Multifamily Investment Sales Report | Colliers MSP Capital Markets

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MULTIFAMILY INVESTMENT SALES REPORT MINNEAPOLIS - ST. PAUL 2021 MID-YEAR REVIEW & YEAR END OUTLOOK


INVESTMENT SERVICES TEAM

RECENT TEAM TRANSACTIONS

TED BICKEL, J.D. Senior Executive Vice President Multifamily Investment Services 952 837 3097 ted.bickel@colliers.com JEFF BUDISH Executive Vice President Multifamily Investment Services 952 897 7755 jeff.budish@colliers.com

Sidal Multifamily Portfolio, Twin Cities | Built 1968-2018 | 1,114 Units | $201M

ANDY HEIEIE Senior Vice President Land & Development Investment Services 952 897 7816 andy.heieie@colliers.com RYAN SPENGLER Senior Associate Multifamily Investment Services 952 897 7786 ryan.spengler@colliers.com

Hello Apartments, Golden Valley | Built 2018 | 172 Units | $44.7M

LAUREN PANZER, CCIM Senior Real Estate Analyst Multifamily Investment Services 952 837 3018 lauren.panzer@colliers.com LACEY O'CONNOR Senior Property Marketing Strategist Multifamily Investment Services 952 374 5812 lacey.oconnor@colliers.com

Crossroads at Elm Creek, Maple Grove | Built 2018 | 98 Units | $24.2M

DEBT TEAM DAVID JURAN President & CEO Colliers Mortgage 612 376 4075 david.juran@colliers.com THOMAS G. O'NEIL Vice President of Market Development Colliers Mortgage 612 317 2122 tom.oneil@colliers.com

$313M

2021 YTD TEAM SALES VOLUME

$731M

PAST 36-MONTH TEAM SALES VOLUME

District 600, Minneapolis | Built 2016 | 78 Units | $14.8M

Lakewood Apartments, Lino Lakes | Built 2007 | 60 Units | $10.5M


PRIMARY MARKET TRENDS As we move through the second half of 2021, the Twin Cities multifamily sales and development market is firing on all cylinders. Sales volume to date is trending back to pre-COVID levels and should approach or exceed $2.0b in total volume for 2021. On the development front, total unit deliveries are on track to continue the annual trend of a pipeline increase. In 2020, total unit deliveries fell just short of 10,000 units. This year, we are tracking to exceed 10,000 units delivered, with a solid pipeline in place for 2022 as well.

Vacancy & Rental Rates

4.5% 4.0%

$1,300

3.5% 3.0%

$1,250

2.5% $1,200

2.0% 1.5%

$1,150

1.0% $1,100 $1,050

0.5%

2016

2017

2018

2019

Average Rental Rate

2021

2020

Vacancy Rate

0.0%

source: Yardi

Total Sales Volume # of Transactions $2.00 $1.75

2017

2018

122

120

41

2013

2014

2015

64

61

37

2012

71

82

$0.75 $0.50

$0.00

125

$1.25 $1.00

76

Billions

$1.50

2016

2019

*Q1 & Q2 sales.

2020

2021*

source: Real Capital Analytics

Total Metro Units Completed 12,000 10,000

2,000

2017

2018

2019

9,575

5,647

4,000

5,550

6,000

7,420

8,000

5,465

Overall, we see continued strength in multifamily investment market going forward. So long as interest rates remain low and demand outstrips supply as a whole across the Twin Cities, healthy rent growth and low vacancy should drive performance and support historically low cap rates.

5.0%

$1,350

$0.25

Based on sales closed to date and what is in the pipeline for the second half of 2021, we have witnessed much more activity in third and fourth ring suburbs. With developers exceeding their pro forma rents on new construction and owners achieving above-market rent growth on many projects, investors have taken note and opened themselves to new submarkets. Rogers, Prior Lake, Shakopee and White Bear Lake are just a few of the notable submarkets with evidence of very strong operating performance.

