MARKET SNAPSHOT
Multifamily development in the Twin Cities is slowing significantly, with starts plunging 69% in 2024 to 2,443 units—well below the 10-year average of 7,808. Units under construction have also declined, down 47% to 5,867, while completions are projected to drop 58% in 2025 to 4,298 units. With supply tightening, particularly in high-demand areas, rent growth is expected to accelerate, creating a more competitive leasing environment.
Occupancy levels in the Twin Cities multifamily market remained stable in 2024, averaging 94.5%. This trend is expected to continue through 2025, with occupancy holding within its current range. While the overall market remains well-balanced, submarkets experiencing higher supply additions or weaker demand fundamentals may face some downward pressure.
Submarkets such as Eden Prairie (93.8%) and Edina (94.3%) are expected to see minor declines due to new supply pressures, while areas with minimal or no new completions, such as Highland/M-Groveland/Summit Hill (95.3%) and Northeast Minneapolis (95.8%), are projected to maintain strong occupancy rates. Downtown Minneapolis and Downtown St. Paul continue to lag the metro-wide average, with 2025 Q4 stabilized occupancy rates forecasted at 92.1% and 91.8%, respectively.
The Twin Cities’ apartment market demonstrated moderate resilience in 2024, with Q4 effective rents averaging $1,503, marking a 1.5% increase year-over-year. While new completions temporarily eased following previous years of higher supply, the substantial decline in 2025 completions is expected to further stabilize rent growth. By the end of 2025, average rents are forecasted to climb by 3.8% to $1,560, driven by constrained new supply and sustained demand.
Premium submarkets such as Eden Prairie (5.4%), Bloomington West (5.0%), and Washington Far Eastern Suburbs (5.3%) are anticipated to lead rent growth, reflecting strong fundamentals and limited new inventory. Downtown Minneapolis is forecasted to see a 4.0% annual rent increase despite ongoing supply additions. On the other hand, areas with softer absorption trends, such as Downtown St. Paul and North Minneapolis, are projected to experience more modest rent growth.
12-month period ending November 2024
The Twin Cities’ diversified employment base and strong economic fundamentals position it as a stable investment market. While urban demand remains subdued due to shifting migration patterns within the metro, strong suburban growth and a sharp slowdown in new supply are expected to tighten vacancy rates heading into 2026. Robust job creation and steady population growth in suburban submarkets should help maintain overall market balance, supporting sustained demand for multifamily housing. As supply pressures ease and demand stabilizes, rent growth is expected to accelerate in the coming years, reinforcing the metro’s long-term investment appeal.
