Rent Growth in Minneapolis/St. Paul Returns to a More Sustainable Pace
The Minnesota Multi-Housing Association’s Perspective 2012 event occurs today, and MPF Research is proud to participate, discussing trends in apartment fundamentals for the nation as a whole and highlighting how the local market in Minneapolis/St. Paul fits into the big picture.
The most significant shift seen of late in the apartment market performance for the Twin Cities is a slowdown in rent growth. Prices are still rising: indeed, they’re increasing at a reasonably healthy pace. But they’re not going up at the way-above-normal level that had been seen during 2011. During the initial three months of 2012, effective rents for new leases in Minneapolis/St. Paul climbed 0.9 percent, and the annual rent growth level came in at 3.6 percent as of 1st quarter. In comparison, annual rent growth had been running at roughly 5 to 6 percent during all of 2011.
While some slowing of rent growth has occurred across the product spectrum, there are still a handful of individual neighborhoods where pricing still jumped at least 6 percent or more during the past year. Those locales include South Minneapolis/Richfield, Uptown/St. Louis Park, South St. Paul/Egan and Anoka County.
Occupancy in the metro is tight everywhere. The overall occupancy rate averages 97.2 percent, up a tenth of a percentage point quarterly and 60 basis points year-over-year.
Ongoing construction in Minneapolis has increased to about 2,100 units, and there are quite a few additional communities that are right at the starting gate. This will be one of the first locales across the country where development activity moves ahead of its historical norm. But that historical norm is very low, and the market looks pretty starved for additional product right now. So construction that’s moving up fairly quickly doesn’t necessarily spell trouble.
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