MINNEAPOLIS (WCCO) — It seems like everywhere you look downtown, a new condo or apartment building is popping up. But now, the vacancy rate is going up, too.
Minneapolis-based Marquette Advisors reported the vacancy rate for apartments in downtown Minneapolis at 5 percent at the end of March. That’s up from the 2.2 percent vacancy rate at the end of March from last year.READ MORE: 7 Horses Killed In Crash Near Wadena
Even if you don’t live downtown, the apartment building boom could affect you.
Downtown Minneapolis’ North Loop is the new hot place to live. That’s why several new luxury apartments, like Else’s Warehouse, opened there in the last year.
“There’s definitely been a lot of places in the past two years, which has been really exciting,” Brent Webb, managing director of leasing for Greco Real Estate Development, said.
However, according to the new report, renters aren’t keeping up with the number of apartment projects being built downtown. The vacancy rate for the area doubled in the last year.
Minneapolis city council member Jacob Frey says the uptick in vacancy is temporary, as the number of renters has to catch up with the original demand for higher end apartments.
“Any time you get an increase in demand you will also get increase in construction and with the increased construction comes increase in vacancy rate for a certain period of time,” Frey said.READ MORE: Northern Minnesota Double Homicide Suspect Kills Himself During Pursuit
Even if you aren’t looking to rent or live downtown, the surge in apartment projects will still have an impact.
“I think with all of these places coming downtown, it’s just going to create more density,” Webb said.
That means more restaurants and attractions in addition to the new apartments, driven partly by a demographic shift downtown.
Real estate professionals say they’ve seen a trend of more young families choosing apartments downtown over houses in the suburbs, so even more projects are in the works.
“I’m not worried one bit. In fact, what we’re trying to deal with right now is so many people want to live here, we’re trying to find them the space,” Frey said.
Some 1,300-plus units are expected to open downtown during 2014.MORE NEWS: Man, 70, Killed In Otsego Crash
That Marquette report also shows the average apartment rent in the Twin Cities is now $1,000 per month, up 3.5 percent from a year ago.