5.5%

$1,400

While the earlier years of this investment cycle brought renewed attention to urban markets, most notably Uptown, North Loop and Northeast Minneapolis, currently there is a clear preference for suburban markets. Some of this is unquestionably related to pandemic-related economic fallout and social unrest in the CBDs. Both factors have waned in 2021, but have also led to employee remote work preferences, which has extended the suburban trend for now. The Minneapolis and St. Paul proper submarkets took a considerable hit to occupancy, dragging net effective rents over the past 18 months. There is evidence that most of the submarkets within the two Twin Cities are reaching a recovery point, with occupancy trending above 90% and rents less than 10% off of historical norms. As employees return to the office, social unrest subsides and the CBDs return to life, it would not be surprising to see occupancy and rents return to prepandemic levels sometime in 2022.

6.0%

$1,450

2020

*Q1 & Q2 deliveries.

Multifamily Investment Sales Report | 2021 Mid-Year Review & Year End Outlook | Colliers International | Minneapolis-St. Paul

2021*

source: Colliers Research


Submarket Development & Trends KEY: Units Delivered by Year Q1 & Q2 2021

NORTH CENTRAL SUBURBAN 836 574 658 658 256 2,982 Units

NORTHWEST SUBURBAN 819 761 439 980 1,608 4,607 Units

2018 2017

UNIVERSITY EAST ST. PAUL 126 388 432 946 Units

DOWNTOWN MINNEAPOLIS 785 1,339 945 1,104 495 4,668 Units

SOUTHWEST SUBURBAN 161 1,190 1,448 301 3,100 Units

2019

NORTHEAST UNIVERSITY 1,076 1,198 971 1,076 517 4,838 Units

NORTH MINNEAPOLIS 178 178 Units

UPTOWN LAKES MINNEAPOLIS 312 1,332 379 331 289 2,643 Units

2020

DOWNTOWN ST. PAUL 170 191 70 136 567 Units SOUTHEAST ST. PAUL 178 92 116 114 500 Units

SUMMIT MACGROVELAND 137 338 293 244 1,012 Units

SOUTH MINNEAPOLIS 160 341 148 227 367 1,243 Units

NORTHEAST SUBURBAN 192 464 157 104 224 1,141 Units

SOUTHEAST SUBURBAN 468 103 528 189 100 1,388 Units

SOUTH CENTRAL SUBURBAN 523 1,547 759 510 505 3,844 Units

source: Colliers Research

Submarket Statistics Inventory

Unit Size (Average SF)

Rent (Average)

Rent PSF (Average)

Vacancy

Pre 2017

<5 Years Old

Under Construction

Pre 2017

<5 Years Old

Pre 2017

<5 Years Old

Pre 2017

<5 Years Old

Pre 2017

<5 Years Old

SUBURBAN WEST Northwest Southwest South Central Suburban West Total/Average

26,953 30,796 22,283 80,032

3,569 5,102 3,870 12,541

1,939 1,946 2,962 6,847

937 941 926 935

928 908 882 906

$1,318 $1,454 $1,345 $1,378

$1,846 $1,940 $1,677 $1,832

$1.41 $1.55 $1.45 $1.47

$1.99 $2.14 $1.90 $2.02

2.8% 4.5% 3.3% 3.6%

4.9% 5.8% 5.0% 5.3%

SUBURBAN EAST North Central Northeast Southeast Suburban East Total/Average

16,278 10,558 10,471 37,307

2,632 1,062 1,444 5,138

2,413 552 1,200 4,165

874 866 988 904

918 887 959 923

$1,188 $1,211 $1,383 $1,249

$1,744 $1,582 $1,793 $1,724

$1.36 $1.40 $1.40 $1.38

$1.90 $1.78 $1.87 $1.87

3.2% 2.4% 2.4% 2.7%

2.5% 4.3% 3.8% 3.2%

MINNEAPOLIS North Northeast University Downtown Uptown Lakes South Minneapolis Total/Average

1,716 7,454 18,807 7,069 3,429 38,475

75 4,039 3,868 2,000 619 10,601

92 473 2,789 909 1,137 5,400

835 856 758 775 864 793

781 768 728 759 759

$902 $1,773 $1,443 $1,532 $1,256 $1,482

$2,009 $1,964 $1,885 $1,525 $1,927

$1.08 $2.07 $1.90 $1.98 $1.45 $1.87

$2.57 $2.56 $2.59 $2.01 $2.52

7.1% 5.1% 9.5% 7.9% 5.3% 7.9%

-% 9.3% 16.8% 7.7% 4.5% 11.4%

ST PAUL University East Summit MacGroveland Downtown Southeast St. Paul Total/Average

