New research suggests falling downtown Minneapolis commercial property values are part of a long-term trend that could continue shifting more tax burden onto homeowners.
5 EYEWITNESS NEWS spoke with distinguished Hamline University professor David Schultz, who said his research was partly inspired by 5 EYEWITNESS NEWS reporting. Schultz said the drop in commercial property values in Minneapolis goes back beyond the pandemic.
RELATED: Why a 20% drop in downtown Minneapolis commercial values could raise homeowner taxes
“If the pandemic created the problem, we would have seen a similar pattern continuing to this day, with Edina,” said David Schultz.
Schultz has appeared on 5 EYEWITNESS NEWS airwaves as an expert in legal studies and political science, but he is also a former city planning and zoning director and worked as a housing and economic planner for a community action agency.
Schultz said that, in inflation-adjusted terms, the assessed value of office, retail, hotel and other commercial spaces fell about 28% in the last decade. He said commercial property went from generating 34.7% of the city’s net tax capacity in 2016 to 24.9% in 2026.
That’s about a 10% drop in 10 years. Meanwhile, Schultz wrote that the residential tax burden rose about 6%.
RELATED: Minneapolis office building values hit 10-year low, homeowners may pay more
“This is huge. It’s sobering and huge on so many different scores here. I mean, one, think about it here, Minneapolis is still the economic engine that drives the state of Minnesota. And if the city of Minneapolis is now starting to see an erosion of its tax base, its commercial tax base, this is not good for the state of Minnesota in general,” said Schultz.
Schultz said that without reversing the trend, taxes are likely to keep rising for homeowners and businesses. He said both may opt to move.
Schultz said it is difficult to pinpoint a single cause. He said the solution would likely have to come from city policy aimed at attracting businesses that would grow the commercial tax base, supporting city services, and easing pressure on homeowners.
“Making the regulatory environment in Minneapolis more supportive of businesses, making it easier for businesses to start up a new business. So, we need to be going in that kind of direction here,” said Schultz.
City officials were not available for an interview. But a spokesperson pushed back on the report published by Schultz, saying, “Office value declines are happening nationally.”
The spokesperson also said tax-burden shifts do not automatically mean tax increases, because other factors also affect tax bills.
It’s not a direct cause-and-effect, but the two are correlated, and property tax bills for 2026 were up on average, according to the City Assessor’s Office.
See the response from the city spokesperson below:
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