VOLUME 32, NUMBER 6
©2016 Law Bulletin Publishing Co.
June 2016
Zumper study: Multifamily rents keep rising in Minneapolis by Dan Rafter
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Should multifamily developers, owners start to worry? by Dan Rafter
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y now, you know the story: Apartment rents across the country, including in the Midwest, continue to rise. At the same time, the demand for
new apartments everywhere from Columbus to Indianapolis to downtown Omaha is soaring. The multifamily sectors remains the top performer of all commercial asset classes. But is there reason Multifamily to page 22
here's a reason why so many developers are building new apartment towers in downtown Minneapolis: The demand for multifamily space is high. And with that high demand comes something building owners love, higher monthly rents. Zumper recently released its latest data on apartment rents in Minneapolis neighborhoods. According to Zumper, Minneapolis in June ranked as the 15th most expensive city in which to rent in the United States, coming in just ahead of Denver and Baltimore. In June, the median rents of a one-bedroom apartment unit in the city rose 2.4 percent to $1,260. The median rent of two-bedroom units actually fell a bit, dropping 2.7 percent to a median rent of $1,460. Rents, though, are not equal throughout the city. The most expensive Minneapolis neighborhood in which to rent in June was Downtown East, with a median rent of $1,800 for a one-bedroom apartment. Downtown West, with a median rent of $1,610; Uptown, $1,600; and the Warehouse District, also $1,600, ranked as the next-priciest neighborhoods in which to rent. The most affordable neighborhood for renters in June was Near North, where the median monthly rent for a one-bedroom apartment stood at $600. The Hawthorne neighborhood, with a median rent of $630, and Willard Hay, $700, were the next most affordable Zumper to page 22
NorthMarq’s Blumberg: Skin in the game matters when it comes to commercial financing
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innesota Real Estate Journal recently spoke to Susan Blumberg, senior vice president and managing director with the Chicago office of NorthMarq Capital, about how busy developers and investors are these days when it comes to requesting commercial financing for new developments and acquisitions. Blumberg’s answer? Very Minnesota Real Estate Journal: What are some of the latest trends when it comes to construction financing?
Susan Blumberg: The newest trend in the last year is that we are seeing more borrowers looking for 100 percent of their costs to be financed in a permanent loan. They’re not looking for 100 percent with construction loans. That is still usually limited to a maximum of 75 percent of costs. But Blumberg more borrowers outside of that are looking for 100 percent of their costs to be financed. We do have deals where this can happen because the value and rents are higher than the costs. Replacement
costs even on a new deal have reached that point depending on the value of the land and how you were able to secure that land. It all comes down to, though, skin in the game, equity and the strength of the borrower. That will determine everything. MREJ: When it comes to multifamily financing, are you concerned at all about a possible oversupply of new multifamily units in some markets? Blumberg: The apartment market is still so active. The monthly rents with the new properties are giganBlumberg to page 23