Chart of the Day: US Apartment Occupancy Leaders, Q3 2017

Via Scott Shaffer on Twitter, here’s a chart for you. It shows the Twin Cities leading the country in rental market tightness, and comes from something called the RealPage and Axiometrics report on Business Wire, a BerkshireHathaway Company.

Here you go!

And one more for good measure.

The report explains itself thusly:

Among the country’s bigger markets, Minneapolis/St. Paul holds atop the occupancy leaderboard, with barely 2 percent of the existing stock now available.

A handful of metros that had been mainstays on the list of rent growth leaders now are posting milder price increases. Atlanta, Dallas and Charlotte, for example, are absent from the top achievers. A slew of new product moving through initial lease-up has flattened rent growth in the urban cores of these cities. In turn, overall rent growth has slowed to 3.5 percent in Atlanta, 2.8 percent in Dallas and 2.5 percent in Charlotte. Rent growth already was modest due to new supply in spots such as Denver, Portland, San Francisco, New York and Nashville.


The Twin Cities has gotten a bunch of number one rankings lately, including “best parks” and “largest racial inequality gap.” You can add this to the list.


9 thoughts on “Chart of the Day: US Apartment Occupancy Leaders, Q3 2017

  1. Eric AnondsonEric Anondson

    This must be what the Twin Cities developers are seeing that is giving them a push to head off the early movement for rent control. Just had that recent article I think in Business Journal about that?

  2. GlowBoy

    Yikes. Is this largely because of suburban zoning laws that have prevented new multifamily developments?

    Ironically, Portland has the opposite problem: the suburbs have allowed lots of multifamily development in recent years (actually, they’ve been required to by the growth management scheme there). But until about 5 years ago, when midrise buildings started popping up all over, apartment development in the City of Portland had been almost impossible due to zoning laws, going back to the early 1960s. There’s almost nothing in the city that was built between 1965 and 2012.

    And despite the large number of recently added apartments, rents have skyrocketed, in large part because new apartments are never going to be cheap. All these new units approach $1500/mo for a studio, and even more for 1 bedroom.

    I’ve come to learn that affordable housing is, practically *by definition*, depreciated housing. For a range of affordability you need to have lots of apartments that are 10, 20, 30 or even 40 years old. Build all the new stuff you want, to where you have oversupply and a significant vacancy rate, and rents still won’t go down much.

    I fear the same thing will happen here. Even if the suburbs get off their behinds and allow more apartment construction, it will all be new and therefore expensive. And as in Portland, you’ll have the problem of people claiming that increased density drives prices up.

    1. Daniel HartigDan

      You are right when you ‘fear the same thing will happen here.’ New units simply cannot be sold/rented cheaply enough to be considered affordable housing. Think of the analogy to a car. There are no $10,000 new cars. You simply cannot build a car for that price, so you can’t afford to sell a new car for that price.

      If demand for urban housing goes up significantly (as it has in the last ~10 years in MSP), then there is an inevitable lag time until building can catch up and make housing affordable.

      Its like if no one built pickup trucks for 10 years: there would be new $30,000+ trucks and old, rickety trucks for under $5,000; but nothing in the middle. That is the fate of the city’s housing market for the next decade or so.

  3. Alex SchwartzAlex Schwartz

    Terry, the Minneapolis Board of Realtors publishes local information on their site.
    There is a myriad of information on that site and you could easily spend hours or more sifting through the data. If you are interested in housing supply specifically, click the tab that says housing supply overview. As I recall, we are at about 2.5 months inventory on the market which is the lowest it has been in over 10 years.

    This information is really interesting and I wonder if it will have a broader impact to the Twin Cities multifamily market. Surely, national and international multifamily investors would be privy to this information and perhaps they would more strongly consider the Minneapolis/Saint Paul area for future investment.

    Interesting to see how this cycle plays out in the next few years.

  4. David MarkleDavid Markle

    Yes, but I’m still not convinced that St. Paul has the economic dynamism needed to make a 5,000 unit development–probably the largest ever contemplated in the Twin Cities–really work.

    1. Eric AnondsonEric Anondson

      Because living in St. Paul means having to work in St. Paul not the rest of the Twin Cities? Or are saying the whole Twin Cities doesn’t have “dynamism” for this?

  5. Daniel HartigDan

    There is some good news. It appears that construction this year is at its highest rate in decades:

    According to Strib, Minneapolis is adding 528 new units, along with 1113 in the first ring suburbs this year.

    Unfortunately, 528 units really isn’t that much in the long run. According to the Census Bureau, Minneapolis has 78241; so an increase of 528 units, if they all remain vacant, represents a 0.7% decrease in occupancy, which would move us from first to second.

    Sounds like we have more building to do.

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