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MARKET VIEWPOINTTWIN CITIES MULTIFAMILY MARKET2019-2020

THE 2010s IN REVIEW:A TRANSFORMATIVE DECADE

Mortgage banking for multifamily housing, senior housing, student housing, and healthcare facilities

INTRODUCTION 1TWIN CITIES MULTIFAMILY SUBMARKETS 2NEW MULTIFAMILY BUILDING TYPES IN THE TWIN CITIES 32019 DEVELOPMENT PATTERNS BY SUBMARKET 4-72019 NEW PRODUCT PRICING TRENDS 8-10THE 2010s: A TRANSFORMATIVE DECADE FOR HOUSING 11MAP: 2010s DECADE – SUBURBAN DEVELOPMENT LOCATIONS 12-13MAP: 2010s DECADE – CENTRAL CITY DEVELOPMENT LOCATIONS 14-152010s DECADE TRENDS: CONTINUED MARKET EXPANSION 16 PRODUCT DIVERSIFICATION 17 TRANSIT-ORIENTED DEVELOPMENT BOOM 18 CHANGING DEFINITION OF SUITABLE SITES 19 ESCALATING PRICES FOR NEW PRODUCT 20 WORSENING SHORTAGE OF AFFORDABLE HOUSING 21MARKET OUTLOOK: 2020 22ABOUT DOUGHERTY MORTGAGE 23REPRESENTATIVE TRANSACTIONS 24-25

ACKNOWLEDGEMENTSReport Author: Thomas G. O’Neil, Vice President of Market Development, Dougherty Mortgage LLCResearch Assistant: Madeline Quickstad, Administrative Assistant, Dougherty Mortgage LLCReport Layout: Shannon Churchward, Churchward Design This report is provided for educational purposes for our clients and business associates. The unauthorized use of this work is prohibited. © 2020 Dougherty Mortgage LLC. DISCLAIMERThis report assesses the 7-county Twin Cities multifamily market as of fourth quarter 2019 using data from numerous sources. Projects analyzed generally contain 20 or more units. Market pricing calculations reflect quoted/asking rents before concessions and exclude rents that are restricted per recorded covenants. The information contained herein has been obtained from sources deemed but not guaranteed to be reliable. Accuracy and completeness are not guaranteed. Past performance does not guarantee future results. Dougherty Mortgage LLC warns against using this report to make site-specific development decisions without a separate and full review of all available information by professional analysts. For this report, affordable rental housing includes new, permanent units with rent and income restrictions, built by private or public entities for general-occupancy/families and targeted populations (e.g. long-term homeless, homeless youth, persons with mental health or chemical dependency challenges, persons with disabilities, and other supportive housing populations). Senior/age restricted units are not included in this report. This report does not tally shelter beds or other short-term accommodations or affordable preservation units. DATA SOURCESMarket data in this report comes from a variety of widely-available sources including project web sites, rental clearinghouse sites, industry reports, accounts from newspapers and other media outlets, leasing personnel, building managers, and other real estate professionals. Economic data was provided by the Bureau of Labor Statistics. Minnesota Geospatial Commons provided base-level GIS files for analysis. Vacancy and rent growth data came from Cushman & Wakefield and Class-A cap rates were provided by CBRE. The Twin Cities Metro Area map was provided by the Met Council. PHOTO CREDITSPhotos in this report are from Dougherty Mortgage LLC unless otherwise noted. Cover images, counterclockwise from upper left: Loden SV (Greco), Aria Apartments (forrent.com), Grand Central Flats (Dominium). Photo on page above: Wells Fargo Center (Mulad, via Wikipedia). Page 3: Hub Minneapolis (Greystar), Residences at 1700 (apartmentfinder.com), Greenway Terrace (Aeon), Schmidt Artist Lofts (McGhiever), Sundance at Settler’s Ridge (Timberland Partners). Page 17: Nolo Flats (Solhem Companies), Nic on 5th (Egan Company), Reserve at Arbor Lakes (Doran Companies), Prior Crossing (Beacon Interfaith Housing Collaborative), The Grainwood (Dominium). Page 19: 66 West (UrbanWorks Architecture), Millennium on 66th (ESG Architecture and Design), Aria Edina (apartments.com), Onyx Edina (Matt M. Johnson).

