MULTIFAMILY INVESTMENT SALES REPORT MINNEAPOLIS - ST. PAUL 2021 YEAR IN REVIEW & 2022 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 Senior 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
Lakeside Flats, Lakeville | Built 2018 | 120 Units | $25.75M
DEBT TEAM FRITZ WALDVOGEL Vice President, Production Colliers Mortgage 612 317 2138 fritz.waldvogel@colliers.com KURT APFELBACHER Senior Vice President Colliers Securities | Colliers Mortgage 612 376 4083 kurt.apfelbacher@colliers.com
$494M
2021 TEAM SALES VOLUME
$1B
PAST 36-MONTH TEAM SALES VOLUME
Birdtown Flats, Robbinsdale | Built 2019 | 152 Units | $40.1M
Northfield Portfolio, Northfield | Built 1983-2005 | 357 Units | $30.5M
PRIMARY MARKET TRENDS
*Urban defined as Minneapolis and St. Paul proper. Average Rent $1,550 $1,500
Urban
$1,450 $1,400 $1,350
Suburban
$1,300 Jan-22
Sep-21
Nov-21
Jul-21
May-21
Jan-21
Mar-21
Nov-20
Jul-20
Sep-20
May-20
Jan-20
Mar-20
Sep-19
Nov-19
Jul-19
May-19
$1,250 Jan-19
Facing multiple headwinds relating to rent control proposals, pandemic restrictions, and social unrest, urban submarkets suffered in terms of transaction activity in 2021. General uncertainty as to how quickly rents and occupancy would recover dampened investor interest on the whole. Though each submarket within Minneapolis and St. Paul varies in terms of pace of recovery, there were bright spots moving into the final quarter of 2021, including a handful of large Class A closings towards year-end. As employees return to the office, vacancy stabilizes and more clarity forms around rent regulation, investors are becoming more bullish on urban investment moving into 2022.
MINNEAPOLIS/ST. PAUL METRO
Mar-19
Both the Twin Cities and broader Minnesota multifamily investment market rallied to a record year in terms of overall sales volume, coming in just over $3.0B. Despite a significant pullback in sales volume in Minneapolis and St. Paul proper, the suburbs and outstate markets carried the day. We see this trend continuing into 2022.
source: Yardi
Average Vacancy 10.0%
Class A trades had a banner year in the suburbs after remaining somewhat muted in previous years as core+ investors chased yield to undersupplied submarkets that demonstrated healthy lease-ups and rent growth. Well-treaded suburban markets like Edina, St. Louis Park, Maple Grove and Woodbury traded deals per usual, but the more surprising trend is the recent push to submarkets with limited to no trades during this cycle, such as Fridley, Robbinsdale, Chaska and Lakeville. 2022 will undoubtedly see newer construction trades in a number of quieter suburban markets given the amount of new deliveries well outside of the urban core. Assuming interest rate increases are modest and rent growth keeps up with inflationary pressures, strong sales volume should continue.
8.0%
Jan-22
Nov-21
Sep-21
Jul-21
May-21
Mar-21
Jan-21
Nov-20
Sep-20
Jul-20
May-20
Jan-20
Mar-20
Nov-19
Sep-19
Suburban Jul-19
0.0%
May-19
2.0%
Urban
Mar-19
4.0%
Jan-19
6.0%
source: Yardi
Total Sales Volume Urban Suburban $2.5
$2.0
Billions
Whatever momentum was lost in the urban cores last year was picked-up by the suburban and outstate markets. Value-add deals traded at historically low cap rates, falling into the high 3’s and low 4’s as a deep buyer pool continued to chase limited inventory. Opportunities remain somewhat scarce.
