Duluth’s medical district is growing, and with that growth comes other development, such as new businesses.
The price tag of St. Luke’s and Essentia Health’s developments, together, total more than $1 billion. It’s an investment that has caused one business to add a new location near the district, an occurrence that local experts say will be more prevalent as medical district construction continues.
Tortoise and Hare Footwear has jumped at the chance to be near the district. In April, it will open a second location at 320 E. Superior St., close to both a shopping district and people and patients who need specialty shoes.
“We wanted to get down there so we have a storefront that is literally right across the street from what is going to be the biggest hospital in town,” said Andy Stukel, who will manage the new location with his girlfriend, Savannah Miller.
St. Luke’s has invested $250 million in a new emergency room, catheterization lab, helipad, parking ramp, hospital tower and more. Essentia’s $800 million Vision Northland development will include a 12-story hospital tower, larger surgical suits and updated clinic space.
Adam Fulton, deputy director of Duluth's planning and economic development division, said there has been renewed interest in downtown. Although, initial investment may be slowed by ongoing disruptive construction and street closures.
“(In the next six months) … I think people are going to be looking aggressively at options for investment,” Fulton said. “I think that investment will be a little bit slower, just simply because there's so much already going on that it's a little bit hard to envision more.”
This investment could range from housing, retail, restaurants, development of vacant lots and more, he said.
Dr. John Pryor, east market president for Essentia, said he wasn’t surprised to learn that a business moved nearby already.
Pryor compared it to an intersection with three gas stations — an anecdote he learned while completing his Master of Business Administration degree. The gas stations draw customers to them, as people know it’s the area to go if one needs gas. Like the gas stations, Essentia and St. Luke’s will act as a magnet, but for businesses.
“I’m hoping that this is going to go beyond just businesses that are going (in),” he said. He’s looking forward to new research, other medical development and more.
Pryor said he expects more businesses to arrive when the construction nears completion.
Mike Boeselager, St. Luke's vice president of support services, said economic development always attracts business.
St. Luke’s has been intentional about its development, he said, as it has included neighborhood members, business development groups, the city of Duluth, the Greater Downtown Council, independent businesses and others in its development conversations.
“It really is about investing in our community and making a more cohesive footprint, (which) helps better serve the entire region,” he said.
The ongoing medical development will bring more pedestrian traffic, additional housing, new services and further development of the nightlife, arts and entertainment scene, said Kristi Stokes, president of the Greater Downtown Council.
Current business owners in the area may be influenced, as well. They might improve and invest in their downtown properties, Stokes said.
“Our downtown will continue to be a key place to attract entrepreneurs. We have really worked hard to build relationships with entrepreneurs and to help them grow,” she said.
Retail vacancy rates in downtown decreased last year to less than 9%. In 2017, the downtown area, which includes Canal Park, had a retail vacancy rate of approximately 19%.
Overall vacancy rates fell from about 15% to just over 12% during that same time period, according to a Northspan Group survey done on behalf of the downtown council.
Stokes partially contributes development as a cause of the decreasing vacancy rates, while other businesses just wanted to be located downtown.
Mary Stukel, owner of Tortoise and Hare, said staff members are excited to bring the business' good fashion and fitting services to downtown workers, whether it's those in hospitality, health care, business or more.
“I think that’s been a missing piece of the puzzle in terms of (downtown) retail — to have great, comfortable brands and styles that people can (wear) on their feet all day,” she said.
Development won’t stop when the hospital projects are done. Boeselager said he has been in conversation with developers who are interested in creating their own projects near the district.
“It's exciting for Duluth," he said. "It’s great for the community. It brings some equity to the neighborhood.”