Although rent growth is decelerating, the Twin Cities multifamily market is steadily recovering. In the first quarter of 2022, rates inched up 0.2 percent. Year-over-year through March, rates were up 5.1 percent. While this trails nearly all top metros around the country, which continue to record double-digit gains, rent growth across Minneapolis-St. Paul remains healthy compared to pre-pandemic levels.
The Minneapolis-St. Paul unemployment rate dropped to a tight 2.8 percent in February—190 basis points below the national rate—according to preliminary Bureau of Labor Statistics data. Nearly half of the 48,700 jobs that the metro gained in the 12 months ending in February were in the leisure and hospitality sector, but manufacturing and construction also posted solid additions.
Transactions hit $452 million in the first quarter, already exceeding the $434 million closed during the same period of 2021. Meanwhile, development activity is beginning to moderate. Only 1,018 units came online, significantly below the 2,738 apartments that developers completed in the first quarter of last year. Persistent supply chain issues and rising inflation, coupled with the recent local rent stabilization ordinance, are generating obstacles for developers. However, Yardi Matrix expects sustained demand to keep rent growth positive this year, at 3.7 percent for all of 2022.