Minneapolis as a Promising Location for Real Estate Investment

Few places in Minnesota are as vibrant and prosperous as the Twin Cities. Here’s why Minneapolis real estate is a prized investment for those who seek to grow their portfolio.

A brief overview of Minneapolis and the real estate market

Minneapolis is known for its magnificent lakes, vast wilderness, fairytale winters, and the famed Minneapolis sound. But the Mini-Apple also has other things going for it – the city is supported by a thriving economy and growing population that enjoys a high quality of life. Though the city is largely known for its live music scene and outdoor attractions, Minneapolis real estate is also emerging as a main attraction for aspiring homeowners and seasoned property investors.

Minneapolis real estate offers a wealth of multi-family properties and vacant land for development. The city also has desirables areas and neighborhoods that are ripe for investment:

• Northeast Minneapolis is located north of downtown Minneapolis and encompasses 13 neighborhoods along with the community of University and the Old Saint Anthony Business District. Northeast Minneapolis real estate offers an excellent mix of high-rise and low-rise apartment buildings with Victorian and Contemporary-style architecture. The housing market also includes single-family homes and townhomes.

  The area is divided into the Northeast Arts and Riverfront districts, the latter of which commands stunning views of the city skyline. Its prime location provides convenient access to a host of boutiques, big-box retailers, art galleries, restaurants, breweries, and sports venues along Broadway Street, Stinson and New Brighton boulevards, and University, Central, and East Hennepin avenues.

• Central Minneapolis encompasses six neighborhoods along with downtown Minneapolis and the Central Business District. Located in south Minneapolis, it offers a vibrant live-work-play lifestyle with the Minneapolis Skyway System providing easy access to shops, restaurants, bars, offices, Fortune 500 companies, and live entertainment venues across 80 city blocks.

  Some of the most expensive rental properties in the city are located in Central. It is also home to the historic theater district and some of the most iconic live music venues in Minnesota. The area is bordered by 38th street, Chicago Avenue, East Lake Street, and Interstate 35 West.

• South Minneapolis spans the entire area south of downtown and encompasses several neighborhoods, including Linden Hills, Kingfield, Powderhorn, and Tangletown. Nestled on the eastern banks of the Mississippi River, South Minneapolis is bisected by East Hennepin Avenue into its northeast and southeast sections. South Minneapolis real estate offers a high concentration of single-family homes and owner-occupied commercial buildings.
• Uptown Minneapolis is located in the southwestern section of the city at the intersection of West Lake Street and Hennepin Avenue. It encompasses four neighborhoods, namely East Bde Maka Ska, East Islies, Lowry Hill East, and South Uptown. This is a desirable and pedestrian-friendly area with well-maintained paths that meander along designer boutiques and gastropubs.

  Some of Uptown’s walking and cycling paths stretch along scenic Lake Calhoun, Lake Harriet, and Lake of the Isles, which are several blocks from the area. Local attractions include the Uptown Theatre, Walker Art Center, and Minneapolis Sculpture Garden.

Some notable suburbs in and around Minneapolis include:

• Blaine – Located outside the Twin Cities, Blaine has over 55,000 residents. It provides access to over 500 acres of open space and four lakes within city limits, making it an attractive option for many renters and homebuyers.
• Cleveland – This neighborhood is located in the Camden area along the western edge of Minneapolis. It lies within close proximity to downtown and provides convenient access to big city amenities.
• Crystal – This suburb offers more than 240 acres of green space and 27 clean and well-maintained parks, appealing to families, couples, retirees, and professionals in search of more space. It has robust property values and a fairly competitive housing market.
• Otsego – This suburb is located northwest of the Twin Cities and is home to 19,966 residents as of 2020. It has good property values and a desirable housing market. It features several nature trails and parks as well as an archery range and hockey and skating rinks.
• Richfield – This suburb spans seven square miles and is home to an estimated 35,000 residents. It features beautiful parks, recreational facilities, reputable schools, farmers markets, and festivals.
• Zimmerman – This small but lively town is surrounded by scenic lakes like Lake Fremont and offers countless opportunities for swimming, fishing, and boating in the summer months. Zimmerman also provides access to Sherburne National Wildlife Refuge and the Sand Dunes State Forest, making it perfect for outdoor enthusiasts.

