Minneapolis 2040 Plan: What's Ahead for Commercial Real Estate?

In the Twin Cities today—and for the foreseeable future—one must look up. Real estate development is going higher and higher, particularly in Minneapolis. That's not only a metaphor for physical growth and rising prices, but it's an observation in a literal sense. High-rise buildings are the new normal throughout the city, not only in the urban core, but now in Dinkytown and uptown as well. And those high-rises are as likely to be mixed-use developments with retail, office space and affordable apartments as they are to be luxury condominiums.

That skyward focus is most likely here to stay, but there is also something new at ground level, if the city's current efforts to deal with population and employment growth trends, transportation needs and affordable housing are to succeed. Minneapolis, in October 2019, became the first city in the nation to eliminate single-family zoning citywide. The move, termed audacious by some, was praised by the New York Times as a "simple and brilliant plan," in a direction long overdue. It is designed to put an end to what is known as exclusionary zoning, and to address the housing gap between rich and poor neighborhoods.

A Plan to Spur New Housing Solutions

Minneapolis, according to officials, learned some important lessons from other cities, notably San Francisco and Seattle, and moved to deal with spiraling prices and declining affordability. It's not the only move designed to effect change in the city, either. Where other municipalities failed to act, Minneapolis not only sought residents' input through a sturdy process that spanned at least two years, but also formulated a decisive plan.

The zoning change, according to a report issued by The Century Foundation, represents a dynamic and dramatic change for a city that had previously reserved 70 percent of its residentially zoned land for single-family development. Now, duplexes and triplexes are to be allowed on previously single-family lots, a change which could yield up to 30 percent more housing units over time. That, by itself, is dramatic. But four other provisions were enacted by a 12 to 1 vote:

1. Construction of three- to six-story buildings will be allowed near transit stops;
2. Off-street minimum parking requirements were eliminated;
3. There is a set-aside requirement for new apartment development: 10 percent of units must be for moderate-income residents;
4. Affordable housing funding was raised to $40 million from its previous level of $15 million in an effort to combat homelessness and provide immediate relief for low-income renters.

The Minneapolis 2040 Plan

Over a two-year period, city planners sought comments and insights from a broad spectrum of the citizenry on future directions for the city. The Minneapolis 2040 Plan addresses how the city will change and grow in coming decades, and lays out steps for reaching specific goals. First and foremost among critical concerns was addressing the need not only for more housing, but for more affordable housing in areas closer to existing and new employment centers.

Both city and state officials agreed in 2018 that the Minneapolis housing crisis is real, and that a comprehensive and directed plan for change was required. The Minneapolis 2040 Plan was born out of that realization, and it defines in detail the kind of city that can be anticipated in 20 years' time.

The basis of the plan is a vision of a city that comprises distinctive neighborhoods. Those neighborhoods are viewed, in effect, as discrete "small towns" that will offer cultural richness, a reasonable expectation of nearby employment opportunity, needs fulfillment, natural beauty, access to public transportation, and a choice of housing. These new neighborhoods will be more inclusive, more people-oriented and more walkable than most existing single-family enclaves. At least, that's the hope.

Minneapolis 2040 is an ambitious plan that, among other goals, seeks to:

• Eliminate the disparities of opportunity, safety, wealth and health;
• Build a healthy economy with an abundance of "living wage" jobs;
• Establish a distinctive, high-quality, clean physical environment with "climate change resilience;"
• Encourage pro-active, accessible and sustainable government; and
• Devise an equitable civic participation system that enlists residents, businesses and service groups in an ongoing spirit of problem-solving and cooperation.

Whether Minneapolis becomes the kind of city that the 2040 Plan envisions in 20 years' time depends on actions that will be taken today and over the next few years. Right now, there is ample excitement about its many parts, and a reasonable expectation that growth will continue to fuel the demand for the type of housing and business development, as well as the transportation and infrastructure alterations, that will be necessary.

If the single-family housing ban is instrumental in helping to rebuild existing residential pockets and establish new neighborhoods to meet the city's diverse needs, then it might become a model for other cities that face similar situations. At this point, there are a lot of unknowns, but Minneapolis has taken some dramatic first steps, and a lot of people are watching with great interest.