Yardi Matrix: Fueling the Twin Cities Economy
As a regional hotspot with strong employment gains, high wages and a relatively low cost of living, the Minneapolis-St. Paul area’s multifamily market is bustling with activity.
As a regional hotspot with strong employment gains, high wages and a relatively low cost of living, the Minneapolis-St. Paul area’s multifamily market is bustling with activity. Though Twin Cities job growth trails the nation, sectors such as health care, education, hospitality and financial services are adding jobs and have pushed unemployment to one of the lowest rates in the country.
Leisure and hospitality play a big part in fueling the Twin Cities economy, as Minneapolis will host the 2018 Super Bowl and the National Football League’s Minnesota Vikings will kick off this season at their new, $1 billion U.S. Bank Stadium. The team has also purchased the former Northwest Airlines headquarters in Eagan and plans to relocate its headquarters and training facility from Eden Prairie. Retail is another major factor driving development in the area, with several large projects currently in the works, including the Mall of America’s $500 million expansion, scheduled for completion in late 2018.
Multifamily demand is high, especially as large employers such as UnitedHealthcare, Mayo Clinic and Target add young workers. Occupancy was a robust 96.6 percent as of April. Investor demand is strong, as deal flow and prices have been on the upswing. We expect that demand is likely to remain elevated in the near future, although a wave of new completions will dampen rent growth in the metro. As a result, we forecast a moderate 1.5 percent increase in rents in 2016.
