Downtown retail growth seen as goal in economic recovery

May 21—A plan to recruit and grow retail business in downtown Rochester is part of the Destination Medical Center Economic Development Agency’s response to recovery from the COVID-19 pandemic.

“This has always been on our radar screen, but never more important than coming out of the pandemic,” DMC EDA Executive Director Patrick Seeb told the DMC Corp. board on Thursday.

He pointed to similar efforts earlier in the first five years of the DMC initiative that helped attract hotels to the DMC district and said the hope is to have similar success in growing retail opportunities.

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Chris Schad, director of business development for DMC’s Discovery Square District, said efforts will range from creating opportunities for pop-up businesses to temporarily occupy vacant storefronts to encouraging retailers to eventually set up shop permanently in those locations.

“There is a certain urgency to do something about the vacant storefronts that we do have, while we also develop a longer-term plan,” he said.

He added that the work is a natural progression to efforts aimed at enhancing downtown public spaces to attract more people to the area.

Seeb said the work is also a response to property owners and others, who are looking for opportunities.

“There has been a very robust conversation in the community with different ideas on how to approach this,” he said.

Schad said the discussions that have started are expected to lead to a more focused marketing campaign by Rochester to be developed by October.

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What happened: Destination Medical Center Corp. board discussed the pandemic recovery efforts and potential strategies.

Why does this matter: The DMC Economic Development Agency has been working on potential approaches for addressing economic struggles amid the COVID-19 pandemic and is monitoring changes.

What’s next: DMC EDA staff is meeting with downtown business owners and others to determine options in the months to come

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DMCC Board Chairman R.T. Rybak encouraged the DMC EDA staff to not focus solely on marketing downtown Rochester to outside businesses.

“The market I think we really need to tap is people within the Rochester community with incredible talent — who have food trucks, who are doing stands at the weekday festivals, who have always wanted to do something, who had a store in another community and their partner got a job at Mayo Clinic and they wished they could do something,” he said.

“I think we need to find a way to aggressively partner with the community,” he added, pointing to the potential to create unique retail opportunities.

He suggested looking at ways to invest in stores that might need a little bit of help, perhaps similar to how tax-increment financing has helped fill financial gaps for some hotel developers.

“A relatively little amount of money could do that,” he said.

Kathleen Lamb, attorney for the DMCC board, said it’s unclear whether that would be an allowable use of the state funds under the legislation that created the DMC initiative, but Rybak said it would be worth investigating as a way of fueling recovery efforts and future business development.

As that work is happening, Seeb said a variety of other efforts are also seeking to help address economic recovery, including the planned return of activities to downtown Rochester and finding innovative ways to conduct hybrid conferences in the city.

However, he said Rochester residents have already taken an important step toward doing their part to helping the economic recovery with a reported 85 percent of eligible residents receiving at least one dose of the COVID-19 vaccine.

He pointed out that the vaccines will bring confidence among residents and visitors, which will spur added economic activity.

He said some return is already being seen. Hotel occupancy, which dropped to less than 16 percent in April last year, rose to 45.5 percent last month.

“There’s still a lot of work to do and recovery to be had,” Seeb said, noting the 2019 occupancy rate for April was 70 percent.

Seeb said hotel occupancy, along with office occupancy, sales tax revenue and the number of visitors, will continue to be monitored as steps are taken toward economic recovery.

The recovery is expected to take time. A study commissioned by the DMC EDA last year indicated the impact of Rochester’s 30 percent decline in economic activity in early 2020 is likely to last beyond the end of 2022.

“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 (percent) to 7 percent lower than pre-COVID levels,” Erin Lonoff, a principal with HR&A Advisors Inc. said in October as vaccines were being developed.

Echoing Seeb’s credit of local vaccine acceptance for positive developments locally, DMCC officials said it will take a continued effort to maintain momentum.

“We’ve done well, but we can’t stop now,” said Olmsted County Commissioner Jim Bier, who sits on the state DMCC board.

“We’re trying to get everyone vaccinated, because that’s the key,” he added.