Data from New Ulm’s City Planning Department indicate of the 123 parcels located in New Ulm’s downtown area, only 43 have apartments available. Of the 80 parcels without apartments, some have no space and others use the second and third-floor spaces for storage or office space.

But several places downtown, especially on Minnesota Street, have potential spaces for apartments. Above Gypsy Girl Consignment Boutique, 11 North Minnesota Street, and the Chamber of Commerce there are currently nine new spaces in development.

With plenty of demand for new apartments, supply is still behind. Why are unused spaces not being converted?

The longer the space has sat, the farther it has fallen behind on regulations required to house occupants. Community Development Director David Schnobrich said this can include features not currently included.

John Yost has lived on the second floor of this building for 20 years, right next to his law office. He said he once considered buying a building and renting out spaces, but decided being an attorney and landlord was not worth it.

“For example, fire escapes,” he said. “We know when these buildings were built, getting out of them was probably through one door. Now you have to meet two means of access. There are those kinds of issues you have to deal with. Things change over time.”

For the buildings downtown that could include apartments, Schnobrich said there’s a common equation building owners run through to see if renovating to feature apartments would be worth it.

“You take a space and cost out how much it will take to bring it to code compliance standard,” he said. “Then you’re looking at how much can I get from a unit from a rent standpoint. Is the amount of rent I get going to be able to cover the debt I’m going to incur?”

Patterson’s Diamond Center owner Ben Patterson currently rents out two spaces above his store. He said he inherited the spaces already ready for tenants three years ago. While it’s a good income source, he said finding steady tenants and the parking situation have been some downsides.

If he had needed to renovate the spaces above to have apartments, he said he’s not sure he would have done so.

“That’s a big question mark,” he said. “You throw a bunch of money in an apartment and want to get the money back out with rent monthly. With the downtown area, I don’t know if you can get that much, especially with the parking.”

A recent ordinance change from City Council designates one parking spot per residential unit instead of two. City Planner John Knisley said they looked at all the parking areas downtown and determined there was enough parking downtown to make the change.

“We believed there was sufficient off-street parking available to cover the customer, business, and residential uses. You might have to walk a block or so to get to where you’re going”

Attorney John Yost has lived in his downtown above-business apartment for 20 years, right next to his practice. He said his experience has been both fun and frustrating, enjoying the view and proximity to restaurants like Rodney’s but dealing with street noise and parking.

In conversations with landlords and building owners, Yost shared similar roadblocks to renovation Knisley, Schnobrich, and Patterson laid out. He cited old wiring, plumbing, and sprinkler systems as potentially high renovation costs.

When it comes to business owners who also own their building, Yost said being a landlord as well often isn’t a favorable scenario.

“They didn’t sign on to become a landlord,” he said. “I thought about buying [my building] and renting it out. I just didn’t want to become a landlord.”

As a potential remedy to the cost-related hurdles, Yost suggested the possibility of grants or reimbursement programs for building owners who put in the effort and cost to renovate spaces for apartments. Knisley said opportunities like these will be on the city’s radar in the future.

“In our new comprehensive plan we’re working on finalizing, one of the things we want to take a closer look at are those types of programs in the downtown and we call that out,” he said.