With a rooftop patio, yoga studio, clubroom and Internet cafe, the Parkside Village apartment complex would seem a natural fit for Uptown or the Warehouse District in downtown Minneapolis.
In reality, the project is destined for Apple Valley -- one more sign that the building boom in upscale apartments is expanding from the urban core to the suburbs.
"In general there hasn't been significant apartment development in the suburbs for about 15 years," said Mary Bujold, president of multifamily housing consultant Maxfield Research Inc. "We're seeing this building activity leapfrog into areas where there's a significant amount of demand for new, upper-end product."
As home ownership rates here and nationwide continue to fall, even younger suburban communities have recognized that they need to offer more choices in their housing stock. Expanded mass transit networks are also helping make suburban apartments a more attractive option.
"There are young professionals that work in the suburbs, too," said Tom Melchior, director of research for consulting firm CliftonLarsonAllen. "They're not all interested in being in the central cities."
Minneapolis and St. Paul still account for most of the nearly 13,000 apartment units planned or being built in the metro area, but there are pockets of activity emerging outside the two cities.
St. Louis Park, whose proximity to south Minneapolis' lakes gives it an urban vibe, is one hot spot. Others, such as Bloomington, Edina and Woodbury, are close to highways and shopping.
Access to mass transit has become a bigger factor for suburban apartment projects. In Ramsey, where the Northstar Commuter Rail will open a new station this fall, a 230-unit upscale apartment project is under construction. Bujold said communities such as Eden Prairie could see more apartments as work moves ahead on the Southwest Corridor, now set to be completed in 2018.
Transit is important
Mass transit is a key ingredient of Parkside Village, which would be a short walk from the metro area's first bus-rapid-transit (BRT) line, set to open along Cedar Avenue next year.
"We're looking for market niches," said Tim Nichols, president of Wayzata-based Signet Development, a development partner in Parkside Village. Nichols said the project's partners consider Apple Valley an underserved market.
Indeed, Apple Valley and neighboring communities have largely been on the sidelines in the recent round of apartment development. Year-to-date figures from the Builders Association of the Twin Cities show little multi-unit housing going up in Dakota and Scott counties, except for senior housing. The 332 apartments planned for Parkside Village would be the most multifamily units for Apple Valley in more than 10 years, according to the Metropolitan Council.
Colleen Carey, president of the Cornerstone Group, said Apple Valley is likely to emerge as one of several regional hubs that can support more apartment buildings. "Transit will continue to play an important role," she said of future development. Cornerstone has apartments in the works on the light-rail Central Corridor and in Richfield fronting Lyndale Avenue, where a transit plaza eventually will link to express bus service to downtown Minneapolis.
Appeal of renting grows
Developers say many prospective apartment tenants are the same people who would have been shopping for condominiums five years ago. The housing market crash and recession forced some people to give up their homes and made buying more difficult for others. Nationwide, homeownership rates peaked in 2005 and are at a 15-year low, according the U.S. Census Bureau.
Tony Patinella, whose Denver-based Titan Investments is Parkside's other development partner, said more people are seeking mobility by renting. "Stability of employment is not a given these days, and renting gives you more flexibility," he said.
Apple Valley and other communities are pitching apartment developments to a variety of renters -- young professionals, families and empty nesters. Nichols and Patinella said no rents have been set yet for Parkside Village, which is still getting approval from the city. The two buildings would have one- and two-bedroom units -- some with dens -- as well as three-bedroom apartments.
Melchior said he would expect them to be priced slightly lower than newer apartments in high-demand areas such as Uptown or along the Mississippi River, where monthly rents now are around $2 per square foot.
Projects aid tax base
New apartment projects also are helping communities bolster their tax bases as other commercial development continues to struggle. In Apple Valley, the two-building Parkside Village complex would go on vacant parcels that went back to the lender during the economic downturn.
Parkside Village would be built in Apple Valley's Central Village, a 60-acre mixed-use development planned by the city in the early 2000s. The area already has townhouses, senior housing, affordable/workforce apartments, a hotel, a small office building, shops and restaurants.
Community Development Director Bruce Nordquist said the city's definition of mixed-use for Central Village has evolved with changing market conditions. That includes adding more rental housing as well as reducing commercial space, he said.
"The City Council is supportive of both ownership and rental projects, but the market is more supportive of rental right now," he said.
Susan Feyder • 952-746-3282