It isn’t often Minneapolis-St Paul ranks second for anything in national rankings. But according to a recent report from Reis, a company that tracks real estate information nationally, the Twin Cities is second only to New York for the lowest vacancy rate in the nation.
Reis studied 86 U.S. rental markets and found that while New York had a vacancy rate of just 2 percent, Minneapolis-St. Paul was right behind at just 2.1 percent. Syracuse, NY and New Haven, Conn. are tied with the Twin Cities for second.
When vacancy rates are low, rents usually rise accordingly. However, the study found that while rent rose 3.1 percent from June 2012 to June 2013, it was only the 15th highest increase in the country. Seattle, on the other hand, experienced an annual rent increase of 6.2 percent.
This means there may be room for bigger rent increases in the Minneapolis and St Paul rental markets.
Before duplex owners get too excited and raise rent to crazy, it’s important to remember that low vacancy rates often inspire new construction. And, this is true in Minnesota as well, with Finance and Commerce reporting an estimated 18,683 proposed new apartment units.
And they all get built, vacancy rates will rise. And when vacancy rates rise, landlords are faced with lowering rents and making concessions to attract tenants.