Twin Cities Rental Market Remains Tight
The Twin Cities rental market is red hot and doesn’t show any signs of cooling down soon.
A report by Marquette Advisors said the average vacancy rate fell to 2.5 percent during the third quarter, down from 2.9 percent in the second quarter. And the average market-rate rent ticked up 5.4 percent compared with last year to $1,091.
The continued low vacancy rate is surprising analysts, according to the Star Tribune. They had predicted that the glut of so-called “luxury” units hitting the market would have caused a bump in the rate. Marquette had predicted rates approaching 4 percent.
Developers have been on a tear in the last several years, adding thousands of units to the available apartment rental stock. The trend has been particularly pronounced in downtown Minneapolis, downtown St. Paul and Uptown. And in the last year, it’s spread beyond to suburbs like Edina and St. Louis Park.
But the pool of so-called choice renters—typically middle- or high-income people that opt to rent when they could buy—still seems large. Places like downtown Minneapolis had nearly 700 empty units in spring 2015 (an 8.8 percent vacancy rate) after a number of large projects opened. That number has dropped since then to 5.3 percent.
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