By Jake Rossen
By Jesse Marx
By Michelle LeBow
By Alleen Brown
By Maggie LaMaack
By CP Staff
By Jesse Marx
In late July, I received a call from the owner of the building I had been living in for five years. Her fourplex in south Minneapolis's Kingfield neighborhood, she told me hesitantly, would be sold in the next couple of days to a company planning on a condo conversion. I'd probably have to be out by the end of August. She had first rented to me in 1999--when I had no money, no job, and no references--because she liked what she'd seen after running my astrological chart.
Eventually I became the building caretaker and developed a kinship with her and her father, a brusque but good-hearted Jewish émigré from Belarus whose command of conversational English lay mostly in words like "motherfuck" and "pussy bull." He managed to accidentally offend most tenants. He called me "Boy," and I jokingly referred to him as the father I never needed.
I took small comfort in the fact that I wasn't the only one being tossed out. Around the same time, my girlfriend and two other friends received their own eviction notices. After checking the state attorney general's office to see if the new owners could boot me on 30 days' notice (they could), I realized it was time to buy a place to live. At age 34, and after six apartments in the past twelve years, I made a vow: No more renting.
Though it seemed to be the twilight of soaring property values in Minneapolis--conventional wisdom said things were turning from a seller's to a buyer's market--goofy things were afoot. Condomania had finally hit home.
The last time Minneapolis's housing stock went through such a stark and swift transformation, it was the 1950s, and city planners were leveling block after block of tenements. Forty percent of downtown fell in just four years. It's hard not to wonder what those old three- and four-story brick buildings would be worth to today's developers. These days, construction equipment litters lots all over the city, scaffolding indicates warehouses that are undergoing extreme makeovers, and, on weekends, open-house signs pop up on random sidewalks. Look at a map of building projects around the city, and there's a startling cluster in the heart of the city, and not much of anything going up anywhere else.
Skyway News, the downtown community newspaper, has taken to running a "condo pipeline" feature every month. The column stretches out over two half-pages, updating the status and completion dates of projects called the Phoenix, Calumet Lofts, and the Sexton. For November, the paper tallied 49 development projects in various stages of completion, with at least 5,800 units still slated to be built in the next few years. A headline in that recent issue trumpeted, "Read Our Lips: No New Condos." Apparently, there aren't any fresh deals to be added to the pipeline. As editor David Brauer wrote, "In these project-crazed days, that's news."
This could be very good news or very bad news, depending on how you look at downtown Minneapolis's transformation from a business center to an entertainment district to an expensive residential enclave. It could mean that the rapid redevelopment--as crass and high-end as it has been--has naturally mellowed into a sustainable market. Or it could mean that the market has been saturated, and for all of the meticulous design that's gone into some of the finer units downtown, they may end up sitting empty.
Two decades ago, the first few signs of a downtown housing trend cropped up. The loft conversion of the Itasca building, an old warehouse near the river on North First Street, surprised many by selling quickly. By the mid-1990s, three separate loft projects were underway nearby in the North Loop neighborhood. Five years ago, developers broke ground for River Station in the same area, and the first of some 360 new condos sold at prices twice as high as had been predicted.
Since then, new loft-style townhomes and condos have proliferated like rodents. Hard figures are tough to come by--the city itself does not keep track of the numbers--but some estimates give a glimpse of the rapid expansion. In April, Maxfield Research Inc., which does feasibility studies for realtors, estimated that there were as many as 11,000 housing units downtown--a number that has easily grown by as much as 500 since then. From 1994 to 1997, a total of 80 new units were built; by last year, that number had grown to more than 700. (And this doesn't account for rentals that have been sold as new condos.) In 1995, according to the Downtown Council, 19,000 people lived in the urban core. Now the council believes that by 2005 some 30,000 people will be living downtown, more than in Denver, Dallas, Houston, and Indianapolis combined.
Recently, however, the market has softened. In October, the Multiple Listing Service--a real estate listings clearinghouse--estimated that more than 360 new units had failed to sell so far this year. That's compared to roughly 200 in the same timeframe last year. Many units up for resale have been on the market for months, whereas a year ago sellers had offers within hours of listing a home. Interest rates, after a run at historic lows, are sure to rise again. Of late, developers have started adding incentives, like free hardwood-floor upgrades, to potential buyers.