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Multifamily rental rates anticipated to grow an average of 3.1% year-over-year

The Minneapolis-St. Paul apartment market’s annual rental growth rate in 2016 was 3.2 percent, significantly higher than the national average of 2.6%. This is a function of limited multifamily supply, as last year’s occupancy levels reached 96.9% across the metro. Demand is expected to keep up as new product delivers; projections show apartment occupancy to remain in the 96 percent range through at least 2020.

Annual effective rent growth is forecasted to be 3.2% in 2017, and average 3.1% from 2018 to 2020. This is a marked increase from the historic annual effective rent growth which has averaged 1.8% since 1998.

Properties constructed within the last 12 months have been leasing at a premium with an average effective rent of $1,921 per unit. That equates to $1.93 per square foot (p.s.f.) for new product, compared to the market average of
$1.34 p.s.f.

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