Apartment Construction Boom (2011-??)

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twincitizen
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Re: Apartment Construction Boom (2011-??)

Postby twincitizen » January 27th, 2015, 9:23 pm

http://finance-commerce.com/2015/01/mon ... francisco/

This article isn't 100% pertinent to the local apartment construction boom, but couldn't think of a better place for it.

The article mostly covers rapidly rising rents in the markets where you'd expect it (SF, Silicon Valley, etc.), but also gives some percentages for other cities.
Rents jumped 15.4 percent in the San Francisco area to a median monthly cost of $3,031, an increased mirrored by San Jose where prices were up 14.5 percent to $3,187 a month. Rents climbed 10.5 percent in Denver to $1,817 a month. Kansas City also notched a substantial 8.5 percent gain to $1,204 a month.
The crazy part, and the part most of us will want to dig into is this:
Still, tenants are catching a break elsewhere. In Chicago, Minneapolis, Philadelphia, Baltimore and Washington, D.C., rents rose by less than 2.2 percent. Rents in Minnesota’s Twin Cities area ticked up a mere 0.1 percent this past year to $1,501.
Anyone have any theories? Bad/incomplete data? In the last year, MSP added thousands of new units, all of them at the very top of the market. In fact, it seems every new large apartment complex that came online last year was reaching for the top (LPM, Nic on 5th, Lime, Track 29, Elan, etc.) Those 5 buildings alone represent a huge share of the new apartments that hit the market, even when you factor in St. Paul and the suburbs.

TBH, it seems mathematically impossible that average rent effectively did not increase. If someone wants to claim that average rents at existing buildings didn't rise, I could maybe buy that. But to claim the average rent in the metro didn't go up at all is pretty suspicious, given all the new construction. Without a doubt, average rents in Minneapolis (proper) are rising some. For the metrowide average rent to stay completely flat, rents in the burbs would need to have fallen, to offset Mpls' increases.

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Nick
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Re: Apartment Construction Boom (2011-??)

Postby Nick » January 27th, 2015, 9:33 pm

Puts into perspective how affordable the Twin Cities are. Lots of people complaining about the sticker prices of #luxury units forget there are apartments literally next door to LPM renting for $650/month.

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Re: Apartment Construction Boom (2011-??)

Postby twincitizen » January 27th, 2015, 9:58 pm

To attempt to back up what I was saying, this Strib article from mid-2014 reported a much lower average rent than the article implied. The F&C article states that average rent in the Twin Cities is now $1,501/month. If you do some digging, you can find recently reported figures much lower than that. I think the average rent figure given in the F&C (via Associated Press) article is bunk.

http://www.startribune.com/housing/259612451.html

EDIT: Did some more very brief digging, and found average rents reported in mid-2012 were $965, mid-2013 $984. The above Strib link states that we broke the $1000 barrier in early 2014. So the F&C/AP reported figure of $1501 is complete horseshit.

I suspect average rents in the Twin Cities have jumped, but they're probably still in the $1100-1200 range, depending on how much the thousands of new units pushed up that average. Even if all existing rents stay flat, the average must go up due to the new/expensive units. Math.

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Re: Apartment Construction Boom (2011-??)

Postby twincitizen » February 12th, 2015, 5:15 pm

http://finance-commerce.com/2015/02/dow ... shoots-up/ (locked)

Downtown vacancy rate shoots up. Nic on 5th is already 65% leased

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Re: Apartment Construction Boom (2011-??)

Postby grant1simons2 » February 12th, 2015, 5:46 pm

65%!? :o

When retail finally moves in there I would expect it to shoot up again. I feel like the light rail totally has something to do with it being so well leased. Anyone want to make any predictions for Q2 percentages?

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Re: Apartment Construction Boom (2011-??)

Postby min-chi-cbus » February 13th, 2015, 8:31 am

Sure. 70%.

There's retail all around this building so if I were a would-be tenant to the building the addition of retail at the base of the building would not sway my decision very much with something as big as deciding where to live. I'm not saying it's worthless, but I don't know that it'd be enough to help occupancy skyrocket.

There's also a lot of supply coming online this year, so it's going to be interesting to see how the market absorbs all of these units.

