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k5 t- +a- ,Y' �RU 0, 1 The Twin Cities apartment market experienced another positive and active year The metro vacancy rate declined to 2.4%from 3.1% reported a year ago. �• MARKET -� OVERVIEW APARTMENT MARKET HIGHLIGHTS VACANCY AND Fifth consecutive year of AVERAGE RENT The total metro area vacancy rate declined to 2.4% from 3.1% a year ago. declining apartment vacancies MINNEAPOLIS-SL PAUL METROPOLITAN AREA All sectors except St. Paul experienced 9/95 9/95 improvement in the vacancy rates. Class A projects are achieving NUMBER PERCENT AVERAGE Owners were more aggressive in 4-5% annual rent increases from SECTOR OF UNITS VACANT RENT raising rents in 1995 than in past years e-risting tenants; 6-10% increases Anoka County 7,197 1.8% 5537.83 and will be raising rents in 1996 too. on vacated units Dakota County 17,545 1.0% 5608.63 Rents rose 6% from September 30, 1994 Minneapolis 21,533 2.4% $501.46 AgWeptember 30, 1995.This compares to ♦ A shortage of multi family zoned Northeast 14,365 1.4% 5553.99 during the prior 12 month period. land presently a-rists in the most Northwest 13,697 7.3% S531.26 ost owners are raising rents 5% to desirable locations St.Paul 15,979 3.6% S501.28 10%. The highest increases are on the Southwest 20,335 1.5% $613.49 vacant units and the lower increases are ♦ Demand for apartments by Washington County 3,803 1.5% 5595.48 on renewals. Owners are very cognizant investors is strong West 18,681 1.4% $651.19 of turnover expense. Owners who want to sell have pushed rents hard to maxi Metropolitan Total 133,135 2.4% S569.08 mize value. Tenants know the "let's ©Towle Real EstateCompany make a deal" mentality is gone and their choices are limited. Relative to 1993, higher home mortgage interest rates AVERAGE VACANCY HISTORICAL SUMMARY contributed to slower renter turnover in 1995. Interest rates in 1996, combined MINNEAPOLIS-ST. PAUL METROPOLITAN AREA with higher rents, may increase the ©Towle Real Estate Company 10% turnover rate again on higher end apart- ments. Rents will continue to rise until 9% they support new construction. 8% I.aa%a Many apartment professionals feel 7% Class A rents need to increase 10% to 6% 5.7% 15% to support new construction. This 5% 4.8% means new projects are 1-3 years away. 4% 4.4°i° 37% The next new apartments will be town- 3.1 house style rentals as proposed in Eagan 3% and Woodbury. Townhouse properties 2% 2.4% are in high demand and tenants will pay 1% �igher rents for these costly units. 0 9/89 9/90 9/91 9/92 9/93 9/94 9/95