$1.5
$1.0
$0.5
$0.0
2012
2013
2014
2015
2016
2017
2018
Multifamily Investment Sales Report | 2021 Year In Review & 2022 Outlook | Colliers International | Minneapolis-St. Paul
2019
2020
2021
source: Real Capital Analytics
Submarket Development & Trends KEY 2017 Deliveries
2018 Deliveries
2019 Deliveries
2020 Deliveries
2021 Deliveries
Total: 4,699
Total: 7,157
Total: 4,558
Total: 7,770
Total: 9,676
NORTHWEST SUBURBAN 955 1,131 465 1,047 875 4,473 Units
MINNEAPOLIS NORTHEAST UNIVERSITY 772 1,051 478 772 97 3,170 Units
NORTH MINNEAPOLIS
NORTH CENTRAL SUBURBAN 921 346 433 341 191 2,232 Units
UNIVERSITY EAST ST. PAUL 123 550 673 Units
DOWNTOWN MINNEAPOLIS 1,262 1,147 558 1,104 337 4,408 Units
UPTOWN LAKES MINNEAPOLIS 546 649 105 633 325 2,258 Units SOUTHWEST SUBURBAN 827 892 1,165 775 1,179 4,838 Units
DOWNTOWN ST. PAUL 379 100 157 118 136 SOUTHEAST ST. PAUL 781 Units 228 116 344 Units
SUMMIT MACGROVELAND 825 325 118 175 244 1,687 Units
SOUTH MINNEAPOLIS 391 248 196 102 164 1,101 Units
NORTHEAST SUBURBAN 281 383 157 397 73 1,291 Units
SOUTHEAST SUBURBAN 1,346 220 353 732 2,651 Units
SOUTH CENTRAL SUBURBAN 820 1,278 366 961 528 3,953 Units
source: Colliers Research
Submarket Statistics Inventory Total Units
Under Construction
<5 Years Old % of Total # of Units Inventory
Rent (Average)
Rent PSF (Average)
Vacancy
# of Units
% of Total Inventory
Total Inventory
<5 Years Old
Total Inventory
<5 Years Old
Total Inventory
<5 Years Old
SUBURBAN WEST Northwest Suburban Southwest Suburban South Central Suburban Suburban West Total/Average
33,299 42,433 28,385 104,117
4,473 4,838 3,953 13,264
13% 11% 14% 13%
2,120 4,793 1,287 8,200
6% 11% 5% 8%
$1,394 $1,550 $1,409 $1,462
$1,824 $1,977 $1,724 $1,850
$1.50 $1.65 $1.53 $1.57
$1.97 $2.17 $1.93 $2.03
4% 4% 3% 4%
5% 5% 5% 5%
SUBURBAN EAST North Central Suburban Northeast Suburban Southeast Suburban Suburban East Total/Average
22,485 11,004 16,262 49,751
2,232 1,291 2,651 6,174
10% 12% 16% 12%
874 163 791 1,828
4% 1% 5% 4%
$1,264 $1,282 $1,442 $1,326
$1,737 $1,643 $1,851 $1,766
$1.44 $1.48 $1.46 $1.45
$1.90 $1.85 $1.87 $1.88
4% 3% 3% 3%
5% 3% 1% 3%
MINNEAPOLIS North Minneapolis Northeast Minneapolis Downtown Minneapolis Uptown Lakes Minneapolis South Minneapolis Minneapolis Total/Average
2,446 10,768 21,732 19,712 8,134 62,792
3,170 4,408 2,258 1,101 10,937
29% 20% 11% 14% 17%
254 31 2,690 920 429 4,324
10% 0% 12% 5% 5% 7%
$906 $1,882 $1,553 $1,647 $1,338 $1,586
$2,053 $2,065 $1,922 $1,622 $1,987
$1.09 $2.31 $2.04 $2.15 $1.57 $2.02
$2.95 $2.69 $2.64 $2.14 $2.70
8% 6% 9% 6% 4% 7%
9% 13% 6% 2% 9%
ST PAUL University East St. Paul Summit MacGroveland Downtown St. Paul Southeast St. Paul
6,865 15,040 4,066 9,453
673 1,687 781 344
10% 11% 19% 4%
669 170 171
4% 4% 2%
$1,369 $1,442 $1,573 $1,149
$1,542 $1,740 $1,641 $1,433
$1.67 $1.77 $2.00 $1.39
$2.22 $2.40 $2.01 $2.64
6% 4% 5% 4%
4% 6% 5% 1%
Multifamily Investment Sales Report | 2021 Year In Review & 2022 Outlook | Colliers International | Minneapolis-St. Paul *Includes market rate and mixed income (10-90% affordable) multifamily properties
source: Colliers Research / Yardi
Rochester Sale Volume
SPOTLIGHT: ROCHESTER, MN Rochester, home of the Mayo Clinic, received national attention after the announcement of Destination Medical Center in 2013, a concerted effort to partner public and private investment to deliver growth. While a healthy pipeline of multifamily projects came out of the ground, the investment sale market remained relatively sleepy. Not so in 2021, with $250M in sale volume, five times the historical average volume of roughly $50M. This is especially surprising given that Rochester’s total population is 115,000.
$250M
$200M
$150M
$100M
$50M
2017
2018
2019
2020
2021
source: Real Capital Analytics
10 Year Treasury Yield
SPOTLIGHT: DEBT MARKETS »
»
»
3.5
Fannie Mae and Freddie Mac had their annual loan volume caps increased from $70 billion in 2021 to $78 billion in 2022.
