Despite a barrage of new apartment buildings in the Twin Cities metro area, demand for rentals continues to outstrip supply.
The average vacancy rate in the seven-county area dipped to 2.3 percent at the end of June, causing the average metro rent price to increase 3 percent to $979, according to a second-quarter survey by Marquette Advisors. That was the largest quarterly decline in vacancy rates in two years, and the ninth consecutive quarter of vacancy rates below 3 percent.
“There are some very positive demographic, economic and lifestyle trends underway in the Twin Cities,” said Marquette Advisors vice president, Brent Wittenberg.
Much of the demand is being fueled by young professionals and empty nesters who don’t want to make a long-term commitment to homeownership and are interested in the perks of urban living. “People want to live close to night life and the amenities they use for recreation,” said Brent Rogers of Greco Development.
For rental property owners and developers, the housing crash and subsequent recession was a turning point. With mortgages difficult to get and thousands displaced by foreclosures, demand for rentals soared. Adding to the trend was a surge in empty nesters and twenty-somethings wanting the ease and flexibility of renting.
The number of people age 55 to 64 in the Twin Cities will rise by about 6,000 per year over the next five years, Wittenberg said. Meanwhile, “Gen Yers” (ages 25-34) will expand by more than 4,000 per year.