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Attention Multifamily Investors,
Despite the most aggressive development cycle in Twin Cities history, multifamily demand continues to outperform expectations, particularly outside the urban core.
Over the past 12 months, Minneapolis absorbed approximately 6,600 apartment units, outpacing new deliveries and compressing vacancy to roughly 6.5%. On a demand adjusted basis, Minneapolis ranked among the top 15 large U.S. metros for multifamily absorption and was the only Midwest market to do so.
That strength, however, is clearly bifurcated.
Downtown Minneapolis and select urban submarkets continue to face headwinds tied to post-pandemic work patterns, elevated concessions, and safety concerns. Vacancy remains above pre-2020 norms, and rent growth has lagged meaningfully. In contrast, suburban and first ring submarkets are leading the market, driven by renters prioritizing affordability, larger units, and walkable neighborhoods. In several cases, suburban effective rents now exceed downtown levels which is a reversal from pre-pandemic trends.
Part II Continues Below...
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