Price gap shrinking between urban, suburban apartment rentals
OAKDALE, Minn. — New numbers show a shift in apartment rental prices in Minnesota.
It used to be that moving to the suburbs meant renting a place for less than what you'd find in the city. But as more renters leave the city, that price gap is shrinking.
Mike Kaeding is CEO of Norhart, a company that designs, builds and rents apartments.
"We're seeing this general trend of people moving from the downtowns more toward the suburbs," Kaeding said.
Leslie Madison of Elko New Market says that shift makes more sense to her.
"You're going to get more for your money, for sure, and a newer place," Madison said.
That shift is affecting rent prices. Minneapolis now ranks behind Eden Prairie, Maple Grove, Bloomington and Plymouth in median monthly rent.
Based on Zumper's active listings for July, the median price of a one-bedroom apartment in Minneapolis was $1,340. That's a 2.9% drop for the month and 2.2% year over year.
The fall is larger for a two-bedroom. At $1,840, prices fell 5.6% and 5.2% year over year.
"It's interesting. You can find these pockets, like in Minneapolis right now, where… those rates are coming substantially down, 5.5%," Kaeding said. "That doesn't mean that Minneapolis is down and out though. We're still seeing a lot of new properties come on online within those markets and they're largely getting absorbed."
In May, Norhart opened a new, 328-unit luxury apartment complex in Oakdale loaded with amenities. It is seeing new residents who previously lived in downtown Minneapolis.
"They want the lifestyle and the finishes that you can get at a downtown property, but they want the suburban convenience that you can get in a suburb like Oakdale or Woodbury," said Stacy Ekholm, COO of Norhart.
If cost is your priority, Maplewood is the most affordable city with one-bedrooms priced at $1,130.
While the short-term changes are worth watching, Kaeding is expecting all rental rates to climb meaningfully over the next few years.
"Why is this? Well, the number of new apartments that are being constructed right now is declining substantially. In fact, the number of new starts has dropped by 80%," he said.
The lack of new supply will lead to higher rents. So if you're happy where you're living, take advantage.
"When your lease comes up for renewal, lock in a longer-term lease, maybe two or even three years. This is going to protect you against any rises in that rental rate," he said.
When you move, Kaeding also recommends asking the landlord for a month or two of free rent.