Apartment rents nearly steady

Rates remain relatively flat in the Twin Cities area, although around the country they're headed down.

By SUSAN FEYDER, Star Tribune

Last update: September 22, 2009 - 8:44 AM

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Unlike in some parts of the country, apartment building owners in the Twin Cities have seen little erosion in rent growth in the last year despite a mini building boom that has added more than 2,000 units to the market.

Preliminary data released last week by Reis Inc., a New York-based real estate research firm, showed that average apartment rents in the Twin Cities dipped just 0.8 percent in the last year. The decrease was one of the smallest in 79 metro markets tracked by Reis and compares with a nationwide average decline of 1.9 percent. New York had the sharpest drop in average rents in the last year: 5.8 percent.

Reis reported that the apartment vacancy rate in the Twin Cities ticked up just 0.3 percent in the last year. The average nationwide increase was 1.4 percent. Reis found only a few markets with declining vacancy rates, headed by Raleigh/Durham, N.C., where the rate dipped 0.9 percent.

The findings generally reflect those of Maxfield Research Inc., a Minneapolis-based multifamily housing consultant. President Mary Bujold said the rental vacancy rate is about 5 percent, indicating market equilibrium or a stable rental market.

Bujold said the Twin Cities area has about 300,000 units, with about 1,740 market-rate units and 540 affordable/low-income units added over the past year. Part of the reason the market continues to do well is that there was little rental property development during the late 1990s through 2006.

Other reasons, Bujold said, are foreclosures pushing some homeowners into the rental market and some would-be buyers' wariness about purchasing a home in a skittish market.

New deal for Opus

It's been awhile since Opus Corp. has had good news to share, but the Minnetonka-based company last week announced a welcome development. Opus Northwest, its regional operating company based in Minnetonka, has signed a deal to build a 717,160-square-foot industrial building for Nissan North America about 25 miles east of Nashville. The building, which includes about 20,000 square feet of office space, is expected to be completed in April 2010.

The project is outside Opus Northwest's customary territory, which stretches from Minnesota to the Pacific Northwest. Tennessee had been part of Atlanta-based Opus South, which filed for Chapter 11 bankruptcy in April and is in the process of shutting down.

Opus Northwest is one of five regional operating companies overseen by Opus Corp. In addition to Opus South, Phoenix-based Opus West has filed for Chapter 11 bankruptcy, and Washington, D.C.-based Opus East has filed for Chapter 7 liquidation. Company officials have said Opus Northwest and Chicago-based Opus North haven't been hurt as much as the other divisions by the commercial real estate meltdown.

But Opus Northwest hasn't been immune. The division has trimmed its workforce and said it recently put a 148,000-square-foot addition to its offices in Minnetonka up for lease, moving all of its employees into a smaller adjacent building.

REIT buys Rogers facility

CB Richard Ellis Realty Trust recently purchased a Class A industrial warehouse that is fully leased to Walgreens in Rogers. Terms of the acquisition were not disclosed.

Constructed in 1999, the 335,400-square-foot building was renovated last year. The site has space for an expansion of up to 75,000 square feet. Walgreens' lease runs through July 2018.

Susan Feyder • 612-673-1723

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