Despite thousands of new apartments that have come on line in recent years, Twin Cities landlors are still in the driver's seat. A year-end report from Marquette Advisors says the average apartment vacancy rate across the metro held steady at 2.5 percent through the end of 2013 . That was the 11th consecutive quarter of sub‐3.0- percent vacancies in the region. A full 43 out of 54 submarkets surveyed by the group reported vacancy rates of less than 3.0 percent during the 4th quarter even though 3,108 new rental units hit the market in the 2013 compared with 1,428 units during the previous year.
Strong demand and low vacancy rates continue to drive steady rent growth. The average market rent at the end of the year was $981 per month, a 2.5- percent increase from a year ago, though rent gains were even stronger in downtown Minneapolis.
We'll have a full report, including predictions for apartment construction this year, in the Wednesday paper.
- Jim Buchta
An Eagan office tower that used to be the home of Blue Cross and Blue Shield of Minnesota is about to get a major make-over. St. Paul-based Interstate Partners has the 10-story tower and adjacent parcels under contract, and they plan to convert the tower into 112 rental apartments. Phase Two of the project will be construction of an additional 90 apartments and 30,000 to 40,000 square feet of retail along Yankee Doodle Road near Town Centre Drive, according to Interstate Partners partner, Lonnie Provencher.
The project received the first of three city approvals last night - a comprehensive guide plan amendment. The property is now owned by Open Space LLC. Provencher said that he hopes to begin construction by the second quarter. Conversion of commercial space into housing isn't unusual, but very fewer office tours are suitable for such conversion. Provencher said that this building is perfect for such use because it has big windows, appropriately located elevators and "amazing" views of downtown Minneapolis and St. Paul. The most notable example of such a conversion was the transformation of a high-rise office building in Minnetonka into the Cloud 9 Sky Flats in 2006.
Here's what you need to know about a handful of interesting mixed-use projects at various stages of development in Minneapolis:
After fierce opposition from Twin Cities home builders, an administrative law judge recently ruled that the Department of Labor and Industry has the power to require sprinklers in some new houses as part of an amended residential building code that’s expected to be adopted sometime next year. Here's a link to that ruling.
That ruling follows a year-long debate over the issue (I last wrote about the debate in May 2012), which would require home builders in most of the state to install automatic fire sprinklers in new single-family houses that exceed 4,500 square feet.
Builders have fought the rule because they say it is unnecessary and could add thousands of dollars to the cost of a new home. Though the square footage requirement is limited to those houses with more than 4,500 square feet, the rule applies to all conditioned space, includes most lower levels and bonus rooms even if the space is unfinished.
Eric Lipman, the administrative law judge who issued the ruling, wrote that “...the proposed rules are needed and reasonable.” James Vagle, public policy director for the Builders Association of the Twin Cities, said that the organization is considering its options. “We are continuing to seek ways to avoid imposing this unnecessary mandate on homeowners as this process continues he said.
The rule has received the support of fire officials who have argued that it will save lives and homes. The decision by the administrative law judge comes several weeks after a hearing to discuss the issue, which has been the subject of debate for several years. In both 2011 and 2012, the state legislature approved measures that would have forbidden the DLI from revising the state code to require installation of sprinkiers, but both measures were vetoed by Governor Dayton.
Here's part of Dayton's response: “I take very seriously the concerns which fire safety professionals have expressed about the safety of home residents, their properties and the lives of the men and women who courageously risk their lives to fight those fires.”
The measure could be implemented sometime later this year. Do you agree with Lipman's decision?
The $7 million house that Grammy Award-winning music producer, Jimmy Jam Harris, built on Lake Minnetonka was sold for $2.6 million to a anonymous couple during a live auction at the 22,000 square-foot house on Thursday afternoon. The winning bid, which is pending approval by the owner of the house, JP Morgan/Chase, is close to what real estate agents say the land alone is worth.
Those buyers were among 11 registered bidders, including some who believe the house will be torn down. The auction took place in front of a kitchen island overlooking Lake Minnetonka, and was over in just a couple minutes before attention shifted to a very shiny creme-colored Rolls Royce that was stuck in the driveway, requiring the assistance of listing agent, Scott Stabeck.
Christopher and Sandra Hintz bought the property from Harris on June 26 2007 for $7 million, but stopped making payments and the house went into foreclosure.
I'm working on a more complete story for the Friday paper, stay tuned.
- Jim Buchta
The Nic on Fifth, one of the biggest apartment buildings to hit the Minneapolis Central Business District in two decades, has opened a leasing office. The office is located in the skyway level of the Baker Center in downtown Minneapolis, and offers floor plans and updated information about residential availability. The 26-story luxury apartment building has 253 units, including 26 penthouses. Developed by The Opus Group of Minnetonka, the building features a 24/7 door attendant and concierge service, an outdoor roof terrace with pool and spa, a fitness center, yoga studio, outdoor fire pit and kitchen, guest suites, a pet play area and nine- to 10-foot ceilings. The building will be skyway connected, and is located along the light-rail line. The first residents will move into the Nic on Fifth this August. For more information, www.theniconfifth.com or call the leasing office at 612-284-9429.