Steve Taylor listed four apartments for rent in Minneapolis six days ago. He's already got a bead on tenants for two.
Taylor, who's been in the landlord business for five years, knows that one of his units — a 700-square-foot one-bedroom nicely sandwiched between Lyn-Lake and Uptown — is probably priced low at $900 a month. But wintertime is hardly primo rental season. Besides, explains Taylor, "The higher you go, the less options you have for tenants. Right now, I'd rather be a little below the market."
The landlord's market in Minnesota's largest city shows no signs of abating. According to the website Adobo, which inventories rental markets, the average one-bedroom in 10 of the 11 Minneapolis neighborhoods making up the "February Rental Report" is a titch above $1,200. The median two-bedroom pad goes for $1,500 and higher.
"When you have apartments in luxury buildings starting at $1,500 to $1,700 and you average them in with those rents in more traditional buildings like mine in the Uptown area, those numbers sound about right to me," Taylor tells City Pages.
Adobo's study canvasses rentals from Northeast through downtown and Dinkytown, west to Calhoun/Isles and and south to Linden Hills. Northeast has the cheapest average one-bedroom rent at $1,137, Linden Hills the most expensive at $1,250. Northeast's two-bedroom median rental is the least expensive at $1,505, while Seward averaged the highest at almost $1,750.
In the past two years, according to Adobo, Minneapolis developers have added about 7,000 units, yet vacancy rates remain at all-time lows, hovering below 3 percent.
Since Taylor started, his rents have risen about 25 percent.
"I think [increases] are being driven by two things," he says. "One is that the rental market remains strong. Every time I have someone move out, I generally have a new tenant ready to move in. The other thing is the cost. [Existing] buildings and new development have gotten more expensive. A building in Uptown that sold for $180,000 five years ago now sells for $400,000 to $500,000."
But there could be light at the end of the tunnel, according to Adobo spokesperson Sam Radbil.
"We anticipate prices evening out in the future and it not being so crazy as it has been the past few years."