Apartment Construction Boom (2011-??)

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minnyapple
Nicollet Mall
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Re: Apartment Boom

Postby minnyapple » May 1st, 2013, 2:03 pm

Heres a little blog from the StarTribune about the Vacancy rate in Minneapolis and Metro staying the same and even slightly going down more. Looks like a good sign for development to continue if not ramp up even more possibly.

http://www.startribune.com/blogs/205630561.html

Full Article http://www.startribune.com/housing/205702361.html
Last edited by minnyapple on May 2nd, 2013, 12:58 am, edited 1 time in total.

RailBaronYarr
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Re: Apartment Boom

Postby RailBaronYarr » May 1st, 2013, 3:18 pm

I think if Minnesota's unemployment remains lower than the national average and surrounding states we will continue to see this trend. If we keep allowing more development (apartments as well as other housing options) closer in, I think we'll have a better chance at sustaining population and growth by providing opportunities for small businesses to take hold in the core. Just a thought.

twincitizen
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Re: Apartment Boom

Postby twincitizen » May 1st, 2013, 7:28 pm

The Uptown submarket in particular will be able to put all this theory to test in the next 6-8 months.

Track 29 is opening July 1st. Elan Phase 1 broke ground around the same time and is listed as "summer". They were offering a free month of rent if you signed up for a lease before today. The Walkway and LIME will follow in late fall or early winter. Elan Phase 2 just broke ground on 220 more units and will probably be ready for leasing in spring 2014. Other than the two affordable-ish projects, Buzza and Greenleaf in 2012, the last big luxury apartments to hit the market were Flux (late 2011), Murals, and Blue.

As I can't afford any of these places, I really hope that SOME of the people who can already live in the area and are moving up. The pressure on the market for regularly priced 1BR apartments in the area (typically 20s brick/brownstones or 60-70s stucco walk-ups renting for $675-875) is insane right now. My lease is up in September, my apartment is merely OK, but I would have to pay at least $100/mo more just to rent an identical apartment in different nearby building. I could probably afford to pay a little bit more now, but why do it if I'm not getting anything substantial?

minntransplant
Nicollet Mall
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Re: Apartment Boom

Postby minntransplant » May 2nd, 2013, 9:58 am

I sure hope all the new construction slows rent increases. Rent went up $50 last year and going up $75 this year. Considering that there are slim pickings for similar apartments (especially at a lower cost), I'm staying put.

twincitizen
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Re: Apartment Boom

Postby twincitizen » June 20th, 2013, 10:17 am

Not sure where else to put this, but F&C did a write up about the various historic conversions going on: http://finance-commerce.com/2013/06/rou ... nversions/

lordmoke
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Re: Apartment Boom

Postby lordmoke » June 20th, 2013, 11:11 am

Nice to see the A Mill is still moving along. I was getting a little worried about that one.

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Andrew_F
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Re: Apartment Boom

Postby Andrew_F » June 28th, 2013, 10:32 am

"The number of building permits issues are at a 12-month high, and planned units in June were up 64 percent when compared with June of 2012.
Year-to-date planned units remain at their highest level since 2007. There were 496 permits issued for a total of 912 units during the four weeks in June. Year to date, cities issued 2,379 permits for a total of 4,024 units.."

"Minneapolis once again led the top five cities permitting 380 units in June. Brooklyn Park joined Woodbury in second position with 31 units, followed by Ramsey with 29. Blaine, Chanhassen and Lakeville tied for fifth place with 23 units permitted each."

http://www.startribune.com/blogs/213513901.html

God, it is good to see Minneapolis have more than twice the units approved this month than the top 5 suburbs combined!

twincitizen
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Re: Apartment Boom

Postby twincitizen » July 11th, 2013, 2:32 pm

I stumbled across this comment on the Strib story about the Snelling-Selby mixed-use development:

These new apartment projects in the Twin City area are pitched to lenders utilizing HUD 221d4 loans with proforma that utilize unobtainable rents to financially stay solvent and hope increasing residential mortgage interest rates are the future so potential residential home purchasers become renters. Today, Bernake said he has changed his mind and QE will continue to keep mortgage rates low which is bad for these apartment projects. In the end, many new projects will go back to the bank and HUD will be on the hook whence there will be too few renters who will be willing to pay the higher rent projected in the proforma. The rents will be lowered to $1.50 per sq. foot per month from $1.70 to $2.55 levels presently pitched to lenders and the U.S. (thats you and I) will bail out the mortgage bond holders.

