mayo Clinic investment, which includes work on the Anna-Maria and Stephen Kellen Building and the completion of the Discovery Square parking ramp, helped increase overall private investment in the DMC district by 28.2% — or $43.8 million — compared to the previous year.

Holton said Mayo Clinic's investment goes beyond new construction, which includes expansion of the Proton Beam Therapy Program.

“Modernization and growth occurs behind our walls every day at Mayo as we continue to modernize and change our facilities to meet the evolving medical, research and educational needs,” he said.

While Mayo Clinic increased its investment in 2022, spending by private developers dropped from a reported $44.7 million in 2021 to $26.5 million last year.

The bulk of new private investment outside Mayo Clinic was the $20.5 million spent on construction of the Bryk on Broadway Apartments, which is currently in the process of leasing 180 apartments near the intersection of North Broadway Avenue and Civic Center Drive.

City Administrator Alison Zelms said other investments included a mix of new construction and reuse of existing spaces.

“We have new things that are occurring and redeveloping in Rochester in the DMC area,” she said, adding that the downtown growth has ripple effects throughout the city.

In addition to the Bryk project, reported private investment in the DMC district ranged from $1.9 million to create lab space, conference rooms and offices for private occupants of the Discovery Square building to $25,000 spend on interior finishes for Mezza9 Cafe & Desserts , which opened last year at 20 Third St. SW.

Zelms said she expects investment to rebound and grow with this year’s adoption of a new Unified Development Code, which addresses some past barriers to development while seeking to clarify regulations for residents and developers.

“I think you are going to actually see some more significant investment from the non-Mayo private investment over the future years as we kind of reduce some of the barriers for folks and make ourselves more attractive for development in Rochester, rather than elsewhere across the country,” she said.

The 2022 private investment, along with the cumulative investment since 2013, is expected to trigger the release of $30 million in state public infrastructure funding later this year. DMC legislation caps annual state infrastructure funding for the project at $30 million a year.

Rochester Mayor Kim Norton said it shows that continued growth has occurred, despite the challenges of the pandemic.

“I am really pleased to see the numbers from 2021 and 2022,” she said. “Rochester is so fortunate compared to other communities.”

The DMC private investment report must be submitted by April 1 and will be audited before the release of state DMC funds later this year.