4,983 7,992 3,594 8,328 24,897

1,307 1,201 795 206 3,509

807 780 519 328 2,434

839 838 780 832 828

695 755 891 421 744

$1,275 $1,334 $1,500 $1,112 $1,272

$1,460 $1,716 $1,594 $1,249 $1,566

$1.52 $1.59 $1.92 $1.34 $1.54

$2.10 $2.27 $1.79 $2.97 $2.14

6.8% 4.3% 12.4% 3.2% 5.6%

6.4% 7.4% 6.4% -% 6.4%

Multifamily Investment Sales Report | 2021 Mid-Year Review & Year End Outlook | Colliers International | Minneapolis-St. Paul

source: Yardi


Significant Multifamily Sale Activity YEAR BUILT

SIZE (UNITS)

Cottage Grove

1995

249

Oak Residential Partners

Curtis Capital Group

$52,000,000

$208,800

Hello Apartments

Golden Valley

2017

172

Peak Capital Partners

Continental Property Group

$44,722,500

$260,000

Feb-21

Louisiana Oaks

St. Louis Park

2001

200

FPA

Sidal Realty

$43,150,000

$215,800

Mar-21

Gallery Flats

Hopkins

2014

163

Weidner Apartment Homes

Sidal Realty

$33,075,000

$202,900

Mar-21

Brier Creek

Minnetonka

1986

192

Ceann Company

Sidal Realty

$32,800,000

$170,800

May-21

Lake Jonathan Flats

Chaska

2019

117

Ridgebrook Investments

Trident Development

$30,000,000

$256,400

May-21

Phoenix Apartments

St. Paul

1976

216

DRA Advisors

Main Street Companies

$26,100,000

$120,800

Jan-21

Crossroads at Elm Creek

Maple Grove

2018

98

Peak Capital Partners

Trident Development

$24,240,000

$247,300

Feb-21

Inglewood Trails

St. Louis Park

1999

124

FPA

Sidal Realty

$22,400,000

$180,600

Jun-21

Live Green Portfolio

St. Paul

Various

174

Klinkner Properties

Skally Management

$21,200,000

$121,800

Jan-21

Larpenteur Manor

St. Paul

1968

144

Preferred Management Services

Sidal Realty

$20,400,000

$141,700

Jan-21

The Estates at Arbor Oaks

Andover

2017

66

Peak Capital Partners

Trident Development

$18,750,000

$284,100

Feb-21

Quail Ridge

Eden Prairie

1986

108

Heartland Realty Investors

Sidal Realty

$17,800,000

$164,800

Jan-21

Tula Apartments

Minneapolis

2018

71

Classic City Apartments

Solhem Companies

$17,250,000

$243,000

Jun-21

Normandale Lake Estates

Bloomington

1964

105

Berg Group

Maven Real Estate Partners

$16,500,000

$157,100

Apr-21

Ridgebrook

Brooklyn Park

1969

144

North Shore Development Partners

Ridgebrook Investments LLLP

$15,100,000

$104,900

Feb-21

District 600

Minneapolis

2016

78

Bigos Management

Michael Development

$14,750,000

$189,100

Feb-21

Harlo

Minneapolis

2018

75

FPA

Sidal Realty

$14,300,000

$190,700

Jan-21

Magnolia Portfolio

St. Paul

Various

147

Kentaurus Capital

Pro One Management

$12,755,000

$86,800

Apr-21

Sibley Cove

Maplewood

2003

81

Kelly Brothers Investments

MWF Properties

$10,900,000

$134,600

Jan-21

Lakewood

Lino Lakes

2007

60

Peak Capital Partners

Dominium

$10,500,000

$175,000

Jan-21

The Birchway

New Hope

1968

108

Birches LLC

Wincrest Properties

$10,400,000

$96,300

May-21

Mahtomedi Flats

Mahtomedi

2018

36

David Kroona

PRE3

$9,500,000

$263,900

Feb-21

Sherwood Glen

Maplewood

1966

96

Kentaurus Capital

Pro One Management

$8,980,000

$93,500

Feb-21

Regency Hill

Woodbury

2006

38

Premier Storage, LLC

Bigos Management

$8,725,000

$229,600

May-21

Sherman Forbes Apartments

Saint Paul

1972

104

Real Estate Equities

Asset Management Group

$8,500,000

$81,700

May-21

Cottages of Cottage Grove

Cottage Grove

