Minneapolis Population / Density - General Discussion

[Tyler]

I'm not saying this is Sean specifically, but many/most? local firms are run by people with more conservative personal politics, and they take the typical reactionary viewpoint on things. I know for a fact that the fear of a nebulous "rent control" is factoring into development decisions as we speak. Its almost the exact same as talking to an "anti-defunder." ie. facts don't matter, its all about vibes.

[Tyler]

Ill say if Sean is pausing developing in the city that's a definite loss, his developments are very thoughtful.

[Tyler]

Also, while I think this is a very real thing id bet on it being a blip, as developers need to do work and they are going to realize all the alternatives to Minneapolis have their own challenges.

[VacantLuxuries]

I actually wouldn't be surprised if development slows down while the 2040 lawsuit issues are ironed out, but fears that Mpls is going to pass a rent control measure that isn't incredibly business and development friendly given the current leadership (and especially after the cold reception a blanket policy received in St. Paul) are irrational.

Between the new apartment proposal on Grand and the second Van Buren project, there's certainly appetite to build that isn't being stopped by sites requiring demolition or navigating through controversy. Maybe Sean is just extrapolating his personal tolerance for investment into a forecast unnecessarily.

[gpete47]

Or maybe Sean is trying to spook off rival developers. It's interesting to read, but it's not necessarily his true read of the situation.

[seanrichardryan]

Keep in mind, most 'developers' don't self-finance. Investors & banks don't like policy change.

[MNdible]

I'd argue the biggest issue in the Minneapolis market is oversupply at the moment. Rent increases haven't been keeping up with inflation, and to my eye that's entirely a supply/demand issue in certain submarkets.

[alexschief]

I'd argue the biggest issue in the Minneapolis market is oversupply...

Which, to be clear, has been an explicit public policy goal for the city.

Minneapolis rents have barely budged at a time when rents nationally are increasing astronomically, and it's not because of disinvestment or flight.

[thespeedmccool]

I'd argue the biggest issue in the Minneapolis market is oversupply at the moment. Rent increases haven't been keeping up with inflation, and to my eye that's entirely a supply/demand issue in certain submarkets.

Exactly. Any reasons any developer may give don't stand up to simple supply/demand logic. Market rents aren't increasing in Minneapolis thanks to healthy supply, so developers and investors are upset that they can't infinitely raise rents in our market like they can others.

There's no rent control policy and no prospects for any real one in the future. Inclusionary zoning has been on the books for a couple years now and it hasn't had a meaningful impact on development. It's all about the money they can make, and they can't make as much money in a healthy housing market as they can in a distorted one.

[uptownbro]

If development is slowing its more due to the fed raising/expected rates, inflation and a cooling economy. Minneapolis has a happy medium for rent prices. There is a steady stream of new developments big and small being proposed.
There have been a number of companies to claim they are done developing in the city only to proposal a new development 1-2 years later. Doran Cos claimed the expo was there last in the city.....until it wasnt just as fast.

https://www.startribune.com/for-doran-c ... 560277872/

[MNdible]

Has Doran developed any projects in Minneapolis since this? I can't think of any off the top of my head, and in the meantime they've been cranking on their massive Shakopee project around Canterbury.

It can be confusing, because Doran has a construction arm which is sometimes hired to perform work by other developers, but that's not at all the same as leading the development of a project.

Also, Kelly Doran has sold off most of his eponymous companies, just to make matters more confusing.

[mplsjaromir]

New home builders are absolutely determined to not be caught with inventory. Obviously they cannot abandon suburbs, they are quickly turning off the spigot. The commitment is one of convenience.

I have a feeling that a cohort of hopeful homebuyers will be renters for at least the near term until either mortgage rates go down or builders adjust their offerings.

[VacantLuxuries]

Also, Kelly Doran has sold off most of his eponymous companies, just to make matters more confusing.

I was going to say, Kelly Doran might have sworn of developing in Minneapolis, but Doran Cos seems to have a different view. Especially thinking about the potential 275-300 unit affordable project they applied for Met Council grants for on the parking lot of the E Lake Target.

[alexschief]

FWIW, projects with a heavy subsidized affordable component operate with a bit of a different logic than market rate projects. So it could be the case that a developer has sworn off market rate projects in a city, but is still willing to entertain affordable projects.

Not ideal, because every city needs both, but it's still something.

[StandishGuy]

Doran is the main partner building 270+ units of housing at Seven Points. They are not affordable units.

