MINNEAPOLIS - The rental market is the hottest it's been in years sending prices soaring and residents scrambling to find a place to live.
"It definitely is tight downtown and in the city of Minneapolis," says Mary Bujold, President of Maxfield, a real estate research firm. "At some point we're going to reach a balance but we're not there yet."
Maxfield shows current vacancy rates in Minneapolis at 1.8 percent, which is historically very low. This has sent prices soaring.
The average rent in Minneapolis has risen 5.4 percent in just two years to $951.
Downtown the numbers are even bigger. In 2010 the average downtown rent was $1135 and today it is $1267. That amounts to an 11.6 percent increase.
"We have new product coming online but there is not a lot that is open yet," says Bujold.
Ground broke on one new rental development Wednesday.
The Soo Line Building is a 100 year-old office building being converted into luxury rentals in the heart of downtown at 501 Marquette Ave.
"I think this is an overwhelming trend," says developer Jonathan Holtzman, CEO of Village Green. "This generation of young people, even empty nesters, are seeing the liveliness of living, working and shopping in the city."
The Soo Line Building is being targeted towards high end buyers and offers the amenities of a hotel including a concierge.
Prices have not been released yet, but the units likely won't come cheap.
"It's a brand, it's a luxury. If you give them what they want, they will pay you a premium," says Holtzman.
So when will supply catch up with demand?
It will take at least several years says Bujold.
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