Now obviously some of that is rooted in owning=good | renting=bad mentality, but is anything else in there worthy of pause? Ignore the exact numbers and lack of commas, and focus more on the gist of it. I mean, these very high rents in unremarkable buildings/locations do seem unsustainable (long-term) so I think there is some truth to what he is saying.
Last edited by twincitizen on July 23rd, 2013, 8:13 am, edited 3 times in total.

mattaudio
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Re: Apartment Boom

Postby mattaudio » July 11th, 2013, 2:34 pm

My experience in the industry is not as specific as knowing about HUD 221d4 but it suggests that GSE regulations have been hostile to mixed-use in general up until recent times.

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FISHMANPET
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Re: Apartment Boom

Postby FISHMANPET » July 11th, 2013, 3:42 pm

It depends on how much it costs to build these buildings.

There seem to be enough insiders in this forum, what's an average construction price per square foot on a stick built apartment building? And how long are investors/developers expecting to earn their money back on an apartment project?

I suspect that developers are charging these rents because they can, but these rents will pay off the projects very quickly, and from then on it's pure profit, so if rents go down they'll still make money.

So basically I think these new projects will filter down to a level that more people can afford.

ECtransplant
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Re: Apartment Boom

Postby ECtransplant » July 11th, 2013, 3:49 pm

The vacancy rates where these units are being built and the absorption rate of their units, even at their high prices, belies any notion that there's insufficient demand.

twincitizen
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Re: Apartment Boom

Postby twincitizen » July 23rd, 2013, 8:15 am

A very thorough article in F&C today regarding the dearth of condo development and how it's not likely to spark another boom any time soon: http://finance-commerce.com/2013/07/des ... m-in-site/ (free)

John
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Re: Apartment Boom

Postby John » July 23rd, 2013, 9:31 am

I think we will see a few modestly sized and good quality proposals come foward this year, but no boom. The market for condos downtown is currently quite healthy though. As the article states, the inventory is smaller and interest rates are low. The value of my place has stabilized over the last two years (after declining for 4 years) , and I have noticed some slight increase in the initial asking price of condos with my square footage looking online. As far as the buying versus renting argument, I really don't believe there is a "right" or "wrong" choice in the matter. My only thought is buying can be a good option if you plan to live downtown long term, and you are well established in your career with a stable income.

David Greene
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Re: Apartment Boom

Postby David Greene » July 23rd, 2013, 9:45 am

A very thorough article in F&C today regarding the dearth of condo development and how it's not likely to spark another boom any time soon: http://finance-commerce.com/2013/07/des ... m-in-site/ (free)
The article focuses on downtown but I fully expect some of the luxury apartments going up in Uptown to be condo-converted at some point. It's a sore point for me because that's how I got kicked out of my North Loop apartment. But then I ended up in a good house in the Wedge so there's always a silver lining.

mplser
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Re: Apartment Boom

Postby mplser » August 1st, 2013, 1:08 pm

Does Anyone have any idea why elliot park, a neighborhood that saw some hefty investment during the condo boom, seems to b avoided by developers during the current apartment boom? There's certainly no lack of empty dirt or asphalt lots to fill up... just thought id ask on this forum to see if there is a reason for this?

mattaudio
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Re: Apartment Boom

Postby mattaudio » August 1st, 2013, 1:21 pm

Weren't there a ton of empty units in Sexton and Skyscape? I think it will do fine in a few years but right now the developers would rather just go to the hot "proven" neighborhoods.

MNdible
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Re: Apartment Boom

Postby MNdible » August 1st, 2013, 1:25 pm

I'm not sure why Elliot Park was so hot in the last boom, but it's very clear to me that the Mill District and the North Loop have much better amenities than EP.

fehler
Rice Park
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Re: Apartment Boom

Postby fehler » August 1st, 2013, 2:17 pm

During the previous boom, the stadium was still planned for Arden Hills. Wait for that to shake down, and see what happens.

mplsjaromir
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Re: Apartment Boom

Postby mplsjaromir » August 1st, 2013, 3:37 pm

During the previous boom, the stadium was still planned for Arden Hills. Wait for that to shake down, and see what happens.
It was? Never knew that? Source?

fehler
Rice Park
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Re: Apartment Boom

Postby fehler » August 2nd, 2013, 10:26 am

My apologies. I had the 04-06 Anoka County stadium proposal mixed up in my head with the Arden Hills proposal.
http://blogs.mprnews.org/capitol-view/2 ... county_re/


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