New housing helped fuel a record year for Minneapolis construction projects last year, with the city issuing more than $1.2 billion in building permits. That was the second year in a row since 2000 that permits exceeded the $1 billion mark, and more than double the amount of construction planned just three years ago.
That boom is being driven by new rental housing, mostly in the Uptown, North Loop and University of Minnesota neighborhoods. Citywide, there were plans to build 3,552 houses, rental apartments and for-sale condominiums), an increase of 249 units from 2012 and 2,936 units from 2011.
Here are the top five construction projects by building permit valuation last year:
The Twin Cities was among the tightest rental markets in the nation last month, despite the addition of thousands of new apartments. The average vacancy rate in the Twin Cities by the end of the year was 2.8 percent with the average rent rising 0.9 percent to $1,017, according to a quarterly survey of rental markets from Reis Inc., a New York-based real estate research firm.
That was the 7th-highest vacancy rate in the nation, just behind New York City, San Francisco and New Haven, which had the lowest vacancy rate (2.2 percent) in the nation.
Ryan Severino, a Reis senior economist, said that about 127,000 new apartments were delivered during 2013 - in line with the long‐term historical average level and the highest annual total since 2009. "The apartment market has been on quite a tear over the last four years, with demand seemingly insatiable," he said.
His prediction for 2014?
With the economy and labor markets expected to improve in the coming year, additional apartment construction will cause a shift in the market. Severino expects more than 160,000 new apartments to hit the market, causing the national vacancy rate, which stood at 4.1 percent last year, to rise very slightly for the first time since 2009. Despite that increase in vacant units, rents are expected to rise about 3.3 percent.
I'll have more detailed local data from Marquette advisors later this month, stay tuned.
- Jim Buchta
Twin Cities home builders had their best year since 2007 with more than 10,300 planned units - a 14-percent increase over last year and the first time since 2007 that builders broke the 10,000 mark. Apartments and other multi-family construction represented half those planned units with single-family homes rising 26 percent over 2012, according to a year-end report from the Builders Association of the Twin Cities. Here's a link to the full report. Stay tuned for a full report in the Friday paper.
Builders sought applications to build fewer apartment buildings, but more single-family houses during November, according to data compiled by the Keystone Report for the Builders Association of the Twin Cities (BATC). This month builders were issued 419 permits to build 646 units compared with the same four week period last year.
That was a nearly 50-percent drop in planned units, but a 4-percent increase in single-family homes. Construction activity so far this year is still on pace to exceed last year by 25 percent, and the region has issued permits for more units than any year since 2006. During the first 11 months of the year, builders have been issued 4,941 permits to build 9,292 units.
“Most of our members had been preparing for a relatively flat fourth quarter 2013 and first quarter 2014," said Pamela Belz, Builders Association of the Twin Cities 2013 president and developer with Senior Housing Partners. "We’re optimistic that by second quarter 2014, and maybe sooner, the market will be on the rise.”
Minneapolis issued the most permits with 212 units. Blaine came in second with 41 units, followed by Lakeville with 34 and Otsego with 33. Woodbury rounded out the top five with 26 units permitted.
Here's a link to the full report.
There was a major surge in new contracts to build non-residential buildings in the Twin Cities metro last month, according to the latest McGraw Hill Construction report, which showed that there was a planned $199,731,000 in new contracts - a 43-percent increase over last year. That includes office, retail, hotels, warehouses, manufacturing, educational, healthcare, religious, government, recreational, and other buildings.
Residential construction was up as well, rising 14 percent to $324,213,000, for a cumulative increase of 23 percent.
We'll learn more about the state of the construction industy across the country when the U.S. Commerce Department releases its residential permit report on Tuesday, November 26. Because of the government shut-down, housing starts and completions data, which were also scheduled to be released tomorrow (Tuesday) won't be released until December 18.
Where to do the nation's hipsters like to hang their hats? The top zip code in the nation, according to a new analysis of rental returns, is St. Paul's 55101, which is smack dab in the middle of the city. Several Minneapolis zips made the top-25 list, but St. Paul mayor, Chris Coleman, didn't waste any time reacting to the news.
"I couldn't be more proud of our efforts to create a cool, but not too outwardly cool, vibrant but not too showy, and modern but also retro-feeling culture in our Lowertown area," Coleman said. "I might even buy some oversized chunky eye glasses and a fixed-gear bike."
“While the precise definition of hipsters is elusive —which is likely just how they want it — there’s no doubt the culture surrounding the hipster lifestyle has a major impact on local real estate markets, and mostly in a positive way,” the study said.
Saint Paul’s "Director of Hipster Recruitment," Joe Spencer had this to say: “I don’t think there’s anything I can really say,” then promptly cracked open a can of Pabst Blue Ribbon to celebrate the distinction.
The list was compiled by RealtyTrac, which "analyzed zip code-level data to identify established and emergent hyper-local hipster markets where investors can realize solid returns on rental properties while also enjoying low vacancy rates that ensure they won’t have much down time between renters."
Realtytrac started with zip codes that had a large population in the prime hipster age range — between 25 and 34, which accounts for 13 percent of the nation's population, and then focused on zip codes with more than 20 percent of the population in that age range. The list was narrowed to zip codes where at least 20 percent of the population either walked to work or used public transportation to get to work. The list was further winnowed to focus on only zip codes where renters accounted for occupancy at least 50 percent of all housing units, and the vacancy rate was 5 percent or less.
Tops on that list was 55101, a 2.9-square-mile area with a population of nearly 22,000, including downtown St. Paul and the Lowertown neighborhood - a hot spot for artists and creative types who are finding cheap rents and cool spaces in the many warehouses buildings that line those streets.
"As a nascent hipster market emerges, it can be an extremely appealing target for real estate investors looking to make some quick fix-and-flip profits or to purchase rental properties that provide a steady cash flow and the promise of strong appreciation going forward."
You can see the complete report by clicking here.