3.0 2.5
Credit markets have returned to pre-pandemic underwriting and there is abundant debt liquidity for multifamily housing.
2.0
After a quiet 2020, banks/bridge lenders/debt funds have grown their market share in 2021 and have been very competitive.
0.5
1.5 1.0
2017
2018
2019
2020
2021
2022
source: NASDAQ
Lumber Costs
SPOTLIGHT: INFLATION
1,750 1,500 1,250 1,000
Futures Price
Inflation is upon us with the Consumer Price Index (CPI) up ~7% and Producer Price Index (PPI) up ~10% from last year. This, alongside labor shortages and material delays has translated to increased construction costs upwards of 20-25% in most cases. Lumber costs had come down last year, but are up again over 2-3x historical norms. This is also at a time when local municipalities are tightening regulation for rental housing. Look for most, if not all newly proposed projects in 2022 to request Tax Increment Financing or similar financing sources in order to make projects feasible.
750 500
2017
2018
2019
2020
Multifamily Investment Sales Report | 2021 Year In Review & 2022 Outlook | Colliers International | Minneapolis-St. Paul
2021
2022
source: NASDAQ
Minneapolis/St. Paul Metro Multifamily Sale Activity - Top 50 Transactions YEAR BUILT
SIZE (UNITS)
Minneapolis
2020
153
Hines
Solhem Companies
$46,900,000
$306,500
The Gibson
Minneapolis
2020
159
Hines
Solhem Companies
$48,600,000
$305,700
Aug-21
Verge
Saint Louis Park
2013
192
Eaton Vance Management
Ej Plesko & Associates
$58,600,000
$305,200
Jul-21
The Laurel
Golden Valley
1979 -2004
151
Weber Properties
Oak Residential Partners
$43,750,000
$289,700
Aug-21
Rize at Opus Park
Minnetonka
2019
322
Virtus Real Estate Capital
LeCesse Development
$93,000,000
$288,800
Jan-21
The Estates at Arbor Oaks
Andover
2017
66
Peak Capital Partners
Trident Development
$18,750,000
$284,100
Aug-21
The Quinn at Plymouth
Plymouth
2002
301
The Connor Group
Mesirow Financial
$85,250,000
$283,200
Dec-21
Birdtown Flats
Robbinsdale
2019
152
Shelard Group
NAI Legacy Fund
$40,100,000
$263,800
Jun-21
Hello Apartments
Golden Valley
2017
172
Peak Capital Partners
Continental Property Group
$44,722,500
$260,000
Oct-21
Vincent Woods
Rogers
2020
168
Timberland Partners
Trident Development
$43,500,000
$258,900
May-21
Lake Jonathan Flats
Chaska
2019
117
Ridgebrook Investments LLLP
Trident Development
$30,000,000
$256,400
Oct-21
Frost English Village
Maplewood
2018
107
Axial Advisors
Sherman Associates
$27,300,000
$255,100
Dec-21
Auburn Townhomes
Hopkins
1985
136
Heartland Realty Investors
Park Avenue Of Wayzata
$34,250,000
$251,800
Dec-21
Aster Meadow
Vadnais Heights
2020
140
Peak Capital Partners
Peter Stalland
$35,000,000
$250,000
Dec-21
Cedar Green Apartments
Blaine
2021
138
Peak Capital Partners
Peter Stalland
$34,250,000
$248,200
Jan-21
Crossroads at Elm Creek
Maple Grove
2018
98
Peak Capital Partners
Trident Development
$24,240,000
$247,300
Jan-21
Tula Apartments
Minneapolis
2018
71
Classic City Apartments
Solhem Companies
$17,250,000
$243,000
Dec-21
Oak Pointe
Bloomington
1985
134
Heartland Realty Investors
Park Avenue Of Wayzata
$32,250,000
$240,700
Aug-21
Lake Ridge Apartments
Prior Lake
2019
150
Peak Capital Partners
Peter Stalland
$36,000,000
$240,000
Dec-21
The Hendrickson
Falcon Heights
2020
66
Peak Capital Partners
Kelly Brothers Investments
$15,600,000
$236,400
Jul-21
The Cielo
Fridley
2016
269
Peak Capital Partners
Trident Development
$59,000,000
$219,300
Feb-21
Louisiana Oaks
Saint Louis Park
2001
200
FPA
Sidal Realty
$43,150,000
$215,800
Oct-21
Lakeside Flats
Lakeville
2018
120
Oak Grove Properties
Guardian Financial Management
