Minneapolis–St. Paul, MN

Market Update

The Minneapolis–St. Paul metropolitan area has experienced a population increase of approximately 1.24% year-over-year, bringing the total population to about 3.76 million. This growth is supported by a net migration of 42,844 individuals, contributing to a diverse and expanding labor pool. The region boasts a median household income of $97,928, with an unemployment rate of 3.8% and total employment reaching 2,032,304. The renter share stands at 30.1%, indicating a significant portion of the population is seeking rental housing, which serves as a key demand driver for multifamily properties.

In the multifamily sector, year-over-year rent growth is recorded at 3.1%, with the median gross rent remaining stable at $1,444. The HUD Fair Market Rent benchmarks for a two-bedroom unit are set at $1,771, which is slightly below the asking rent of $1,685 for similar units. This suggests that while rents are increasing, affordability may be a concern for some renters, particularly as the growth rate is slightly below the national median rent growth of 3.5%. The current rental momentum reflects a competitive market, although challenges related to affordability persist.

Over the trailing 24 months, the multifamily capital markets have seen 894 transactions with a total volume of approximately $1.17 billion, yielding a median price per unit of $165,915. The multifamily cap rate stands at 6.71%, which is about 33 basis points tighter than the national median of 7.04%. This positioning indicates a relatively strong investor interest in the market, despite the broader economic pressures. As reported by CBRE Research, the multifamily sector continues to attract attention, suggesting ongoing demand for rental housing in the region.