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