Downtown St. Paul is having a moment — but not a good one

Barrio's sudden closure in St. Paul's Lowertown neighborhood over the weekend was the latest blow to a reeling downtown.

The popular restaurant and tequila bar closed after a 15-year run, leaving just one restaurant in a once-bustling historic stretch that is partly under bankruptcy protection.

A few blocks away, in downtown's central business district, owners of the St. Paul Athletic Club elected not to sell the historic building in a private auction Wednesday after bids came in far below the property's assessed value.

Closer to the Xcel Energy Center, a court-appointed property manager is working to repair the dilapidated Lowry Apartments after tenants complained about unsafe and unsanitary conditions. The building's owner publicly vented at City Hall about "crime/drug use that is allowed to occur without any consequences" in the urban core.

It's a sobering moment for downtown St. Paul, which has been taking hit after hit lately — a pattern raising alarm among residents, workers and visitors.

Even before the pandemic, the city struggled to shake downtown's notoriously sleepy reputation. Downtowns across the country were then forced to grapple with the rise of remote work and a rise in crime, addiction and homelessness that put subsequent strains on public services. St. Paul's unique challenges exacerbated and accelerated its downward spiral.

To name a few: Downtown's largest property owner, Madison Equities, dumped 1.6 million square feet of office space on the market after the company's founder died. The Green Line, heralded as downtown's saving grace when it was built a decade ago, is frequently blamed for the worsening crime and atmosphere. The capital city's many government workers have been slow to return to their offices in the urban core.

"I think that we've known for a while that this market disruption was going to show itself in downtown St. Paul," said Joe Spencer, president of the nonprofit St. Paul Downtown Alliance. "This is a moment of transition, there's no doubt about it."

Developer Carl Kaeding, whose firm is converting a 17-story downtown office building into 178 housing units, said he expects more foreclosures and discounted sales as owners offload distressed properties.

"There's going to be a lot of negativity before the banks make their moves and the new developers that want these properties come in and do something with them," he said. "It just takes some time."

Mayor Melvin Carter was not available to answer questions about the situation Monday or Tuesday, his press secretary said.

Bye-bye Barrio, Saint Dinette?

The restaurant turnover may be part of a more natural cycle for downtown, Lowertown boosters said, though the dwindling number of office workers at lunch and happy hours was certainly a factor in some businesses' decision to close.

In addition to Barrio, Saint Dinette's owner recently said said the restaurant is likely to close when its lease is up at the end of March. Other former mainstays, like Black Dog Cafe and Tin Whiskers, shut their doors a few years ago after COVID wreaked havoc on the entire sector.

"Honestly, it's exhausting being a restaurant owner," said Annie Rose, owner of Lost Fox, a café and bar that opened downtown in 2022. "There's only so many punches you can take sometimes."

But, she added, new bars and restaurants have been coming onto the downtown scene as others leave: Bullvino's, a Brazilian steakhouse, and Erta Ale, an Ethiopian restaurant and bar, have both drawn followings. The longtime owner of the Lake Elmo Inn recently opened 1881 in Union Depot.

"We set up our business plan knowing these economic struggles and a plan of what we need to do," said Mike Christenson, part-owner of Gambit Brewing Company, which opened at the start of 2023. "We see it as: We need to be here. We need to support our community. We need to help change and help businesses thrive around here."

Though they mourn the lost gathering spots, residents of Lowertown are embracing their new neighborhood watering holes. The historic artist enclave has gone through change before, including in the mid-2010s, when the construction of the light rail and CHS Field helped double downtown's population.

Neighbors on Monday said many qualities that attracted them to the area remain: The charm, architecture, history, small-town feel, quirkiness, progressiveness, the arts and culture scene, a sense of community.

During a Saints game, the farmers market or live music in Mears Park, the area is vibrant and filled with visitors. It's during the quieter times, in between events, that issues such as homelessness and addiction become more visible, said Sara Davis, a renter in the building that houses Saint Dinette.

"It's partly just a matter of numbers down here, as far as like enough people living down here to support the businesses," she said. "But they need to make it appealing to get more people — so it's like this chicken-egg thing, right?"

Downtown's path forward?

The Downtown Alliance's downtown investment strategy, published in March, shows just that. Through office-to-residential conversions, improvements to the streetscape and key redevelopment projects, Spencer said the plan aims to triple downtown's population of 10,000.

"I'm quite confident and quite bullish and energized — even though I acknowledge that some of these transitions are going to be hard, are going to be scary, and they're going to be painful for folks," he said. "At the end of the day, they're going to be just kind of the tough moments we go through to transform to a much better downtown on the other side."

It's a long-term strategy, Spencer acknowledges, though he said some work is starting to roll out. The mayor's proposed budget for 2025, for instance, includes $1 million to waive permitting fees for two conversion projects and $500,000 for Catholic Charities, whose downtown shelter and service providers have faced skyrocketing demands in recent years.

In the nearer future, "we've really got to focus on the fundamentals," Spencer said. Though business owners like Rose and Christenson said public safety this summer was much improved from last year, there are still challenges. So Yen, a popular weekends-only bakery that recently opened in Lowertown, had its cash register stolen after a break-in last month.

Davis said she is hopeful the newly announced expansion of the downtown improvement district will help. The district charges property owners fees to provide special cleaning and safety services.

"I just don't want to see things go any further in the wrong direction," she said. "I think things will come back around. But I think it's going to take a little time."

Correction: Previous versions of this story should have said Saint Dinette is likely to close when its lease is up at the end of March and clarified that only one property overlooking St. Paul's Mears Park, the Park Square Court Building, is under bankruptcy protections.