Expect a busy year in the multi-family market in Minneapolis/St. Paul.
The researchers at Marcus & Millichap Real Estate Investment Services predict that builders will deliver 1,865 rental units in 2012. That’s the highest this figure has stood in eight years. It also dwarves multi-family activity in 2011, when builders delivered 477 multi-family markets to the Minneapolis/St. Paul market.
The news is not all good, though. Marcus & Millichap is predicting that vacancies in the Twin Cities multi-family sector will rise 20 basis points in 2012 to 2.8 percent. The reason for this is fairly obvious: The number of new units delivered by builders will exceed a smaller increasein demand among Twin Cities consumers.
Don’t expect the rising vacancies, though, to hurt rents. According to Marcus & Millichap, operators should be able to raise asking rents 2.9 percent by the end of 2012 to $987 a month. Effective rents will see an even bigger increase, a predicted 4.5 percent to $956 a month.
This is all good news for the Twin Cities. Overall, Marcus & Millichap ranks Minneapolis/St. Paul as the 10th-best multi-family market in the country. That’s down a bit from 2011, when Marcus ranked the Twin Cites as the eighth-best such market, but it’s still a solid ranking. And it provides yet more evidence that the multi-family market here, and in most Midwest markets, remains the best commercial real estate bet out there.
– Dan Rafter