TABLE OF CONTENTS

Market ViewpointTwin Cities Multifamily Market 2019-20

Dougherty Mortgage LLC90 South Seventh Street Suite 4300Minneapolis, MN 55402612-317-2100 www.doughertymarkets.com

For more information about this report, please contact: Thomas G. O’Neil Dougherty Mortgage LLC 612-317-2122 [email protected]

MARKET VIEWPOINT: TWIN CITIES MULTIFAMILY MARKET 2019-20 | 1

AS EXPECTED, 2019 PUT A BIG EXCLAMATION POINT ON A TRANSFORMATIVE DECADE FOR MULTIFAMILY HOUSING IN THE TWIN CITIES. For the third year in a row, production peaked last year with more than 6,900 new rental units delivered in 65 developments, excluding units in any type of senior rental housing. Despite the record production, the market is arguably stronger at the end of 2019 as market-rate deliveries were down significantly – 19% less or 1,200 fewer units – over 2018. Affordable units made up the difference, with a record year of production of 1,875 units. Demand for affordable housing in the Twin Cities is in the tens of thousands of units and any new projects entering the market will operate at or near 100% occupancy over the long term, thus adding stability to the market.

The multifamily market in the Twin Cities matured greatly over the past decade, demonstrated by growing production volumes, the spreading of new product over more cities/geographies, and product specialization. At decade’s end, some concentrated submarkets such as the U of M neighborhoods and Uptown appeared to be largely through the current development cycle, with slower growth expected in the 2020s. For the Twin Cities overall, however, there still should be significant growth potential as development further penetrates the outer suburban markets, which collectively added only about 13,100 units during the past decade. As this report discusses on page 11, multifamily production served only about 14% of new households added in the outer suburbs in the 2010s, leaving ample development opportunities in the current decade.

The Twin Cities multifamily market ended the decade with continued strong market fundamentals. The rental vacancy rate for stabilized properties increased only slightly during 2019, finishing the year at about 3.5%, while year-over-year rent growth was very strong at 5.8%. The unemployment rate remained low over the year, ending December at 3.0%, up just 0.2 percentage points from a year earlier. Strong apartment absorption, rising rents, and low unemployment

kept investor interest strong across the Twin Cities, and the year ended with cap rates for stabilized Class-A properties between 4.50% and 5.25%, depending on a central city or suburban location.

Renting continues to be a strong lifestyle option for many households, especially younger mobile professionals and empty nesters seeking to downsize and capture long-held home equity. And given the low for-sale inventory and the rapid increases in home sale prices in the Twin Cities, it is still often cheaper to rent than to buy, especially in the built-up portions of the metro area.

This year’s Market Viewpoint report looks in detail at the decade of the 2010s and outlines key trends that we observed. We hope you find this analysis helpful. We look forward to working with you in 2020.

INTRODUCT ION

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Num

ber o

f Uni

ts

Source: Dougherty Mortgage LLCIncludes market-rate and affordable units for general-occupancy or targeted populations. Excludes senior/age-restricted units.

Affordable

Market Rate

New Multifamily Units Delivered (Non Senior)2010 – 2019

Twin Cities Metro Area (7 Counties)

4,258 Units Ave./Yr.

Key Multifamily/Economic Indicators: YE 2019Twin Cities Metro Area

3.5% 5.8% 3.0% 4.50% – 5.25% Multifamily Year-Over-Year Unemployment Class-A Cap Rate Vacancy Rate* Rent Growth** Rate*** Range****

* Yardi** Cushman & Wakefield*** Bureau of Labor Statistics, US Department of Labor; 16-County MSA**** CBRE; stabilized properties

1 Downtown Minneapolis – the area within the I-94/ I-35W freeway ring, plus areas immediately adjacent that have a Downtown orientation, such as St. Anthony/East Bank Riverfront (centered on East Hennepin Avenue and University Avenue SE).

2 Minneapolis Uptown – the area in the broader Lake Street corridor, stretching from the West Lake Bde Maka Ska (formerly Lake Calhoun) district near Chowen Avenue, east to roughly Lyndale Avenue. Includes development within roughly ¼-mile north or south of Lake Street. The 29th Street Greenway is a key feature of this submarket.

3 U of M Neighborhoods – the area surrounding both banks of the Minneapolis campus, generally bounded by I-35W on the west, the Burlington Northern rail yards (north of TCF Bank Stadium) on the north, Malcom

This report divides the Twin Cities into 11 multifamily submarkets, each with unique characteristics. Concentrated development in the downtowns of Minneapolis and St. Paul, and in the Uptown area of Minneapolis, has helped transform key cultural and employment districts into desirable housing locations. Similarly, key nodes in select first-ring suburbs and inner-city neighborhoods have seen strong amounts of multifamily investment in recent years as the market acknowledges the wide array of attractions and short commutes offered in the ‘50s and ‘60s development ring. In addition, private investment in student-oriented housing has created a unique rental submarket in the immediate neighborhoods surrounding the University of Minnesota campus in Minneapolis.

