Twin Cities Multifamily Report – May 2023
Despite a general slowdown, rates are improving once more.
Twin Cities rent evolution, click to enlarge
Twin Cities’ record run during the past two years began to weaken at the beginning of 2023. Development slowed, transaction activity took a dive and occupancy slid more than a full percentage point in 12 months. However, this correction will likely spur a more sustainable pace of growth in the long term, especially when economic uncertainty subsides. While U.S. rent growth plateaued in the first quarter—clocking in at $1,706—Minneapolis-St. Paul rates improved by 0.2 percent, to $1,465.
Twin Cities sales volume and number of properties sold, click to enlarge
The metro’s job market remained on a positive track, with employment expanding by 3.5 percent, or 70,600 positions, in 2022. Two sectors—education and health services and leisure and hospitality—accounted for half of the job gains, while mining, logging and construction was the only sector to contract, losing 3,400 positions. As of February, the Twin Cities unemployment rate was 40 basis points below the 3.6 percent national figure. One of the largest investments announced in the metro was Xcel Energy’s $575 million solar power plant in Becker, Minn., which will replace three coal-fired facilities that will be closed by 2030.
Twin Cities. Photo by atosan/iStockphoto.com
In the first quarter, developers brought online only 475 units, following two of the metro’s best years for deliveries, when a combined 22,311 apartments were added to stock. The past two years also saw unprecedented investment, with sales surpassing $3.2 billion in 24 months.
