Apartment Construction Boom (2011-??)

[skyrab]

Right Minneboy, not sure I'd fall asleep too well in a high-rise wood structure with so many uncontrollable variables to consider (i.e. other tenants), seems like an accident waiting to happen, well... live and learn.

[seanrichardryan]

http://www.mprnews.org/story/2014/06/18 ... le-options

[mulad]

The Strib editorial board has a piece up today about how the existing stock of single-family homes is more than sufficient for regional growth through 2040, a finding from a new report commissioned by the Met Council. There is no need to expand the existing supply, though teardowns will probably be a big thing.

http://www.startribune.com/opinion/edit ... 22771.html

From page 4 of the report:

Compared to this new demand, detached homes on medium- and large-lots are presently over-supplied. [...] Put differently, to meet housing demand by type in 2040 all new residential units will need to be attached options (apartment, townhouse, condominium) or small-lot detached homes.

The results of the report are supposed to be incorporated into the Met Council's 2040 housing plan, coming later this year.

[Tcmetro]

Interesting study. I agree that we will see more teardowns. The problem to these teardowns is that the current zoning code often doesn't allow the demolition of SFHs and replacement with townhouses or small (3 story or less) apartments. Many outer ring suburbs and exurbs are still banking on the idea that there will be more SFHs and vast swaths of undeveloped land are zoned as such. Even the "small-lot" SFHs aren't allowed in most of the suburban density guidelines.

Certainly the impact will not be uniform across the region. Areas along the beltway, especially on the south and west sides of the metro will remain in high demand. I think demand will drop considerably in the north metro (especially older areas farther away from job centers) and the east metro (especially inconveniently located cities like Cottage Grove). If the current development patterns remain more or less the same, then we will see an imbalance, with higher demand (and higher prices) in the city trending south and west, and lower demand (and lower prices) in the north and east metro, and especially on the fringe.

It'll be interesting to see how this plays out, and if the demographics of the region change as modeled.

[min-chi-cbus]

I love small lot SFHs, and wish there were more areas with them in the Twin Cities! I find that to be a great balance between suburban and urban ideals.

I don't personally see an abrupt halt to demand for housing in the fringes of the metro area -- even if that's what I may or may not prefer. Areas with plentiful jobs and job growth will continue to see new housing as well. They're building large office/warehouse centers in places like Rogers, Ostego and Shakopee, and you can bet that people will want to be able to live closer to these employment centers, just like we all do within the urban core (if that's where our jobs are). There will always be a need to have that type of real estate located far outside the urban ring in places like those mentioned above, if for no other reason than for plentiful cheap land to build on.

I also don't necessarily agree with their growth projections: 700K people over 25 years. That's quite low, and knowing the Met Council and how they seem to project population it likely includes data from the 3-4 slow-growth/no-growth years on/after 2007. In the 2000 Census there were projections for about 500K people to be added every decade. Now in the 2010 Census they're projecting 330K people every decade, yet the metro population is higher than it was in 2000, making the growth rate increasingly lower, when the fact is that the Twin Cities metro area has growth fairly steadily between 10% and 15% per decade (give or take) for the last 100 years. I'd expect those percentages to continue moving forward (if not increase) as the metro area starts to truly evolve to more of a world-class and international metropolis. I also think Global Climate Change and its side effects may have a positive influence on population growth in the Twin Cities area as it slowly becomes one of the few remaining U.S. cities to have 4 true seasons and a healthy water supply (not to mention milder winters).

[streets.mn]

A Minneapolis Housing Boom Explainer

https://streets.mn/2014/07/09/a-minneapo ... explainer/

Minneapolis is hot! The Metropolitan Council recently noted that we popped back up above 400,000 residents after adding almost 9,000 people between 2012 and 2013. The area along the Midtown Greenway has been completely transformed in the past decade–eleven separate projects, ten of which are residential, have been built along its Uptown stretch since 2004. There are residential towers sprouting in Downtown Minneapolis, Loring Park, and the University of Minnesota area.

Put another way, at any given point in 2013, on average there were thousands of more people living in Minneapolis than just a few months prior.

[...]

[Chava]

Good article. Helped me understand things as a newbie. I try not to read comments often, but this one stuck out:
"It seems like there are two types of buildings: High rent/luxury finishings, and "artist lofts" or "affordable housing." But the latter comes with income requirements that are quite low (and those *should* exist for people that need them, don't get me wrong!)
But, as someone currently looking for her next apartment, there is a housing donut hole that a lot of people (I suspect) fall into, which is we make too much to qualify for affordable housing, but there's a lack of reasonably-priced rentals with a few updates (like a dishwasher! In-unit washer and dryers!) but not the whole shebang. Where does one go to find that? (please don't say the 'burbs)"

We talk about the cycle of housing and how this "amenity rich " housing will eventually become the more affordable units as those with higher incomes move on to newer and more expensive housing. That doesn't happen overnight though. Her situation seems like it might be a reality for many for a while, or so long as population grows and housing supply doesn't with it. Would you all agree or disagree? How long might this cycle take if we were to throw a number at it? 5, 10 years?

[Wedgeguy]

If housing increases along the same lines as the population increases, then it could be along time. There does get to a point where you can't build more high end as those who can afford it is finite. It may grow over the years, but percentage wise not at the pace we have been going along so far. We had a drought of apartment units built that lasted about a decade. I'd say we are close to 5 years into the apartment build so we may have 5 more years, but I think maybe 3 at best. My reasoning is that the job force downtown has not been growing at the pace that the apartment boom as been growing. What we may see here in the near future is reverse commuting. People living downtown, but commuting out of the city to their jobs. If that were to become a trend, then I could see MPLS continuing to be able to build. I don't think that will happen, but I'll be glad if it does.

