Minneapolis-St. Paul Multifamily Market Report
Rising Homeownership Costs Refocus Residential Demand on Upper-Tier Apartments
Pandemic hurdles begin to dissipate. Apartment segments more impeded by the health crisis and surge in unemployment are turning the corner as jobs are added and the economy reopens. In the second quarter, Class A vacancy declined by 120 basis points. Prior to this, availability in the tier had risen in six consecutive quarters. The stronger performance can be partially attributed to the single-family housing market. Minneapolis-St. Paul’s median home price was up nearly 23 percent year over year in June, which in turn has bolstered upper-tier apartments’ appeal as a cost-effective alternative. The recovery in downtown locales is also gaining traction as desirable urban amenities like shops and entertainment have reopened and more young adults are finding jobs in these settings. Central St. Paul posted a vacancy contraction of 280 basis points in the second quarter while Downtown Minneapolis-University had a 80-basis-point ease.