The epicenter of the Twin Cities apartment boom is finally showing some signs of softening. In downtown Minneapolis, the average vacancy rate was 8.8 percent in the first quarter, up from 5 percent last year, according to Marquette Advisors.
Across the 13-county metro area, the average vacancy rate remained stable at 2.7 percent. The report shows that while the apartment boom in the region appears to have peaked, this will be another big year for projects. During the first quarter, 554 apartments came to market across the region, with a total of 3,100 units expected by the end of the year. That’s compared with 4,391 in 2014 and 2,763 in 2013. In downtown alone, about 300 units came online during the first quarter and another 866 units are expected during the remainder of the year. Despite all those new units, there’s still upward pressure on rents. Across the metro area, the average rent was $1,018 compared with $1,000 a year ago. In downtown Minneapolis, average rent increased 6.8 percent to $1,493.
Other downtown apartment news:
Dallas-based Invesco has joined Ryan Cos. and Excelsior Group, both of the Twin Cities, as an investor in three apartment projects that are part of the Downtown East project that Ryan initiated near the new Vikings stadium. There will be 195 apartments in the three buildings. Two will sit at the base of the twin 18-story Wells Fargo towers, facing south along S. 4th Street between 5th Avenue and Park Avenue. A third will be on 5th Avenue S. between 4th and 5th streets at the edge of the planned two-block park that runs up to the stadium. Public records show that Invesco paid Ryan Cos. nearly $7 million for the land on which the apartments are now being built. The apartments are being called Edition in a nod to the former owner of the land, the Star Tribune.
Ryan and Excelsior previously worked together on the 222 Hennepin luxury apartments and Whole Foods store. Ryan and its partners recently sold that project for $109 million.
Separately, Twin Cities-based Sherman Associates sold its recently completed Paxon — an apartment project in the North Loop to Clarion Partners, a New York firm, for $38.75 million.
Sherman built the 140-unit Paxon at the corner of 1st Street and 4th Avenue N. on the site of a stalled condo development called the Reserve. In 2003, Chicago-based Bejco called it quits on the project after several attempts to get approval.