Backed by rebounding job gains and a strong demographic expansion, the Twin Cities’ multifamily markets maintain their dynamism. Despite a new cycle peak for deliveries, last year’s 3.3 percent rent growth stayed above the U.S. average. Meanwhile, occupancy remained one of the country’s highest—at 97.1 percent as of November, second only to New York among major metros.
Employment gains were led by trade, transportation and utilities, which added 10,100 jobs in the 12 months ending in October. Large infrastructure projects—such as the $2 billion light-rail line between downtown Minneapolis and Eden Prairie—are already stimulating development along the way. The Minnesota Vikings moved their practice facility from Mankato to Eagan in 2018, but the team owners are planning to build 1.2 million square feet of office space, as well as hotel, residential and retail space. Work on a 320-key hospitality project has already begun.
Some 9,000 units were under construction in the metro as of December, with downtown Minneapolis—which attracts upscale projects—leading the pipeline. Workforce housing demand is increasing, but with mounting land and materials costs, the segment could face increasing headwinds going forward. Yardi Matrix expects the average Twin Cities rent to advance 3.6 percent in 2019.