Twin Cities Sees Improving Vacancy Rates
According to a recent report from Michel Commercial Real Estate, the Twin Cities multifamily vacancy rate hit approximately 6.9% in the second quarter of 2025.
This is down slightly from Q1’s 7.03%; down further still from Q1 of last year when it 7.9%. The decline was due in part to the absorption of newly completed units. The year over year vacancy decline ranks third in the nation. This bodes well for housing providers, as there are fewer new apartment projects set to be delivered this year.
So of that vacancy rate, which is calculated predominantly by looking at larger apartment buildings, what percentage were in small multifamily properties?
According to HousingLink’s monthly report, 16% of the vacancies were found in condos, duplexes, triplexes, and townhomes. This was 4% higher than June of last year. The inverse was true in St Paul, where duplex vacancies contributed 16% of the total last year and dropped to 12% this year.
Median rents for a one bedroom unit were up 9% year over year in St Paul to $1200. Two bedrooms were up 6% to $1510 and three bedrooms rose 10% to $1962. These increases, which exceed the 3% rent control mandated annual increases, are likely the result of the new construction, vacancy decontrol exemptions to the city’s policy, and housing providers making sure to levy increases lest they fall too far below market averages.
Minneapolis, on the other hand, which does not have city-wide rent control saw year-over-year declines. One bedroom rent fell from $1200 to $1155. Two bedroom units declined 3% to $1595. Three bedroom units saw a 2% decline to $1900.
According To Michel Commercial, this is especially good news as Twin Cities wage growth has outpaced rent growth for 5 years. In fact, the 18.97% rent-to-income ratio is among the lowest in the nation.
Overall, Minneapolis has 3% more licensed rental units this year than last; in all, a total of 114,492 licensed units. Of these, 23,144, or 2% were found in one and two unit properties. Minneapolis also saw a 5% year over year decline in the number of units earmarked for short term rentals, falling to 1608 units.
St Paul has 450 short term rentals, 12,543 one and two unit rental units, and exactly the same number of rentals overall, at 70,720, as they did last year.