[MNdible]

Doran is the main partner building 270+ units of housing at Seven Points. They are not affordable units.

For whatever it's worth, it sounds like Doran isn't really the developer on Seven Points either:

The planned $150 million redevelopment of the Seven Points retail center in Uptown won approval from the Minneapolis Planning Commission on Tuesday. The Planning Commission approved a preliminary application from Bloomington-based Doran Cos., which is providing architecture and general contracting work for the project on behalf of Chicago developer Northpond Partners.

[alexschief]

Just spotted this great series of maps on population changes from Jonathan Schroeder of the Minneapolis Population Center. I'm going to share what I think is the key image, because who knows whether that Twitter link is going to last, but I encourage people to check out the full thread if it's available.

Here's population changes per block group in the MSP metro in the 2010's:


A couple key points from Jonathan's maps and some of my research:

1. As you can see from his decade-by-decade maps, MSP's growth was occurring primarily in exurban areas for decades. But the 2010's saw a spatial shift in these patterns, with downtown Minneapolis emerging as the major center of growth. I really think this shift is undercovered and underappreciated locally. Everyone knows that "downtown is coming back" and "there's a lot of cranes downtown," but I still don't think it's really seeped into how people think about the area, including some downtown landlords, business owners, and boosters. A big part of that is that this is a pretty recent trend.

2. This spatial shift actually dates more precisely to 2012. This was the year that developers started coming up for air following the housing bust and they looked to urban multi-family housing. In 2011, just 691 homes got permits in the two core cities, out of 4,578 homes permitted in the metro area. Then, in 2012, 4,072 homes were permitted in the core cities out of 10,452 homes in the metro. That enormous jump saw the percentage of metro area homes permitted in the core cities jump from 15.09% to 38.53%. It hasn't dipped below 20% since, whereas in previous decades that percentage had all-but never (1982 is the only exception I have) broken 20%.

At the same time, developers moved decisively to multi-family housing. Whereas in previous decades the percentage of metro area housing units in multi-family buildings had almost never eclipsed 40%, it leapt from 28.28% in 2011 to 54.11% in 2012 and has recently been above 60%.

You can view both of these trends in this graph. Again, I have to emphasize how different this is. In 1991, the % of multi-family permitted housing units in the MSP metro bottomed out at 11.87% and in 1992, the % of permitted housing units in the two core cities bottomed out at 0.82%. A little over a decade ago, MSP was closer to those numbers than what we're seeing today. The Twin Cities have undergone an unprecedented decade of urban densification.

3. As Jonathan's maps show, this is not part of some universal national trend. While I suspect it's been replicated in places like Seattle, Portland, and maybe Denver, if you look at fast growing metros like Tampa and Las Vegas, or still-hollowing out cities like St. Louis and Detroit, you'll appreciate the path the Twin Cities have been one.

4. Are we still on that path? We've been getting years and years of articles from the Strib promising a shift from developers to multi-family housing in suburban areas. But only this year do we really have clear evidence of this occurring. The percentage of permitted housing units in MSP metro that are in the two core cities has slumped in 2022 so far to 22.08%, the second lowest figure since 2011. But the percentage of permitted housing units in the metro that are in multi-family buildings has increased to 68.28% (all these figures through September).

Is this a new trend? Possibly! But one note of caution: housing production in Minneapolis is still pretty solid. The number of newly permitted housing units in the City of Lakes is on track to to be the second most productive year of this decade. The main collapse has been in St. Paul, probably for obvious reasons that are city specific and have nothing to do with regional trends. Already we are seeing some renewed interest in the capital after the rent control ordinance was amended. If it picks up, the core cities could have a much better 2023, even if suburban multi-family housing is here to stay.

[StandishGuy]

Very interesting. Thanks for sharing. Minneapolis has a long way to go to reach the peak population of 520,000 from 1950. The City is likely just back to the 1970 population of 434,000. On the other hand, St. Paul surpassed their peak population in the past few years, but obviously could grow significantly more considering the Capital City has a nearly identical land area to Minneapolis.

[MNdible]

Whenever we compare Minneapolis population back to that 1950 census, I need to remind people that that was an anomaly.

Because of the Great Depression, World War II, and the transition of the country out of its war time economy, there was essentially no housing produced for 20 years. Population kept growing, and you had GI's coming home from the war forming new families with no where to move into. As a result, you had people absolutely packed into the existing housing stock, with multiple generations living under the same roof. It simply wasn't sustainable.

[Didier]

Not with that attitude.