CoStar Market Insights: The Majority of Larger Projects Underway Are Outside of the Urban Cores
Though the wave of multifamily construction in the Twin Cities continues, many of those cranes in the air are for multifamily projects outside of the Downtown Minneapolis/University and Downtown St. Paul submarkets.
For much of this cycle, construction has been concentrated in the urban cores and surrounding urban submarkets. But now, developers have started to branch out and focus more development in the suburbs.
Of the larger projects (more than 100 units) currently under construction, more than 60 percent are in suburbs. Areas like Apple Valley, Lakeville, Hastings and Maple Grove, Golden Valley, Plymouth are seeing some of the largest shares of that activity, despite the lengthier commutes to jobs in the Minneapolis Central Business District (CBD) and the lack of solid public transportation options.
Demand has been strong for recent suburban deliveries, indicating that while the urban cores continue to be attractive, households have not abandoned the desire for suburban living and the associated greater affordability.
One of the biggest projects in the pipeline is the 4-Star, 372-unit Xenia, being developed by the Slosburg Co. The five-story apartment community is located between the West End area of St. Louis Park and Golden Valley with good proximity to Interstate 394 and the concentration of corporate employers in the 394 Corridor.
Xenia will consist of 100 one-, 172 two- and 100 three-bedroom floorplans. Slosburg broke ground on the complex in mid-2017 and is slated to deliver by the end of 2018. The median household income within a one-mile radius is $88,302, which is about 14 percent higher than the greater metropolitan area’s median household income.
The most recent delivery in Apple Valley, the 134-unit Galante at Parkside, came from locally based Bigos Management. Bigos has been busy in the Legacy North neighborhood near Kelley Park, as the firm purchased the 196-unit Gabella at Parkside in 2016 and recently got the city council’s approval on plans for the final phase of the development, the 175-unit Nuvelo at Parkside. These units will span two buildings, with the smaller of the two featuring a live-work amenity that will be open to both residents and the general public.
The rapid lease-up of Gabella may be a good harbinger for the other complexes, as the 2015 delivery stabilized just over a year after opening and has been nearly 100 percent occupied since.
CoStar Market Insights provides a snapshot of recent real estate trends. The CoStar Market Analytics team monitors commercial and multifamily real estate across 390 metro areas, with a granular understanding of the projects, players and economic trends that move these markets.