[aeisenberg]

A Minneapolis Housing Boom Explainer

https://streets.mn/2014/07/09/a-minneapo ... explainer/

Minneapolis is hot! The Metropolitan Council recently noted that we popped back up above 400,000 residents after adding almost 9,000 people between 2012 and 2013. The area along the Midtown Greenway has been completely transformed in the past decade–eleven separate projects, ten of which are residential, have been built along its Uptown stretch since 2004. There are residential towers sprouting in Downtown Minneapolis, Loring Park, and the University of Minnesota area.

Put another way, at any given point in 2013, on average there were thousands of more people living in Minneapolis than just a few months prior.

[...]

Happy to announce that yesterday, while hanging out with non-urbanmspers/streets.mners, Nick's article came up organically in conversation without me. We're penetrating the mainstream, nerds!

I know that's kind of a stupid thing to post about, so I'll also add that while we were sitting there, State Senator Scott Dibble walked out of the apartment building we were drinking in front of.

That's interesting, right?

[mnmike]

I think it's kind of funny to bring this back now...

http://finance-commerce.com/2012/12/hot ... oling-off/

Fears of a "bust" have not yet come true....and Greco is working on a new project.

[min-chi-cbus]

Perhaps they let things play out and realized that the market can fully support what was being built, and also what is being proposed?

[mnmike]

Well, yes. Point is...always take these alarmist headlines with a grain of salt. Media was looking for a bust to happen that hasn't yet.

[grant1simons2]

http://www.startribune.com/blogs/271111221.html

It kind of stuns me that these super expensive apartments are being filled up like they are. Whatever. Feeding the economy more and more

[mulad]

Doing some quick math based on this, it looks like Minnesota as a whole needs to add 15,000 to 16,000 housing units per year to keep pace with population growth, and that doesn't count the need to replace old structures and deal with population shifts within the state. The Twin Cities region is well over half the state's population, so there should be upwards of 10,000 units constructed within the region each year (a mix of places to own and rent). 2,000 new apartments is basically just treading water, since about 22% of the units statewide are in multi-unit housing (though that would include condos -- also note that this percentage is lower than the national average of 26%). If just a small percentage of the 2.1 million households in the state decide they want to move into an apartment over the course of a year, they can easily fill up all of the apartments that get built.

I'm not sure what the right ratio is, but I wouldn't be surprised if we could build 8,000 new apartments/condos each year in the Twin Cities and still barely meet demand.

[mplsjaromir]

A great post by Alon Levy Zoning and Market Pricing of Housing. He makes the case that first world urban housing is expensive because of zoning. Politics ensure that zoning will continue.

[twincitizen]

From the Strib today:

The number of apartment/condo units permitted in Minneapolis from 2011-2014 is as follows:
2011: 929
2012: 3,679
2013: 3,445
2014: 1,543 (Jan. 1 – June 30)

http://www.startribune.com/blogs/271721601.html

I don't think the highs of 2012-2014 will continue long term (that's why it's called a boom...plus there was a backlog because of the recession), but it would be nice to see that number stabilize around 1500-2000 new residential units per year. Keep in mind that the student housing boom is largely over for now and all of those units are accounted for in the above figures. North Loop, Northeast, and Downtown (esp. Downtown East) are really going to have to carry the weight to keep those numbers up going forward. Obviously there is room for more in Uptown, but it won't be as easy as the 200-unit Greenway stuff where they had three-quarters of a block of vacant land for Flux, Lime, Elans, Track 29 etc. Going forward, I think future Uptown area projects will be in the sub-100-unit range, unless some of the bigger spots like Cheapo, Arby's & Cub open up. I can't really see the Uptown submarket contributing more than 150 new units/year to the market beyond 2015 (Franklyn & 2320 Colfax). Beyond those two irons in the fire, we don't even have a rumor to work with. The Calhoun Square lot sounds like it will be purely commercial (hotel & office). Of the big obvious lots to develop, I'd guess Cheapo will be the first to go, followed by Cub's eventual multi-story redevelopment. The Cub block is probably the most likely to get something taller than 6-stories on it.

[grant1simons2]

Well with the rumors of a large condo complex in DT and the apartments or condos in St Anthony Main that would certainly boost the numbers

[twincitizen]

http://finance-commerce.com/2014/10/dem ... partments/

This (locked) article reports that leasing is very strong at Nic on 5th (already 60%, they expected to be at 30 or 40% at this time) and weaker than expected at LPM. They suggest its location (which is admittedly not ideal, and not on the skyway), combined with its top-of-market rents, may be causing the lag, but they're not sounding the alarm quite yet. Junction Flats (@ Target Field Station) is also leasing quicker than expected. I wouldn't be surprised if Trammel Crow announced another project in that area soon. If only they could pry that surface parking lot loose from Metro Transit, they'd probably already be working on it!

The 3.1% vacancy rate given for downtown does not include either Nic or LPM, as they typically exclude anything that's been open less than 6 months from their calculations. The vacancy rate for the metro is stuck at 2.4%, so it's build baby build!

Also, the 254-unit Penfield in St. Paul is up to 87% leased now, so I'm really glad that's working out after they had some struggles early. Pioneer-Endicott is nearly fully leased.

EDIT: Get your vacancy data here: http://www.minnpost.com/twin-cities-bus ... emains-low

[twincitizen]

Strib: http://www.startribune.com/housing/281386321.html

Comments section is about 50/50. 50% being people who love living downtown and love to boast how great it is, and the other 50% telling them that they're wrong. Someone was even chastised for not having kids.

[Silophant]

Looks like a good percentage of the anti-apartment posts are just the one troll. I'm pretty sure he's both said that downtown apartments are too expensive for anyone too afford, and that the only people who lives in them are people too broke to buy a house.