Market Rebound After Historic Challenges
Entering 2021, the multifamily sector had strong hopes that the implementation of a national vaccine program and stepped-up economic stimulus from the Federal government would support a turn toward normalization in society and stabilization in the broader commercial real estate markets. The path wasn’t easy or always direct, but the multifamily market in the Twin Cities roared back in historic fashion on several dimensions. Near-record production of market-rate units, record absorption, a decline in vacancy rates to once again tight conditions, and a return to positive rent growth all signaled the unique strength of the multifamily market among commercial real estate sectors.
Brief Highlights: 2021
- Market-rate deliveries totaled 82% of the new multifamily supply in 2021, reaching 10,592 new units. Strong production in the suburbs, especially in the east metro, led the way.
- Within the market-rate category, general-occupancy rentals hit a record level with 9,149 new units while age-restricted (senior) properties delivered just over 1,500 units.
- Affordable deliveries in the Twin Cities grew by 6% over the previous year with 2,330 new units. This represented the third year in a row with at least 2,190 new units. While this new production plateau is a strong achievement, demand advanced by an estimated 4,000+ new households needing affordable housing. Long-term pent-up demand for affordable housing still remains a vast problem in the Twin Cities.
- Affordable deliveries advanced by 1,636 new general-occupancy units, 531 senior units, and 163 units for targeted populations. For all three subcategories, demand was likely double the number of units delivered.