Permits for multi-family housing booming in suburbs

  • Article by: MARY JANE SMETANKA , Star Tribune
  • Updated: February 9, 2012 - 9:43 AM

Low vacancy rates and more interest in renting spur development.

If housing leads economies out of recession, things appear to be on the rebound in some of the western suburbs.

In 2011, Bloomington issued permits for 648 units of residential housing. That's the most in at least a decade, and more than 50 percent higher than any year since 2000.

Another trend is evident in the permit totals: The great majority are for multi-family housing. Just 24 of the new units permitted in Bloomington during 2011 were for single-family homes.

Similarly, St. Louis Park issued permits for 124 residential units during 2011 -- nine for single-family homes and the rest for senior apartments. Three more multi-family housing projects are underway this year, after none in 2009 and 2010.

City officials say they are not concerned about the low numbers of new single-family homes, noting that most of the western suburbs are fully developed for that type of housing. They say the growth in apartment developments is linked to a tight rental market, growth in the number of seniors looking for maintenance-free lifestyles and perhaps to a reluctance among people who could afford to buy a single-family home to take that leap in uncertain economic times.

"Society-wide, there's more interest in flexibility in housing," said Glen Markegard, manager of Bloomington's planning division. "Some feel it might be safer to rent, especially if their time horizon is short. They don't have to worry about eventually selling."

The lead time for getting financing for such developments can be fairly long, so some of the projects have been in the planning for a couple of years, said Kevin Locke, St. Louis Park's director of community development.

"But the combination of a strong rental market and an attractive location has combined to make it possible for us to see new housing development even through the recession," he said. "It does appear to be an upward trend in terms of pulling permits."

In contrast, in 2011 Eden Prairie issued only 32 permits, all for single-family homes. Building official Kevin Schmieg said that demand for multi-family housing in the city already had been fulfilled by developments in previous years.

"We're happy with the single-family numbers we have right now," he said. "We have a number of new developments coming on right now and expect more in the next year or two."

In Edina, permit activity last year was with single-family houses. Permits were issued for 62 single-family detached homes, the most since at least 2008 and almost triple the number for which permits were issued in that year. Almost all involve tear-downs of existing houses and replacements.

Steve Kirchman, chief building official, said Edina already has issued eight permits for single-family houses this year.

"We're on path for another good single-family year," he said.

It's been years since Golden Valley has had any multi-family housing developments, but City Planner Joe Hogeboom said the city has opened up areas near Interstate 394 to that type of development.

"There is interest in a senior building and non-senior luxury apartments," he said. "Plans can change ... [but] these are to be geared to people already in the area who are maybe looking for an easier lifestyle and low maintenance."

The apartments that are being built in Bloomington and St. Louis Park also are aimed at seniors or are higher-end developments. The market exists for that kind of housing, Markegard said. Another 250-unit upscale apartment development is waiting in the wings, he said.

"It's been many years since there was upper-end rental housing developed in Bloomington," he said. "On the demand side, we're seeing a lot more one- and two-person households than in the past. Vacancy rates are low."

The biggest new project in Bloomington is the three-story, 282-unit Luxembourg at 82nd St. and Stanley Av. In the Penn American area near Southtown, the Genesee will have 234 units in three buildings that range from four to eight stories high. That development includes 14,000 square feet of ground-floor retail space.

The other large project that was permitted in Bloomington last year is Founders Ridge, which will have 105 units in the first phase of a senior development that eventually may reach 240 units. That Presbyterian Homes development is in west Bloomington on land that was once owned by Bethany College of Missions.

"A lot of other market segments do not look strong, like retail and office," Markegard said. "It is strong in senior housing right now."

Several suburbs also reported a boom in permits for home additions, decks and remodeling projects. Recession may be encouraging people to stay where they are, and they're improving their homes instead of selling and moving.

"It's good to see those numbers climb," said Golden Valley's Hogeboom. "We want people to focus on improving the existing housing stock."

Mary Jane Smetanka • 612-673-7380

Twitter: @smetan

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