A 26-story apartment tower being planned at the University of Minnesota would be the tallest on campus, but it’s not just for students.
A local developer thinks that living close to campus will appeal to many other people — from professors and others who work at the U to professionals who work in downtown Minneapolis or St. Paul.
“We’re trying to do something that will appeal to everyone,” said Tom Lund of Harbor Bay Real Estate Advisors, who is leading development of the as-yet unnamed building. “There’s a vibrancy to being around the U.”
The 431-unit project would be built on a quarter-block site at Washington Avenue SE. and Harvard St. SE., near the East Bank light rail station. The site is now home to a pub, coffee shop and juice place.
Over the past six years, the neighborhoods around the U saw the building of 27 apartment projects, with 3,100 total units, according to research by Thomas O’Neil, vice president of FHA operations at Dougherty Mortgage.
That’s a yearly average of five projects and more than 500 units, the bulk of which were designed to appeal to students with built-in furniture and multiple bedrooms in each apartment. Last year alone, private developers delivered five projects with 873 units.
O’Neil noted that no new projects are planned to open this year in that submarket, making it one of only 11 Twin Cities submarkets where there’s been no significant expansion this year. However, four projects with 778 units, not including the tower proposal, are in the works for 2017 or later. Two of them would also be near the light rail. Two others would be built in the Marcy Holmes neighborhood west of the main campus.
Ted Bickel, vice president of Colliers International, a commercial real estate firm, said there’s been a dearth of more traditional options for people in the area, especially employees and graduate students at the U.
“Many of those prospective tenants do not want to live in student-focused housing and would benefit from more flexible leasing options than the typical August-to-August student leasing cycle,” he said. “I’d venture that the project would pull tenants working and studying at the university from other heavy rental neighborhoods like Northeast and Uptown.”
Bickel said that while the last two leasing seasons have been challenging, new developments in their second leasing season and beyond have performed well almost across the board, with a few exceptions.
Still, there’s some evidence — notably rent concessions — to suggest that the recent surge in supply is creating stiff competition among developers to fill their buildings. In projects near the U that were open for at least one year, the average asking rent declined 1.8 percent between the fourth quarter of 2014 and 2015, according to O’Neil’s research.
Meantime, just 2 miles away, four other high-rise apartment or condo projects are at various stages of development. Those and the 26-story tower represent a new wave of development across the Mississippi River from downtown Minneapolis, where there was also a flurry of housing construction in recent years.
Lund and Harbor Bay co-founder Mark Bell are partnering with Chicago-based developer Core Spaces. The tower was designed by another Chicago firm, HPA Architects.
The project has yet to receive city approvals. That’s expected to happen this summer. Because the site is essentially surrounded by the U, it’s not technically within an official neighborhood. Lund said he will discuss it with residents from the nearby Prospect Park neighborhood.
The building site is within three zoning districts with two height restrictions that are below what’s being proposed. Lund will ask the city to rezone the entire site and to increase the allowed height to 26 stories, which is similar to the Malcolm Moos Health Sciences Tower that the apartment tower will be near.
Mary Bujold, president of Maxfield Research, which does market studies for developers, said the neighborhood has sought some more traditional multifamily development in the area, but nothing has moved forward.
“I believe there is a niche to be satisfied for those that want to rent and be close to the U — but not live with a lot of undergraduate students,” she said.