1984

59

Ballast Real Estate Partners

Oak Grove Properties

$8,375,000

$141,900

Apr-21

Brighton Pond

New Brighton

1988

82

Highland Management Group

Golden Pond LP

$8,271,000

$100,900

Jan-21

West End Trails Apartments

Golden Valley

1961

58

Cardinal Properties

Domicile MSP

$8,000,000

$137,900

Feb-21

West Broadway

Brooklyn Park

1965

59

Monarch Investment & Management Group

Sabre Enterprises Inc

$6,400,000

$108,500

Mar-21

Ridgecrest Apartments

Oakdale

1973

50

Tribella Properties LLC

Hafner Properties

$6,300,000

$126,000

Feb-21

Sterling Square

Brooklyn Center

1968

54

Monarch Investment & Management Group

Sabre Enterprises Inc

$6,200,000

$114,800

Apr-21

Aspen Village

North St. Paul

1965

54

BLA Property Investments LLC

Osmundson Land Co.

$5,940,000

$110,000

May-21

Minnehaha Park

Minneapolis

1971

39

Falls 44, LLC

CTA Inc

$4,585,000

$117,600

Feb-21

The Bancroft

Minneapolis

1962

34

Larry Mountain

Simek Property Group

$4,148,000

$122,000

Mar-21

St. George Apartments

Minneapolis

1918

35

Sunderland Properties

Brummer Properties

$3,775,000

$107,900

May-21

Flats at Emerson

Minneapolis

1959

28

Arcus Realty Group

Simek Property Group

$3,724,000

$133,000

Feb-21

Como Terrace

St. Paul

1973

39

EquiMax Real Estate

Tyme Properties

$3,550,000

$91,000

Jun-21

2631 Columbus Ave S

Minneapolis

1972

33

Scott Hayes

Jon Sawyer

$3,395,000

$102,900

Apr-21

Eustis Apartments

St. Paul

1964

28

EquiMax Real Estate

Healy Family

$3,300,000

$117,900

Jan-21

Brooklyn West

Brooklyn Park

1969

33

MGT Alpha Property Investments, LLC

Leon Fischer Companies

$3,030,000

$91,800

DATE

PROPERTY

Feb-21

Hinton Heights

Jun-21

CITY

BUYER

SELLER

Multifamily Investment Sales Report | 2021 Mid-Year Review & Year End Outlook | Colliers International | Minneapolis-St. Paul

SALE PRICE

PRICE PER UNIT


COLLIERS INVESTMENT SERVICES TEAM: TED BICKEL, J.D. Sr. Executive Vice President Multifamily Investment Services ted.bickel@colliers.com

JEFF BUDISH Executive Vice President Multifamily Investment Services jeff.budish@colliers.com

LAUREN PANZER, CCIM Sr. Real Estate Analyst Multifamily Investment Services lauren.panzer@colliers.com

LACEY O'CONNOR Sr. Property Marketing Strategist Multifamily Investment Services lacey.oconnor@colliers.com

ANDY HEIEIE Sr. Vice President Land & Development Investment Services andy.heieie@colliers.com

RYAN SPENGLER Sr. Associate Multifamily Investment Services ryan.spengler@colliers.com

COLLIERS MORTGAGE & SECURITIES TEAM: DAVID JURAN President & CEO david.juran@colliers.com

MURRAY KORNBERG Executive Vice President murray.kornberg@colliers.com

DAVID MULLEN Sr. Vice President david.mullen@colliers.com

FRANK HOGAN Sr. Vice President frank.hogan@colliers.com

CRAIG THEIS Sr. Vice President craig.theis@colliers.com

KURT APFELBACHER Sr. Vice President kurt.apfelbacher@colliers.com

SCOTT LOVING Sr. Vice President scott.loving@colliers.com

TROON DOWDS Vice President troon.dowds@colliers.com

FRITZ WALDVOGEL Vice President fritz.waldvogel@colliers.com

THOMAS G. O'NEIL Vice President tom.oneil@colliers.com

colliersinvestmentservices.com Colliers International | 1600 Utica Ave S, Suite 300 | St. Louis Park, MN 55416 The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. © 2020, Colliers International.