What makes Minneapolis a great place for real estate investment

Why makes Minneapolis an ideal market for real estate investing? The Twin Cities Metro Area had the lowest housing vacancy rates in the United States in the last quarter of 2021. The tight vacancy rate, high demand, and low supply drove housing prices up across Minneapolis and St. Paul, according to analysis from Jonathan Schroeder of the Institute for Social Research and Data Innovation.

The city has a strong and steadily growing economy, a fairly young population, and higher than average population growth with an influx of new residents. A combination of these factors make for a lucrative rental market.

With significant demand for rental real estate in Minneapolis, favorable market conditions, and relatively affordability compared to other metro areas in Hennepin County, there’s plenty of room for investors to take advantage of a wide range of investment opportunities.

Economic factors

• Strong job market

  Minnesota’s job growth primarily comes from the Twin Cities. The Minneapolis-Saint Paul metro area is home to 16 Fortune 500 company headquarters, including 3M, Best Buy, General Mills, and Target. As these companies continue to grow and expand, there will be a need for increased hiring and an additional workforce.

  Forbes ranked the city #104 for job growth in 2019. Minneapolis offers many career and business opportunities to those in search of work and upward mobility. Some of the largest employers in and around the city include the Federal Reserve Bank of Minneapolis, U.S. Bancorp, and Wells Fargo. The Twin Cities is also sustained by a broad range of industries with many jobs in retail and technology.

• Growing economy

  The gross domestic product (GDP) of the Minneapolis-St. Paul-Bloomington (MN-WI) area was more than $235 billion as of 2021, according to the Federal Reserve Bank of St. Louis. The GDP has increased by more than 16% over the last 10 years. Minneapolis’ top industries include advanced manufacturing and technology, financial services and insurance, food and beverages, headquarters and business services, and health and life sciences. Job growth in Minneapolis was at 0.2% from 2019 to 2020 with the number of employees in the MN-WI area increasing to 1.96 million from 1.95 million.

• Quality of life

  Cities that offer a high quality of life will naturally attract more tenants and create a sustainable demand for housing. The quality of life in Minneapolis is unparalleled – the Twin Cities rank highly when it comes to healthcare, environmental quality, business freedom, tolerance, and leisure and culture.

  Forbes ranked Minneapolis #32 among the best places to live for business and careers in 2019 while Patch.com ranked the Twin Cities the 6th best metro area to live in America out of the 125 largest metro areas in the U.S based on various factors including affordability, steady job growth, and quality of life.

  With four seasons, beautiful scenery, and gorgeous lakes, Minneapolis attracts new residents and tourists from across the U.S., presenting a wider range of potential short-term and long-term renters.

  The number of well-paying jobs, cultural events, and recreational activities make the Mini-Apple a desirable place to live. Local attractions like the riverfront skyline, annual festivals, and art and theater districts make day-to-day living all the more special and enjoyable.

• Population growth

  For most housing markets, shifting populations and demographics are typically a key indicator for future investing potential. The Twin Cities has seen steady population growth over the past several years, creating more investment opportunities. After Detroit and Chicago, Minneapolis-St.Paul is home to the third largest population and economic center in the Midwest with a projected population growth of 12% in the coming decade.

  Additionally, more than 65% of Minnesotans live in the Twin Cities metro area.

  Downtown Minneapolis welcomed an estimated 1,805 new residents in 2020, amounting to a total population of 53,093 – that’s more than a 3% year-over-year increase for the downtown residential population. The city’s core has seen a population growth of 66% since 2006, according to statistics from the Minneapolis Downtown Council.

  Further, the vast majority of people moving to Minneapolis won’t buy their own properties right away – they’ll likely test the waters through renting first. This translates to significant investment potential for rental properties.