$25,750,000
$214,600
Feb-21
Hinton Heights
Cottage Grove
1995
249
Oak Residential Partners
Curtis Capital Group
$52,000,000
$208,800
Dec-21
PARKOne
Saint Louis Park
1971
186
FPA
Timberland Partners
$38,000,000
$204,300
Mar-21
Gallery Flats
Hopkins
2014
163
Weidner Apartment Homes
Sidal Realty
$33,075,000
$202,900
Aug-21
The Fitzgerald
Burnsville
1988
240
Greystar Real Estate Partners
FPA
$47,200,000
$196,700
Feb-21
Harlo
Minneapolis
2018
75
FPA
Sidal Realty
$14,300,000
$190,700
Feb-21
District 600
Minneapolis
2016
78
Bigos Management
Michael Development
$14,750,000
$189,100
Dec-21
Northpointe
Coon Rapids
1989
161
Curtis Capital Group
Shelard Group Inc
$29,900,000
$185,700
Feb-21
Inglewood Trails
Saint Louis Park
1999
124
FPA
Sidal Realty
$22,400,000
$180,600
Jan-21
Lakewood
Lino Lakes
2007
60
Peak Capital Partners
Dominium
$10,500,000
$175,000
Mar-21
Brier Creek
Minnetonka
1986
192
Ceann Company
Sidal Realty
$32,800,000
$170,800
Feb-21
Quail Ridge
Eden Prairie
1986
108
Heartland Realty Investors
Sidal Realty
$17,800,000
$164,800
Sep-21
Equinox Apartments
Saint Anthony
1971
266
DRA Advisors
Laramar Group
$43,750,000
$164,500
Jun-21
Normandale Lake Estates
Bloomington
1964
105
Berg Group
Maven Real Estate Partners
$16,500,000
$157,100
Dec-21
Parkvue Flats
Burnsville
1971
323
Bridge Investment Group
Abacus Capital Group
$49,500,000
$153,300
Sep-21
Curve Crest Villas
Stillwater
2002
90
Alliance Development
Wishrock Group
$13,500,000
$150,000
Jan-21
Larpenteur Manor
Falcon Heights
1968
144
Preferred Management Services
Sidal Realty
$20,400,000
$141,700
Sep-21
Eagle Pointe
West Saint Paul
1972
216
Monument Capital Management
Timberland Partners
$30,250,000
$140,000
DATE
PROPERTY
CITY
Dec-21
Ox-Op Gallery and Residences
Dec-21
BUYER
SELLER
Multifamily Investment Sales Report | 2021 Year In Review & 2022 Outlook | Colliers International | Minneapolis-St. Paul
SALE PRICE
PRICE PER UNIT
Minneapolis/St. Paul Metro Multifamily Sale Activity - Top 50 Transactions (cont.) YEAR BUILT
SIZE (UNITS)
2003
81
Kelly Brothers Investments
MWF Properties
$10,900,000
$134,600
Various
174
Klinkner Properties
Skally Management
$21,200,000
$121,800
Minneapolis
1970
88
EquiMax Real Estate
Michael McGuire
$10,700,000
$121,600
Phoenix Apartments
Saint Paul
1976
216
DRA Advisors
Main Street Companies
$26,100,000
$120,800
Aug-21
KMS Uptown Portfolio
Minneapolis
Various
332
North Park Ventures
KMS Management
$40,000,000
$120,500
Sep-21
KMS Management Portfolio
Various
Various
2,696
KMS Management
Centerspace
$323,800,000
$120,100
Apr-21
Ridgebrook
Brooklyn Park
1969
144
North Shore Development Partners
Ridgebrook Investments LLLP
$15,100,000
$104,900
Dec-21
Marion St. & Brittanys Apartments
Roseville
1964
277
Wall Companies
SM Engineering
$28,000,000
$101,100
Jan-21
The Birchway
New Hope
1968
108
Birches LLC
Wincrest Properties
$10,400,000
$96,300
St. Paul
Various
147
Kentaurus Capital
Pro One Management
$12,755,000
$86,800
DATE
PROPERTY
CITY
Apr-21
Sibley Cove
Maplewood
Jun-21
Live Green Portfolio
St. Paul
Jul-21
Minnehaha 94
May-21
Jan-21 Magnolia Portfolio
BUYER
SELLER
Minneapolis/St. Paul Metro Multifamily Sale Activity - Top 50 Transactions
Minneapolis St. Paul
Multifamily Investment Sales Report | 2021 Year In Review & 2022 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 Sr. 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
KURT APFELBACHER Sr. Vice President kurt.apfelbacher@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
CRAIG THEIS Sr. Vice President craig.theis@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. © 2022, Colliers International.