Apartment Construction Boom (2011-??)

[MNdible]

From the article:

If the market busts, Harmsen said the properties closest to campus will survive. Customers should be rooting for this, Harmsen said, because only the landlords will suffer.

“Competition helps everybody,” he said. “If you explode a market, then the prices will go down.”

This bit should be in 36 point bold font. Amazing how few people get this.

[FISHMANPET]

Yeah, for the love of god please overbuild housing in Dinkytown. Will make it cheaper for everyone.

[Nick]

Anecdata: There appear to be about ten vacancies in my building, which has ~220 units. Not particularly significant by itself (anecdata!) but I've checked in with the office every couple months since moving in last fall to try to get a skyline-facing unit, and it's always been just a couple vacancies that usually get snatched up right after the first of each month. I think my building is pretty uncommon in that it's sort of in between the $600/month soiled carpet one bedrooms and $1800/month indoor heated dogrun one bedrooms. My $900/month rent for a one bedroom didn't go up this summer when I extended the lease another year, which surprised me. I literally ran down the street in May 2012 to grab my checkbook to put a deposit down on this apartment because they had three August 1st openings when I emailed them the day before, two were taken the day I toured, and someone was touring right after me.

I know at least one person from my building who moved over to Vue when it opened, I wonder if things are actually starting to shift?

[Nick]

Follow up: I hear Eitel down the street (and in a different price range) has lots of vacancies, too.

[ECtransplant]

I know a couple people who moved out of Eitel. They were very displeased with Village Green's management

[twincitizen]

F&C: Financing still flowing for apartments (free)

[twincitizen]

The Twin Cities was the 7th-tightest rental market in the nation last year

The Twin Cities was among the tightest rental markets in the nation last month, despite the addition of thousands of new apartments. The average vacancy rate in the Twin Cities by the end of the year was 2.8 percent with the average rent rising 0.9 percent to $1,017

[TheUrbanGopher]

Minneapolis has record-breaking year in construction projects: http://www.minneapolismn.gov/news/WCMS1P-118900

The City of Minneapolis set a new record for construction building permits in 2013. At year end, the total number of building permits issued in 2013 was 12,100 with the valuation of $1.211 billion.

[talindsay]

12k permits valued at $1.2B puts the mean valuation at $100k, and the median would be expected to be a good deal lower than that. Does "building permits" include things like garage rebuilds? If so, the numbers make sense but if not, who is building structures for under $100k in Minneapolis?

[Rich]

Permits are required for work as simple as replacing windows or adding a deck, right? Those kinds of projects might account for a lower mean valuation. Also, MPR says that only about 3,500 of the 12,100 permits were for housing units.

[sad panda]

Building permits in Minneapolis are required for pretty much anything that affects structure. A list of the most common needs are found at: http://www.ci.minneapolis.mn.us/mdr/bui ... /index.htm

[mattaudio]

Those aren't the permits described above. I'm not sure how exactly they break down, but there are different permit classifications. I'm not going to research more, because a sniff test proves this. 12,100 permits at an average of $100k each is too few and too high of an average price to account for every window, toilet, and stove replacement in the city.

[Rich]

UrbanGopher’s link reveals a list of the 5 highest-value permits, which range from $36 million to $68 million. Couple major projects like those with all the permits for tiny remodel jobs and I’m guessing that brings the average permit to $100k.

[twincitizen]

Either way, the numbers most relevant to this topic are these:

Number of residential housing units permitted in Minneapolis from 2008-2013

2008: 361 units
2009: 399 units
---
2010: 980 units
2011: 616 units
2012: 3,303 units
2013: 3,552 units

That's almost 8,500 units added since the 2010 Census was performed. Along with a tightening rental market for existing units, you have to figure Minneapolis is going to hit 400,000 residents later this year. (Sidebar: If the vacancy rate hypothetically declines one percent, how many units are absorbed? How many total official rental units are there in the city?)

2014 will almost assuredly see a drop in total units added, as many big projects are already under construction. However, if Marq4, Downtown East, 300 Washington, Dock Street phase 2, and the two potential West Calhoun projects all get going in 2014, I wouldn't be surprised to see around 3,000 units again.

[mnmike]

And this is all I know, because I don't have a subscription. I guess we saw this coming...hopefully demand stays strong and it levels off at a still healthy rate...hopefully prices have topped off.

http://finance-commerce.com/2014/03/apa ... nneapolis/

Apartment vacancy rate doubles in downtown Minneapolis

By: Adam Voge March 4, 2014 9:47 am 0

Downtown vacancy rates ended 2013 at 4 percent compared with 1.9 percent the year before.

[FISHMANPET]

I think this is still well below the "ideal" threshold, so the market is still very strong.

[mnmike]

Yup...still good, but finally going up. Isn't around 4-5 what is considered "ideal"?

[ECtransplant]

My understanding is 5% vacancy is considered "balanced"

[twincitizen]

Counting the seconds until that headline is shared out of context on SaveDinkytown or MRRDC (anti-development) Facebook pages...

The only thing that headline tells me is that a bunch of units came online in the 2nd half of 2013 and they haven't fully leased yet. 222 Hennepin, Soo Line, and a handful of North Loop projects come to mind. Mill & Main was said to be nearly fully leased. That said, unless Nic on 5th and LPM are heavily pre-leased (which sounds possible) the vacancy rate could be even higher at the end of 2014, unless the downtown job market is just going gangbusters.

[gpete]

Meanwhile, across the entire Metro, vacancy rates are still very low at 2.5% and rents are rising.

http://www.startribune.com/blogs/248385841.html