Real estate values

Minneapolis has seen an uptick in real estate activity over the past few years with a dearth of listings and homes selling faster and for higher prices than previously observed, according to MinnPost. The economy has been improving since the devastation of the coronavirus pandemic, according data from the Minneapolis Area Realtors Association. Unemployment is falling and rental prices are on the rise.

Rents in Minneapolis have increased by 2% year-over-year, according to data from Roofstock. Renter-occupied households also make up 51% of all occupied housing units in the city. Despite rising rental prices, WalletHub ranked the Mini-Apple among the best cities for renters in the U.S. for quality of life and rental market affordability compared to other urban areas. The desirable rental market provides insight as to why there are more renter-occupied households than owner-occupied homes in Minneapolis.

Roofstock provides the following information on rental prices in Minneapolis:

• Neighborhoods with the highest rental prices in Minneapolis include Downtown East, Cedar Isles-Dean, and Nicollet Island, where rental properties can command upwards of $8,600 per month.
• Linden Hills is the most expensive neighborhood in Minneapolis with an estimated median listing price of $829,900.
• Most affordable neighborhood is Whittier, which has an estimated median listing price of $189,900.

There are also several real estate developments in the pipeline to add to the housing stock. These include 550 W Lake Street, 921 Marshall Street NE, Parcel 6A at Upper Harbor Terminal, The Meridian at CityPlace, and The Standard at Dinkytown. Upon completion, these residential projects will feature apartments, condos, and townhomes. These developments will also have commercial and parking space as well as shared amenities like fitness centers, gardens, and bike storage.

Living in Minneapolis

Location

Minneapolis is located in the Upper Midwest. The city adjoins St.Paul in southeastern Minnesota. Nestled on the banks of the Mississippi River, just north of the confluence of the Minnesota River and the Mississippi. It serves as the seat of Hennepin county.

Amenities

• The city provides access to more than 200 miles of walking, running, and bicycling trails. It was ranked as the 7th best city for runners and the 2nd fittest city in the U.S.
• Minneapolis Farmers Markets offer an assortment of fresh fruit, vegetables, herbs, flowers, baked goods, homemade jams, and other products from local vendors and nearby country farms.
• The Minneapolis Institute of Art (MIA) harbors more than 90,000 works of art from around the world, including paintings, sculptures, statues, and prints. Its permanent collection and rotating exhibitions also feature Modern and Contemporary art. The gift shop offers an array of coffee table books, jewelry, home decor, and art supplies.
• The Walker Art Center is considered one of the most esteemed art museums in the U.S. with a focus on the visual arts, design, performing arts, moving image, digital media, and publishing. It features 11 galleries with Contemporary and Modern artworks.
• The Minneapolis Sculpture Garden is home to the iconic Spoonbridge and Cherry sculptural fountain as well as several galleries and design studios showcasing Modern and Contemporary artworks from around the world.

Healthcare and education

• Residents can receive care and medical attention from some of the best hospitals in the Twin Cities region, such as the Mercy Hospital, University of Minnesota Medical Center in Minneapolis, and Mayo Clinic in nearby Rochester.
• Top colleges and universities in and around the city include Minneapolis Community and Technical College, Augsburg University, the University of Minnesota, and Metropolitan State University.

Transportation

Minneapolis is easily accessible by land and air transport:

• There are several interstate highways that pass through the city, including I-94, I-694, and I-494.
• The Minneapolis-St. Paul International Airport (MSP) was named by the Air Transportation Research Society as the Top North American Airport for Efficiency and Excellence in its size category in 2017. It is the second largest hub for Delta Airlines and the base for Sun Country Airlines.

Invest in Minneapolis real estate today

If you’re ready to invest in Minneapolis real estate, contact Realtor Scott Haubrich and BuyRentSell.com, LLC at 612.298.5400. You can also reach the company through email or by filling out this contact form. Scott is a Minnesota native with over 25 years of experience in real estate. With in-depth community and market knowledge, marketing savvy, and strong negotiation skills, the team offers the very best service to real estate investors in Minneapolis.