Interest rates, 2040 Plan may be factors in slowing growth Is the apartment construction boom over?

In 2021, we took a look back at the number of apartment “units” that had been built in the Northeaster’s coverage area since 2018 and came up with a total of 2,770. While it hasn’t come to a screeching halt, the pace of apartment construction has slowed considerably since then.

Part of that slowdown may be due to higher interest rates, which have made some developers wary of starting new projects. 

In January, the St. Anthony Housing and Redevelopment Authority granted an extension to Doran that would allow the company to hold off construction of the second phase of The Ruby at Silver Lake Village. The start date was pushed off to 2025; completion would come in 2027. Doran representatives said they were seeking more favorable interest rates.

In Minneapolis, the city’s controversial, build-multi-family-housing- anywhere 2040 Plan, was put on hold when environmental groups brought a lawsuit against the city, calling for an environmental impact study of the City — including an inventory of its trees — before allowing the plan to go ahead. The City had to revert to its 2030 Plan and, as a result, many developers who were in the midst of the permit process under 2040 were unable to go ahead with their projects.

A development at 401-405 Main St. has been pared down from apartments to a pair of single family dwellings; the single family houses currently there are up for sale. Developer Mark Iwaskewycz could not be reached for comment.

Said Dean Dovolis, founder of DJR Architecture, whose firm has designed many of the new buildings in Northeast, “The party’s over for now.”

Here are the projects completed since our June 2021 inventory:

Northeast

1426-1432 Marshall is a four- townhome building. Three of the four are occupied. Rent for the three-bedroom apartment at 1432 is $3,750 per month, as noted on many real estate websites.

2418 Taylor was built by the Minneapolis Public Housing Authority (MPHA). A single family home at 1030 Lowry Avenue was demolished a year ago to make way for the new
building, part of the city’s Family Housing Expansion Project. All six units are affordable, and families will move in in March. MPHA spokesperson Drew Halunen said residents will come from MPHA’s family housing waitlist, which has been as long as 7,500 people.

HenCen, 455 Central Ave. SE, began renting its 229 apartments in November 2023. The triangular building at the intersection of Hennepin and Central Avenues is “pretty close” to full at 95% occupancy. 

Solstice Northeast, 633 Van Buren St. NE, is just welcoming its first renters. Cody Fischer’s new, 23-apartment building is 100% electric, with 40% of its energy coming from rooftop solar panels.

The Laker, 2500 NE 2nd St., looms over Lowry Avenue. The 209-unit building features a rooftop pool as well as a gym with a basketball court. It opened in September 2023, and 50% of its apartments are spoken for.

Tyler Street Stacks, 1180 Tyler St. NE, rented its first apartment on Nov. 13, 2023, two days before its open house. It has 129 units and is 18% occupied.

Windom Park Flats, 2318 Johnson St. NE, was going to have six units, but neighbors protested its height, so it ended up as a triplex, built on a vacant lot across the street from Windom Park. The 2,000-sq.-ft., three-bedroom apartments feature high-end amenities such as electric fireplaces, upscale appliances and heated garages. Upper units have balconies front and back and the ground floor unit has two decks. One unit was leased during construction; the other two became available at the beginning of February. Rent is $4,200, according to Zillow.

Columbia Heights

The Col, 800 42nd Ave. NE, is tucked behind Columbia Heights’ Public Service building. Its 62 units of affordable housing began renting last summer. It’s fully occupied.

Ratio, 909 Gould Ave. NE, has 266 units, a pool and a dog run. The building opened in September 2022. Building managers did not respond by the time this paper went to press.

St. Anthony

3725 Stinson Apartments, 3725 Stinson Blvd. NE., is a modular building, with apartments built in a factory and stacked up on each other. The 38-unit building opened in February 2022 and is 95% occupied.

Hayden Grove Senior Living, 2601 NE Stinson Pkwy., opened a year ago in April. Its 135 units offer a “continuum of care” from assisted living to memory care. It’s 65% occupied.

The Ruby, 3750 Silver Lake Rd. NE. is Phase I of a two-phase construction project. Opened in September 2022, it has 254 units; 88% are leased, and 83% are occupied.

Still to come

Canvas, 2301 California St. NE, will open this spring. Its 160 affordable units are named after artists, from Van Gogh to Banksy. They are taking applications through their website, www.canvasmpls.com.

Eric Ollestad, owner of the Johnson Street triplex, is building another triplex on a vacant lot at 1731 3rd St. NE. He expects it to be finished early this spring.

Construction on an 89-unit building designed by DJR Architecture at 921-927 Marshall St. NE will begin this spring. It received approval from Minneapolis Community Planning and Economic Development in 2022, and 8% of its units will be affordable.

One project that’s been delayed is Silva on the River, a 184-unit building at 1516 Marshall St. NE. “These are incredibly challenging times for apartment developments due to interest rates, construction costs, and several other factors,” Rob Stolpestad of Exeter Management emailed to the Northeaster. “Despite these challenges, we are moving forward with Silva on the River. While our construction start has been delayed, our current plan is to be under construction by June of this year.” 

Alatus Development will hold off on its big project at 43rd and Central in Columbia Heights, the former site of Rainbow Foods and Frattalone’s Ace Hardware. 

“The earliest we would start would be Q4,” said Barrett Corwin, director of development, in an email. “We’re in the same boat as Doran [waiting for interest rates to go down].” 

The development would include 400-600 market-rate apartments on the east (Central Avenue) side of the property and single-family homes on the west.