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Re: Apartment Construction Boom (2011-??)

Postby twincitizen » February 13th, 2015, 8:37 am

I think the performance of 4Marq and Latitude 45 will definitely have an effect on the various (larger) proposals that are floating around right now, but still a year or more from construction (Nicollet Hotel Block, #NyeRise, etc.), for better or for worse.

What else is hitting the market in 2015 besides those two huge projects? Maybe the last phase of Elan Uptown, but they have the Uptown market all to themselves for 2015 openings. Mill & Main West? Anything else? Those projects are all pretty damn big (200-300 units), so we're still talking around 1000 or more units hitting the market this year. Is there even a single residential project underway in the North Loop right now, not counting the recently approved 30-unit condo building and delay-plagued District 600?

We actually seem to be in a mini-lull right now as far as projects actually under construction. If everything we've heard about lately stays on track, late 2017 - 2018 will have a ton of units hitting the market, particularly in the Old St. Anthony area.

EDIT: Looks like 4Marq is actually slated to open Q1 2016, not in 2015. Latitude45 is lucky to have this year to themselves, especially give that it's 320 units. This little lull should help LPM and Nic on 5th tremendously.

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Re: Apartment Construction Boom (2011-??)

Postby TommyT » February 13th, 2015, 8:40 am

What's funny about this is, I remember being a very young Urbanist (18 and living in Wisconsin) and had a friend who lived in Seattle who would tell me that he would go downstairs to the store to pick something up. I thought it was SO cool that he had a convenience store in his building and couldn't wait to move to a big city where I could live above retail. Well, fast forward 10 years and I'm 28... living at Lime is my first experience with that type of setting and I MAYBE have purchased 4 things from there the entire time we've been in the building.

On that note, they did just send out a surveymonkey about Marche and what we would like to see them offer in the future. In the comments I expressed how cold and uninviting I thought the lobby was. I'm really hoping this means that there may be some sort of budget to improve the lobby area of the building now. I've been quite unimpressed compared to other Greco buildings. My roommate just had an offer accepted on a house at 45th and Park though so we won't be there too much longer.

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Re: Apartment Construction Boom (2011-??)

Postby min-chi-cbus » February 13th, 2015, 9:20 am

twincitizen wrote: What else is hitting the market in 2015 besides those two huge projects? Maybe the last phase of Elan Uptown, but they have the Uptown market all to themselves for 2015 openings. Mill & Main West? Anything else? Those projects are all pretty damn big (200-300 units), so we're still talking around 1000 or more units hitting the market this year. Is there even a single residential project underway in the North Loop right now, not counting the recently approved 30-unit condo building and delay-plagued District 600?
Granted I haven't been able to keep up with all of the changes happening to the project pipeline and I do not have an accurate way to track their status, other than proposed, approved, under construction or completed, but just for the projects within "downtown" -- which includes what's inside the loop (not Cedar-Riverside) and St. Anthony Main across the river -- and if I only look at projects with some Residential included, there are 36 projects with nearly 5,400 units to consider. Of those, only 23 projects for ~3,300 units are under construction that may or may not be completed by year end (includes Nic on 5th). Noteworthy are:

Latitude 45 - 320 units
4Marq - 262 units
Artist A Mill Lofts - 255 units
The Nic on 5th - 250 units
Dock Street Apts - 200 units
Junction Flats - 182 units
Mill & Main Phase I - 180 units
Mill & Main Phase II - 179 units
Else Warehouse - 161 units
Wells Fargo Residential I & II - 150 units (each, or 300 total)


In addition to those, there are 13 projects for ~2,000 units that I know of that have been completed within the last year. Including:

LPM - 355 units
222 - 286 units
Soo Line Apts - 250 units
Third North - 204 units


So that's nearly 5,500 units that could be in direct competition with the Nic on 5th (and one another) this year. I think they'll fill up fairly quickly, but it's still a lot to absorb for any market our size, in such a small geographic area (greater downtown).

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Re: Apartment Construction Boom (2011-??)

Postby min-chi-cbus » February 13th, 2015, 9:35 am

If they were to all fill up in 2015, that'd be an additional 7,500 - 10,000 residents added to the downtown population. That'd be great, but a BIG leap from the 1,500 - 2,000 resident pace we've seen to date.