Avenue SE on the east, and I-94 on the south. Includes all or most of the student-oriented neighborhoods of Marcy-Holmes (includes Dinkytown), University, Prospect Park (includes Stadium Village), and Cedar-Riverside.

4 Minneapolis Neighborhoods – the remainder of the City outside of Downtown, Uptown, and the University of Minnesota neighborhoods.

5 Downtown St. Paul – the area bounded by the I-94/I-35E freeway loop between roughly Kellogg Boulevard/Chestnut Street on the west and Lafayette Road/Highway 52 on the east. Includes the Upper Landing housing district and the West Side Neighborhood (north of Plato Boulevard) south of the Mississippi River.

6 St. Paul Neighborhoods – the remainder of the City outside of Downtown.

7 First-Ring Suburbs – includes 23 inner-ring suburbs surrounding Minneapolis and St. Paul. These areas were mostly developed in the 1950s and 1960s and have been the focus of significant redevelopment activity in recent years.

8 Southwest Suburbs – includes all suburbs south of I-394/US 12 and west of I-35W/I-35. Includes Bloomington and all of Scott and Carver Counties.

9 Northwest Suburbs – includes all suburbs north of I-394/US 12 and west of the Mississippi River, plus the western half of Anoka County (Coon Rapids, Andover, Ramsey, Anoka, etc.)

10 Southeast Suburbs – the suburbs south of I-94 and St. Paul, east of I-35W/I-35 and southeast of the Minnesota River. Includes all of Burnsville and Lakeville.

11 Northeast Suburbs – generally covers the suburbs east of the Mississippi River and north of I-94, excluding the western half of Anoka County.

§̈¦94

§̈¦35E§̈¦35W

§̈¦94

§̈¦94

§̈¦694

§̈¦35W

§̈¦35

§̈¦694

§̈¦394

§̈¦494

§̈¦494

§̈¦35

§̈¦35E

St. Paul

Hugo

Eagan

Blaine

Scandia

Columbus

Minneapolis

Afton

Grant

Lakeville

Andover

East Bethel

May Twp.

Nowthen

Orono

Corcoran

Plymouth

Ramsey

Rogers

Ham Lake

Woodbury

Medina

Dayton

Oak Grove

Lino Lakes

Forest Lake

Rosemount

Eureka Twp.

Bloomington

Benton Twp.

Eden Prairie

Shakopee

Helena Twp.

Maple Grove

Minnetrista

Linwood Twp.

Douglas Twp.

Burnsville

Cottage Grove

Edina

Empire Twp.

Camden Twp.

Dahlgren Twp.

Hampton Twp.

Marshan Twp.

Independence

Vermillion Twp.

Hollywood Twp.

Lake Elmo

Minnetonka

Chaska

Watertown Twp.

Belle Plaine Twp.

Waconia Twp.

Cedar Lake Twp.

St. Francis

Savage

Denmark Twp.

New Market Twp.

Castle Rock Twp.Blakeley Twp.

Greenfield

Sand Creek Twp.

Brooklyn Park

Greenvale Twp.

Laketown Twp.

Young America Twp.

Chanhassen

Coon Rapids

Prior Lake

Spring Lake Twp.

Ravenna Twp.

Inver Grove Heights

Fridley

Maplewood

Roseville

Credit River Twp.

Apple Valley

Victoria

Hastings

Oakdale

Hancock Twp.

Farmington

Sciota Twp.

San Francisco Twp.

Shoreview

Nininger Twp.

Stillwater Twp.

Anoka

Louisville Twp.

Champlin

Stillwater

St. Lawrence Twp.

Randolph Twp.

St. Louis Park

Golden Valley

Richfield

North Oaks

Shorewood

Mound

Baytown Twp.

West Lakeland Twp.

Mendota Heights

Wayzata

Waterford Twp.

ArdenHills

Crystal

White Bear Twp.

CarverJackson Twp.

BrooklynCenter

NewBrighton White

BearLake

VadnaisHeights

Belle Plaine

Waconia

NewHope

Mahtomedi

Hopkins

Jordan

Newport

SouthSt. Paul

WestSt. Paul

Fort Snelling

Deephaven

Little Canada

Lakeland

MoundsView Dellwood

St. Paul Park

Hanover

Watertown

Robbinsdale

Centerville

Marine on St. Croix

Mayer

Cologne

NorthSt. Paul

Bayport

Columbia Heights

Tonka Bay

St. AnthonyOak Park Heights

Miesville

Coates

New Prague

Elko New Market

Circle Pines

Falcon Heights

Bethel

Hampton

Northfield

SunfishLake

Spring Lake Park

Grey Cloud Island Twp.

