Apartment Construction Boom (2011-??)

[Nick]

Walking around town today, I think we're maybe at the point where I wouldn't want to bet $50 million on another high-end apartment building.

P.S. I'm not a large, institutional investor.

[twincitizen]

Countdown to downtown explosion: http://finance-commerce.com/2014/04/cou ... explosion/

[ECtransplant]

"The 13-story building will also feature a lounge, club room and “kegerator” — an appliance for cooling beer kegs."

Have we jumped the luxury shark yet?

[nate]

“There are more amenities in this building than all of our buildings in Chicago, which are all over 500 units,” said Josh Taylor, a vice president of marketing for Magellan. “We feel that Minneapolis is prepared for another level of luxury.”

I feel like the amenities on offer have nothing to do with the level of luxury Minneapolis is prepared for, compared to Chicago. Magellan can probably get away with smaller units and fewer amenities in Chicago because it's a more mature urban market and the advantage of central location is much greater there. Marketing bullshit is tiring.

[Minneboy]

It's interesting in their list of metro cities that they would include my hometown of Zumbrota, which is 66 miles from Minneapolis and they include River Falls, WI but not Hudson, WI or New Richmond, WI which has a huge commuter population and is 45 miles from Minneapolis.

[FISHMANPET]

So, looks like another vacancy report:
http://www.startribune.com/blogs/259536491.html
Rents are still rising as metro wide we're at 2.7% vacancy. However, downtown has hit the magic 5% number, with yet more to come online soon. However rents are still rising downtown.

[Viktor Vaughn]

Great reporting on the apartment boom and sales of apartment buildings from Finance and Commerce.

http://finance-commerce.com/2014/05/out ... nt-market/

[Chef]

The Minnesota Monthly's take on the apartment boom:

http://www.minnesotamonthly.com/media/M ... ment-Boom/

[mattaudio]

That was an excellent article. And it makes me think that while the culture in those neighborhoods is changing very rapidly, this could possibly yield some affordable housing sooner than one expects. Much of the lu**ry value-add is in the intangibles, the programming, the common spaces, etc and those require significant money year after year. Besides some trite countertop, appliance, and lighting selections, there's not much luxury in these units themselves. I used to spend a lot of time in Blue back when that was one of the few games in town, and it seemed like a fortune for what my friend was actually getting out of the unit itself. So as soon as one of these complexes loses just a tiny bit of cachet to a complex down the street, I wonder if they'll start cutting some of the frills and cutting the prices just to keep the place filled up.

[mister.shoes]

I haven't had a chance to read/watch this, but the author (goes by @RandBallsStu) is hilarious.
http://www.minnpost.com/business/2014/0 ... using-boom

[twincitizen]

So as soon as one of these complexes loses just a tiny bit of cachet to a complex down the street, I wonder if they'll start cutting some of the frills and cutting the prices just to keep the place filled up.

Is there any precedence for falling rents, outside of a neighborhood as a whole generally falling out of favor (reverse gentrification?)

I'd imagine it's more likely that the rents in these now-luxury buildings would just hold steady, perhaps with some move-in incentives, rather than actually fall in nominal value.

[mattaudio]

I figured they'd fall in real value over time, not necessarily nominal value. Although an interesting test will be if the older downtown highrise rentals (which were considered to be "nice" because we didn't have anything different) see nominal rent decreases.

[FISHMANPET]

I'd say my apartment has gotten "cheaper" over the last 3 years by virtue of the fact that my rent hasn't actually gone up. We're more likely to see actual rents cut in the form of move-in bonuses like x months free rent when you sign a lease etc etc. There's a fair bit of that on campus already, although I've also seen an advertisement of a $75/month "sale" at 700 Washington if you sign a lease by a particular time.

[Chava]

I'm going to keep an eye on this one. Many of my neighbors in my North Loop apt building have told me that their rent was going up by almost 10%. With rents for 1 one bed at about 1500-1500 I thought the market wouldn't sustain much more of this, but I guess my building thinks otherwise. These kinds of prices were typical of Gold Coast apartments in Chicago, with far more neighborhood amenities. It will be interesting to see how quickly some of the buildings currently coming up will fill their units.

Mod note: I moved the discussion of rising rents in older buildings to Apartment Hunting General Discussion, since it wasn't exactly germane to the new construction apartment boom. And that derailment was totally my fault too, sorry. - twincitizen

[twincitizen]

Dumb poll: http://www.bizjournals.com/twincities/p ... l/14775891

[mattaudio]

Does Minneapolis need another brewpub? Chef-driven restaurant? Stadium? Classy, MSPBJ.

[ECtransplant]

Does Minneapolis need another trollpaper?

[VAStationDude]

http://m.thestar.com/#/article/partner_ ... ntage.html

Builders and developers in British Columbia are experimenting with taller wood frame buildings.

[FISHMANPET]

Strange that not even 6 story wood frame is legal in Ontario yet.

[Minneboy]

Off the top of my head I'd imagine it's not just the cost ratio it also has to be, if not should be, a safety issue as well. You start going much higher the harder it will be to rescue people who might be trapped in a fire and it doesn't take a scientist to figure out a wood structure would burn faster than a concrete one.