Minneapolis politics, slightly ground down

A Minneapolis politics podcast hosted by four-term Ward 2 city council veterans Cam Gordon and Robin Garwood, with longtime activist Jesse Mortenson

Data Centers, Office Conversions and the Vacancy Dilemma

June 15, 2026

As anger at the Big Tech data center boom seems to be boiling across layers of society, data center politics landed in Minneapolis last month. The City Council passed a temporary moratorium - with generous exceptions - on new data centers in the city. We look at some of the data center projects that exist today, and those that appear to be in-progress. How do we think about hyperscale? We also examine the downtown vacancy dilemma, and the challenges and tradeoffs between data center conversions and housing conversions. When and how do data centers make sense in Minneapolis?

Recorded 6/10/26.

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Mill City Hall AI Transparency

We have used generative AI (aka stuff powered by Large Language Models, or LLMs) here at Mill City Hall, but sparingly so far.

  • Show research has been done by hand EXCEPT for this very episode: here is the Claude Fable prompt and results. These results were very good/useful: caught a lot of the material that we expected/planned to talk about, as well as some less-obvious references (local business press, national real estate press) that added depth.
  • Jesse used the Cursor AI-infused code editor to generate initial scaffolding for the millcityhall.com website. (Logo and site/text content was created by Jesse without AI). Most edits to that initial scaffolding were done by hand.
  • All audio recording and editing is done by hand.
  • We use a service called Headliner to create animated-caption videos ("audiograms"). That service certainly uses some AI, but it's not clear how much is more conventional AI (non-LLM) and how much is the newer LLM tech.

Data Centers

City Data Center Moratorium

Data Center Media Coverage

Existing/Planned Metro Data Centers

National Coverage of Related Policy Impacts

A very select list

Data Center Political Action

What About Converting To Residential?

Twin Cities Support for Residential Conversion

Media Coverage

Projects Completed or In Progress

  • MPLS: Groove Lofts at Northstar Center (Sherman)
    • $92 million cost
    • $7m city TIF
    • 216 apartments, 20% of which are income-restricted
  • MPLS: Kyle Garden Square: homelessness + supportive services (Alliance Housing)
    • $25m cost
    • financing was challenge, "She credited the city with helping fill that [gap]"
    • 59 units
    • downtown Minneapolis office building constructed in 1921, originally the Swedish Hospital, for conversion into 59 apartments Star Tribune
  • MPLS - PLANNED - Grain Exchange (Sherman)
    • $120m cost
    • 232 units
      • approximately 186 of the residential units would be affordable, according to a description of the project in grant proposal
    • seeking a $2.7 million grant from the Metropolitan Council for asbestos and lead paint abatement
    • widely assumed that the project also will take advantage of historic tax credits to fund the office-to-residential conversion.
    • The complex has narrow floorplates and punched-in windows, features that make it ripe for conversion. The Main and North buildings also are L-shaped, creating more opportunities for windows.
    • Business Journal
    • Bring Me the News
    • The project would create 232 residences while retaining some office and retail uses. Approximately 186 units would be affordable.
  • St. Paul — Landmark Tower (Sherman)
    • $97m cost
    • $21 million TIF district in 2023,
    • 187 luxury apartments
    • 26-story tower at 345 St. Peter St.
    • Yahoo
  • St. Paul — The Stella (former Ecolab tower) (Kaeding Development and Inland Real Estate)
    • $68 million cost
    • $15.8 million C-PACE (Property Assessed Clean Energy) loan on top of $18 million in state and federal historic tax credits.
      • building qualified as historic because it was the Twin Cities' first curtain-walled building
    • 178 units
    • “This is one of the lowest-return projects I will have probably quarterbacked in the last two decades,” Kaeding said, adding costs piled up fast between the heating and cooling systems, plumbing for individual units and other equipment needed to meet residential code. Star Tribune
      • “Would we do this one again knowing everything we know now, uncovering all the skeletons?” Kaeding said. “Probably not.”
  • St. Paul - Hamm Building
    • Rich Pakonen of PAK Properties is seeking financing to do the same to the historic Hamm Building. Pakonen, in an email, said he envisions keeping the first floor and lower levels of the Hamm Building unchanged, including the retail, restaurant and theater spaces, while adding 129 residential units on the upper floors. Yahoo
  • ST. Paul Downtown Alliance study identified another 10 buildings as candidates web archive
    • Saint Paul city mention
    • 10 buildings received a compatibility score of 80% or higher, making them strong candidates for a successful conversion (category one).
    • Converting the 10 buildings in category one could create an estimated 3,951 new residential units. The study also estimated these conversions would save 80,000-110,000 tons of carbon dioxide emissions annually.

Downtown Vacancy

  • Q4 2025: The office vacancy rate in downtown Minneapolis sits at 32.6%, Twin Cities Business Magazine
  • Sept 2024: "The overall vacancy rate in Minneapolis’ central business district at the end of June was 33%, exceeding the metro-wide average, according to a quarterly report from Cushman and Wakefield" Star Tribune
  • Office valuations continue to drop. Downtown Minneapolis’ commercial real estate values fell 13.7% last year, according to the city’s assessment report City of Minneapolis
  • Oct 2024: "Office vacancies in the core of downtown Minneapolis reached a new high this fall " Star Tribune
    • By the end of September, the average office vacancy rate in the central business district (CBD) of downtown rose slightly to 23.4%, according to a quarterly report from Colliers. The situation was even worse in downtown St. Paul, which saw a 29% vacancy rate, while the combined suburbs rose to 11.5%.
    • The Dayton’s Project, the much-heralded $350 million redevelopment of the former department store on Nicollet Mall, went into receivership last month.
    • Some new developments:
      • the Kickernick Building, which recently opened an art gallery. Earlier this year, Twin Cities-based United Properties sold the historic former warehouse on the edge of the CBD for $3.79 million. In 2017, United paid $19.5 million for the building
      • Tom McCarver and Steve Boynton bought a mixed-use, nearly 31,000-square-foot building at the corner of Seventh Street and Hennepin Avenue that most recently housed Seven Steakhouse & Sushi. Last month, they paid about $4.3 million, slightly more than half of what it sold for in November 2017.

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