Twin Cities Multifamily Report – Winter 2021

While development powered through and employment rebounded, the metro's average rent continues to drop.
Twin Cities rent evolution, click to enlarge
Twin Cities rent evolution, click to enlarge

The Minneapolis-St. Paul multifamily market has proven relatively resilient in the face of adversity, even while rent gains entered negative territory on a trailing three-month basis in September. Rates were down 0.3 percent to $1,332 on a trailing three-month basis through November, while the U.S. average stayed flat at $1,465.

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Twin Cities sales volume and number of properties sold, click to enlarge
Twin Cities sales volume and number of properties sold, click to enlarge

Gradual efforts to reopen the economy brought Twin Cities’ unemployment rate to 4.2 percent in October, 270 basis points below the U.S. figure and the lowest figure among Midwestern markets. And while service and entertainment businesses are still facing difficulties, the construction industry is beginning to pick up steam again. Ryan Cos. officially began work on Highland Bridge—a 122-acre redevelopment project on the site of the former Ford plant in St. Paul’s Highland Park—and Mortenson Co. broke ground on phase two of Destination Medical Center’s Discovery Square project in Rochester, the largest public-private partnership in Minnesota history.

In 2020 through November, multifamily transactions totaled $509 million, less than half the figure recorded in 2019. Meanwhile, pandemic-induced restrictions did not have a similar impact on the market’s pipeline, with construction deemed essential. Some 5,200 units came online through November, in line with the metro’s five-year average of 5,544 units.

Read the full Yardi Matrix report.