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Re: Apartment Construction Boom (2011-??)

Postby acs » February 13th, 2015, 9:42 am

Hopefully this new supply will actually succeed in keeping rents down for those of us who don't live in new buildings.

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Re: Apartment Construction Boom (2011-??)

Postby mog » February 13th, 2015, 12:29 pm

Does anyone have access to the article? What is the vacancy rate at?

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Re: Apartment Construction Boom (2011-??)

Postby twincitizen » February 13th, 2015, 1:11 pm

9.8% downtown

BUT, vacancy is at just "4.6 percent for all “stabilized” downtown Minneapolis apartments" that are past their initial lease up period (I'm guessing this is one year, at least I've read that elsewhere in the past). They attribute the jump in vacancy to the large number of units that came online in the 2nd half of 2014.

Uptown's vacancy rate is at 2%, which the article indicates was very unexpected. They thought that with Lime and Elan's multiple phases hitting the market that the rate would spike, but it actually went down since Q4 2013. This certainly bodes well for future construction in Uptown. We've basically knocked out of all of the vacant land in Uptown, so perhaps we'll see increased pressure on the several blocks encompassing Arby's/Cub/Acme/PP.

Across the entire metro, the vacancy rate is at 2.9%, up from 2.5% at the end of 2013. Every single submarket across the region is under 5%, except downtown Minneapolis. Downtown St. Paul is right at 5%, and the Penfield is now 93% leased, way ahead of schedule (after a very slow pre-leasing period before the Green Line opened)

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Re: Apartment Construction Boom (2011-??)

Postby min-chi-cbus » February 13th, 2015, 3:44 pm

9.8% is definitely statistically significant, as is the 4.6% metric (whatever "stabilized" means). I really hope the jump is truly driven by new units coming online all at once, but it scares me a little without knowing more behind those figures (like total vacant vs. occupied units, and values from different time periods). However, if Uptown is truly just at 2.0% after all that's come online recently, that is awesome news, and bodes well for the Girard project!

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Re: Apartment Construction Boom (2011-??)

Postby Gman12 » February 13th, 2015, 5:01 pm

I really hope people want to keep moving downtown and that the mini boom isn't over already. When I tell people I live downtown a lot of them respond with 'thats so cool, I would like to also, but its too expensive...'

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Re: Apartment Construction Boom (2011-??)

Postby uptown067 » February 13th, 2015, 8:35 pm

twincitizen wrote:We've basically knocked out of all of the vacant land in Uptown, so perhaps we'll see increased pressure on the several blocks encompassing Arby's/Cub/Acme/PP.
Additionally, I would really love to see some development extend east of lyndale, particularly along the greenway.

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Re: Apartment Construction Boom (2011-??)

Postby twincitizen » February 13th, 2015, 9:32 pm

Likewise. I just moved out of Whittier after a 4 year stint at Grand & 28th, and my gut tells me that the rent levels aren't there yet. I really think the city needs to make a move on the LynLake municipal parking lot that they own, in order to begin momentum eastward. This will, in turn, benefit the eventual redevelopment of the Kmart site by starting the eastward crawl of development. Without any development between Lyndale and Blaisdell, there is absolutely no way that the Kmart site will be able to command market rents. There's currently way too much vacant land and distressed property between Lyndale and Nicollet, on both sides of Lake st.

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Re: Apartment Construction Boom (2011-??)

Postby Anondson » February 24th, 2015, 10:48 pm

Homeownership rates lowest in twenty years.

http://cnsnews.com/news/article/terence ... 0-year-low

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Re: Apartment Construction Boom (2011-??)

Postby twincitizen » March 23rd, 2015, 10:15 am

MPR on the boom & low vacancy rates, plus a cool pic of a 4Marq panel being hoisted: http://www.mprnews.org/story/2015/03/23 ... cancy-rate

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Re: Apartment Construction Boom (2011-??)

Postby Nathan » March 23rd, 2015, 1:18 pm

It's crazy that the vacancy rate has only increased, what, 1% with all that has been built. If we have to get up to 5% to be normal... at this rate... that's like 10 years 40k more units? Super estimating obviously, but dang.


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