Twin Cities Rental Vacancies Drop

Want a good laugh?

A few years back, the city of St Paul passed rent control, mandating a hard cap on annual rent increases of 3%.

According to a recent report from Marquette Advisors Apartment Trends report, year-over-year rent growth in the city of St Paul is 3.4%.

Perhaps this is a result of the St Paul City Council’s modifications to the original rent control ordinance.

Of course, it may also be the continuation of a pattern. Rent control ordinances have always resulted in higher rents anywhere they have been implemented. In a way, that’s good news for housing providers.

Ironically, in Minneapolis where rent control continues to be part of the City Council’s conversation, year-over-year rent growth was 1.9%.

Of course, rent prices are largely dictated by that old economics law of supply and demand. In suburban communities, rents rose 5.4% year-over-year due to a post-pandemic increased exodus from the urban core.

Metro-wide, the apartment vacancy rate is now 4.1%. This is down from 4.8% at this time last year.

In Minneapolis, the vacancy rate during the second quarter was 5.9%. St Paul fared slightly better at 5.6%. The suburbs saw a vacancy rate of 3.4%; this despite 2800 brand new units coming on the market in the first six months of the year.

Marquette Advisors estimate there are 5500 more new market-rate apartments coming on the market before the end of the year.

It will be interesting to see what impact that surge of inventory will have on both vacancy rates and rent.