The Minneapolis-St. Paul multifamily market faces challenges, with high interest rates topping the list. But demand for multifamily space here remains high, with tenants still filling Twin Cities’ apartment units in record numbers, according to the latest research from Berkadia.
In its third quarter report card for the Minneapolis-St. Paul market, Berkadia reports that the multifamily occupancy rate throughout the Twin Cities region has risen to 94.8%. That is up 10 basis points year-to-date.
That occupancy rate is also higher than expected. In its 2023 multifamily forecast released at the beginning of this year, Berkadia estimated that the multifamily occupancy rate in the Twin Cities would fall 20 basis points throughout this year. So far, at least, that isn’t happening.
Effective rents remain strong, too, climbing to an average of $1,536 a month at the end of the third quarter. That is up 2.1% year-to-date.
Not all apartment numbers in the Minneapolis-St. Paul area are as strong, though. Berkadia reported that the local market saw the delivery of 5,898 new apartment units through the first nine months of 2023.
Earlier this year, Berkadia forecast that the Twin Citis would see 9,152 new apartment units delivered throughout this year. So far, at least, it looks like the market won’t see this many new units before 2024 hits.
Berkadia reported, too, that the Twin Cities market had absorbed 6,014 apartment units as of the end of the third quarter. This pace of absorption was also slower than what Berkadia predicted in its 2023 forecast.
