Twin Cities Multifamily Report – Spring 2021
Following a rocky 2020, the Minneapolis-St. Paul market kicked off this year on the mend.
Banking on its relative affordability and steady demographics, the Minneapolis multifamily market withstood the COVID-19 test, embarking on a journey to recovery. At 0.2 percent on a trailing three-month basis through March, rent development was on par with the national rate, despite Minneapolis-St. Paul adding an average of about 7,500 units each year since 2018.
The unemployment rate in the metro hit 4.4 percent in February, according to preliminary BLS data. Last year, the Twin Cities lost 166,600 jobs, with employment marking a 7.1 percent slide. Several large employers, such as 3M, Target and Wells Fargo, reduced their workforce, but state employees were also let go because of budget deficits. On a more positive note, the Minnesota Department of Transportation announced that more than 200 construction projects will be underway this year, which is set to support thousands of construction jobs across the state.
First-quarter data paints a picture of steady performance. Developers delivered 1,991 units and transaction activity picked up steam, with some $284 million in multifamily sales. Despite these positive signs, occupancy was on a negative trend, particularly for core properties, with rates down 280 basis points year-over-year as of February to 93.0 percent in urban Twin Cities. Yardi Matrix expects average rents to improve by 2.5 percent in 2021.