The multifamily market in the Minneapolis-St. Paul market has been hot for a long time, with demand for apartment units almost as strong as the demand for industrial assets in the Twin Cities region.
But Apartment List’s December 2022 rent report suggests that the local multifamily market might be cooling off a bit, especially when it comes to rent growth.
Apartment List reported that the overall median monthly apartment rent in Minneapolis stood at $1,074 in November. That is down 1.6% from October and up just 0.2% from a year ago.
While rents are still solid here, Minneapolis’ rent growth during the past year has fallen behind both the state of Minnesota, which saw median apartment rents jump 2.8% in November on a year-over-year basis, and the nation, which saw median rents rise 4.6% this November compared to the same month in 2021.
The median one-bedroom rent in Minneapolis was $968 in November, while the median two-bedroom rent was $1,251.
You can better see how rent growth is cooling by comparing the first 11 months of this year to the first 11 of 2021.
According to Apartment List, apartment rents in Minneapolis have risen 0.8% during the first 11 months of this year. During this same period last year, median apartment rents had jumped by 6.9%. Apartment List also reported that rent growth in Minneapolis ranked 78th out of the country’s 100 largest cities in November.
Apartment List reported that Maple Grove is currently the most expensive city in the Minneapolis market in which to rent. The median one-bedroom rent here stood at $1,410 in November, while the median two-bedroom rent was $1,723. Edina also saw higher rents, with a median one-bedroom rent of $1,419 and a median two-bedroom rent of $1,672 in November.
On the lower end of the scale was the city of Minneapolis itself, which saw a median one-bedroom rent of $968 in November and $1,251 for two-bedroom units.
The dip in median rents, though, doesn’t mean that the local apartment market is struggling. Demand is still high for units among renters, while investors, despite rising interest rates, are still interested in placing their dollars in multifamily assets.
But those days of soaring monthly rents? They might be coming to an end.