urbanMSP

A general thread to discuss the current and ongoing boom in multi-unit construction around the Twin Cities.

A fantastic article from F&C with some very encouraging statistics. It looks like the building will keep on coming!

http://finance-commerce.com/2012/11/rep ... -up-a-bit/

Uptown's vacancy rate has actually FALLEN since the construction has started. Good news for the future phases of Elan, and hopefully 2900 Lyndale as well.

And we got official DC opinion maker endorsement:
http://www.slate.com/blogs/moneybox/201 ... ities.html

We'll need more apartments to shelter the coming hordes of coastal expatriates.

Yglesias' endorsement is entirely based on average income as related to housing prices (MSP is #12 in the country for income but still has low housing prices). I'm surprised that no one I've seen comment on this has related this to the dire predictions of those opposed to the Met Council and its urban growth boundary (the MUSA line), which they said would produce high housing prices. It may be that that the MUSA has been too generous to have the effect on supply that would logically result from such a constrain on supply, but either way there are regional policy implications (that are not really related to the so-called apartment boom).

there are regional policy implications (that are not really related to the so-called apartment boom).

Taking your comment out of context, I was unsure where to put this interesting endorsement (but couldn't just ignore it).

I didn't know we had a growth boundary. Doesn't seem to be doing a very good job, does it?

Isn't our growth boundary just a limit on where the Met Council will run sewer services?

More or less. At least it manages the sprawl.

It's effectively a growth boundary, because the Met Council doesn't allow municipalities to plan for "urban" densities outside of the line. Outside of the line they need to plan for only large-lot residential, which I think is a 1 acre minimum lot size; inside the line developments need to be at least 3 units per acre. Of course there are ways around this, but it's annoying for everyone.

The problem is not only that their minimum urban lot size is too large and their minimum rural lot size is too small, it's also that the MUSA line tends to be way beyond what is really needed for urban growth. I was looking at the first development framework from 1970 or so and it recommended developable land within the MUSA that was 4-5 times the area needed for the amount of growth that they projected through 2000. My understanding is that Portland in contrast sets their UGB rather tight relative to the amount of growth projected but I haven't looked at that too closely.

So at what point is the economy fixed? There are thousands of units under construction right now in Minneapolis, including two $100+ million dollar projects. What would that translate into in 1996 subdivision units? Half of Maple Grove? And we don't even have to build new infrastructure!

According to the Met Council, there were permits issued for 9550 single family detached units in the Metro in 1996 (316 of which were in Maple Grove). I count 4386 multifamily units under construction in Minneapolis right now, not sure about when they were permitted exactly.

Sure, that's a good sign for the economy, but those 9550 single family homes built in 1996 means that the urban form itself is hugely unbalanced.

I half-jokingly meant that our construction now represents half the City of Maple Grove, not their rate of construction. I'm optimistic for our area!

http://finance-commerce.com/2012/12/hot ... oling-off/

Another good free article from F&C. Nothing Earth-shattering, but some nice reading. It's a little amusing how after that very painful real estate bubble bursting a few years ago, developers are being very negative about the prospects of the apartment boom, which seems to me like it's been the attitude almost from the get-go.

"I don't know how much we can count on this market."
*begins another development*

Great article. If Sherman and Gregory (Greco) are men of their word, they won't be pursuing any new projects (not already under or near-construction) in 2013. FWIW Greco has a bunch of recent and upcoming projects so it is understandable that they'd want to slow the pace a little bit. Not that I know anything about anything, but a slowdown in luxury $2+/sq. ft units seems to make sense. There are a ton of them under construction right now and hitting the market within a pretty narrow time frame.

Let's just say my friends in the industry are glad their shovels are already in the ground.

Thoughts? Everything is speculation of course...but do you think that we have actually seen a shift in the market that will sustain more and more multi-family housing, or are we just in another boom-bust cycle? I like to think we are seeing a bit of a shift towards urban living...and will continue to sustain, though probably not at the current pace, a higher demand for high density projects than we have in years past.

http://finance-commerce.com/2012/12/hot ... oling-off/

Hot Twin Cities apartment market shows signs of cooling offPosted: 7:30 am Thu, December 20, 2012
By Burl Gilyard Finance and Commerce
7:30 am Thu, December 20, 2012

Editor’s note: This is the first in an occasional series looking at the changing Twin Cities apartment market.

Developer Arnie Gregory has been one of the busiest players in the current Twin Cities apartment boom.

His company, Minneapolis-based Greco Real Estate Development, just started construction on its latest project, a 171-unit market rate apartment complex along the Midtown Greenway in south Minneapolis expected to come on line in 2014.

Yet, in a business driven by what’s next, Gregory is calling time out. Citing the large number of apartments under development, he says he’s not looking for additional projects right now.

“We are not chasing any deals,” he said. “I don’t foresee that we will be in the near term. I think we’re going to finish up what we’ve got and let this all play out.”

I don't think you'll see a 'bust', but I do think think some areas will not see any new development for quite some time. For instance, I think Uptown will be over-stocked once these latest developments come on board. Downtown will probably slow down once Nic and the Loring Park developments are done. You will probably still see things cropping up around the U and along the LRT lines for a while, espcially on University. I have no data to back this up, it's just a gut feeling.

Vacancy rates are still very low. I don't think we'll see a bust. How much of a cool down we see will depend on what happens to rents and vacancy rates once all the units currently under construction open up.

The condo market may start to show some signs of life soon too.

I don't think we can keep up this pace of apartment construction, but hopefully good projects will continue to get financing.

The apartment boom is both an appropriate response to changing long term trends & unmet demand, and it's a frothy sign of market overcompensation. Hopefully, any apartment glut in the next couple years will work itself out fairly quickly and we'll again see new projects, but at a less frenzied pace.

It's too bad nearly all of the projects have price points out of the range of most people. I don't know how deep the market is for people willing and able to pay close to $2sq/ft. Some projects opening in 2013 or 2014 will probably have to compete by lowering rents. This would discourage new buildings.

I also think we could see a few condo projects soon.

Does anyone know the history of the apartment buildings of the 1960s? Every block seems to have a few buildings like this one on it. They seem to be everywhere in Minneapolis. How was this possible at a time when the suburbs were booming and the city was losing population. The apartment boom today doesn't seem close to having an impact that these buildings have on neighborhoods.

Can anyone offer more insight to this vague question?

The number of projects per year will most likely dip, but I don't foresee multi-family construction coming to a standstill anytime soon. Job and population forecasts for Minneapolis are positive. As long as employers add jobs and people are remain interested in living an urban lifestyle, we should continue to see residential construction in the core and periphery neighborhoods. Maybe there will be fewer large-scale developments like Flux, but that would probably be for the best--there are still small vacant lots to fill and plenty of distressed apartment buildings that I would love to see replaced.

How was this possible at a time when the suburbs were booming and the city was losing population.

Maybe it was the era before minimum parking restrictions.