Some local crane watchers surveying the ongoing multifamily building boom in Minneapolis keep wondering: “How many more apartments can we build in this town?” Based on the volume and scale of new apartment plans being proposed in the city, the answer appears to be: a lot more.
Late Thursday afternoon, the Committee of the Whole of the Minneapolis City Planning Commission will review plans for more than 1,500 new apartments in the city: seven new projects with a combined 1,486 units and a 40-unit addition to an existing project.
The projects up for review are largely in downtown Minneapolis and include some large potential developments. Minneapolis-based Kraus-Anderson Companies is pitching 357 units for the 8th Street Apartments at 813 Portland Ave. Two Chicago area firms, CA Ventures and Harlem Irving Cos., are proposing a 355-unit project at 240 Hennepin Avenue.
Another project, a 201-unit North Loop affordable project proposed by Plymouth-based Dominium, was also originally listed as up for discussion but has been pulled from the agenda for today’s meeting. (That would have pushed the count of new apartments under review at the meeting over 1,700 units.)
“2018 has been an extremely busy year for the planning commission we are certainly on pace to exceed last year’s pace of major development projects,” said Jason Wittenberg, manager of land use, design and preservation for the city’s Community Planning and Economic Development department.
Wittenberg said that he’s not seeing any signals of a slowdown from apartment developers.
“I don’t see any sign of it slowing down in the coming months,” said Wittenberg.
During the first two quarters of the year, the city’s planning commission approved more than 4,700 new apartment units.
Committee of the Whole meetings of the planning commission are simply discussions of proposed projects: no votes are taken. The meetings offer a venue for developers to get early feedback from commissioners, which may prompt developers to make project revisions or tweaks before formally coming before the Minneapolis City Planning Commission.
Despite all of the new apartments that have been added in recent years, local apartment vacancy rates remain low. At the end of June, Minneapolis-based research and consulting firm Marquette Advisors reported the apartment vacancy rate in Minneapolis at 2.3 percent. In downtown Minneapolis, Marquette Advisors reported a vacancy rate of 2.9 percent. A vacancy rate of 5 percent is considered to be the equilibrium point in the market between tenants and landlords; lower vacancy rates favor landlords; higher vacancy rates favor tenants.
The value of building permits in the city of Minneapolis has now topped $1 billion for six consecutive years. For 2017, the city had $1.5 billion in construction permits. Apartment projects have been a strong driver of those numbers.
Job growth is one of the key catalysts for new apartment development. On Thursday, the Minnesota Department of Employment and Economic Development reported that the state’s unemployment level is down to 2.9 percent, its lowest point in nearly 19 years. DEED statistics show that the Twin Cities area has added more than 41,000 jobs over the past year, through the end of August.
Metro developers remain confident in the depth of demand for apartments in the Minneapolis market.
“We remain bullish about Twin Cities housing and that while there has been a lot of supply added there still is a great deal of demand and new demand,” said Tony Barranco, senior vice president of real estate development with Minneapolis-based Ryan Companies. “We are very much paying attention to certain pockets, though, to make sure that certain submarkets are not overextended.”
Ryan Companies is currently under construction on a mixed-use project with 319 apartments at the former Sons of Norway site in the Uptown neighborhood of south Minneapolis.
“We continue to see strong demand in the city of Minneapolis, but in particular in downtown and the North Loop neighborhoods. We’re closely watching the job growth in the Twin Cities,” said Matt Rauenhorst, vice president and general manager for Minnetonka-based Opus Development Co. “Well-positioned and well-located product continues to lease very well.”
A new Opus project in downtown Minneapolis, 365 Nicollet, will be fully open on October 1. The 30-story tower at the north end of the Nicollet Mall has 370 apartments. “The Opus team is very pleased with the leasing efforts to date,” said Rauenhorst.