Minneapolis-St. Paul Multifamily Market Report

Urban rentals benefit from homeownership challenges. The city councils of Minneapolis and St. Paul closed out their December sessions by increasing property tax levies for the 2023 calendar year. The new respective tax rates of 1.33 and 1.47 percent add to higher home values and elevated interest rates, and push homeownership costs to a record high. These difficulties will likely result in increased renter demand across the urban landscape. The Downtown Minneapolis-University submarket registered Class A rent growth of 9.4 percent over the four-quarter period ending in March. A delivery slate of more than 1,000 units here for the fifth consecutive year, however, may challenge existing performance this year. Demand is also flowing into St. Paul, aided by the recently-enacted rent growth cap. This resulted in Class B and C availability in the South, East and Central St. Paul submarkets remaining below the market average.