Osseo

Woodland

Lilydale

Gem Lake

Randolph

Norwood Young America

Vermillion

Excelsior

Long Lake

Greenwood

Maple Plain

Minnetonka Beach

New Germany

St. Bonifacius

Pine Springs

Lexington

Spring ParkLake St. Croix Beach

Lakeland Shores

Lauderdale

Loretto

Mendota

Rockford

MedicineLake

St. Marys Point

Hamburg

New Trier

Birchwood VillageHilltop

Landfall

Willernie

§̈¦94

§̈¦35E§̈¦35W

§̈¦94

§̈¦94

§̈¦694

§̈¦35W

§̈¦35

§̈¦694

§̈¦394

§̈¦494

§̈¦494

§̈¦35

§̈¦35E

St. Paul

Hugo

Eagan

Blaine

Scandia

Columbus

Minneapolis

Afton

Grant

Lakeville

Andover

East Bethel

May Twp.

Nowthen

Orono

Corcoran

Plymouth

Ramsey

Rogers

Ham Lake

Woodbury

Medina

Dayton

Oak Grove

Lino Lakes

Forest Lake

Rosemount

Eureka Twp.

Bloomington

Benton Twp.

Eden Prairie

Shakopee

Helena Twp.

Maple Grove

Minnetrista

Linwood Twp.

Douglas Twp.

Burnsville

Cottage Grove

Edina

Empire Twp.

Camden Twp.

Dahlgren Twp.

Hampton Twp.

Marshan Twp.

Independence

Vermillion Twp.

Hollywood Twp.

Lake Elmo

Minnetonka

Chaska

Watertown Twp.

Belle Plaine Twp.

Waconia Twp.

Cedar Lake Twp.

St. Francis

Savage

Denmark Twp.

New Market Twp.


Greenfield

Sand Creek Twp.

Brooklyn Park

Greenvale Twp.

Laketown Twp.

Young America Twp.

Chanhassen

Coon Rapids

Prior Lake

Spring Lake Twp.

Ravenna Twp.

Inver Grove Heights

Fridley

Maplewood

Roseville

Credit River Twp.

Apple Valley

Victoria

Hastings

Oakdale

Hancock Twp.

Farmington

Sciota Twp.

San Francisco Twp.

Shoreview

Nininger Twp.

Stillwater Twp.

Anoka

Louisville Twp.

Champlin

Stillwater

St. Lawrence Twp.

Randolph Twp.

St. Louis Park

Golden Valley

Richfield

North Oaks

Shorewood

Mound

Baytown Twp.

West Lakeland Twp.

Mendota Heights

Wayzata

Waterford Twp.

ArdenHills

Crystal

White Bear Twp.

CarverJackson Twp.

BrooklynCenter

NewBrighton White

BearLake

VadnaisHeights

Belle Plaine

Waconia

NewHope

Mahtomedi

Hopkins

Jordan

Newport

SouthSt. Paul

WestSt. Paul

Fort Snelling

Deephaven

Little Canada

Lakeland

MoundsView Dellwood

St. Paul Park

Hanover

Watertown

Robbinsdale

Centerville

Marine on St. Croix

Mayer

Cologne

NorthSt. Paul

Bayport

Columbia Heights

Tonka Bay

St. AnthonyOak Park Heights

Miesville

Coates

New Prague

Elko New Market

Circle Pines

Falcon Heights

Bethel

Hampton

Northfield

SunfishLake

Spring Lake Park

Grey Cloud Island Twp.

Osseo

Woodland

Lilydale

Gem Lake

Randolph

Norwood Young America

Vermillion

Excelsior

Long Lake

Greenwood

Maple Plain

Minnetonka Beach

New Germany

St. Bonifacius

Pine Springs

Lexington

Spring ParkLake St. Croix Beach

Lakeland Shores

Lauderdale

Loretto

Mendota

Rockford

MedicineLake

St. Marys Point

Hamburg

New Trier

Birchwood VillageHilltop

Landfall

Willernie

ANOKA

WASHINGTON

HENNEPINRAMSEY

CARVER

SCOTT

DAKOTA

´ 8 0 84 Miles

Downtown MinneapolisDowntown St. PaulFirst Ring SuburbsMinneapolis NeighborhoodsSt. Paul NeighborhoodsUniversity of Minnesota NeighborhoodsUptownNortheast SuburbsNorthwest SuburbsSoutheast SuburbsSouthwest Suburbs

Twin Cities Apartment Submarkets

2 | MARKET VIEWPOINT: TWIN CITIES MULTIFAMILY MARKET 2019-20

TWIN CITIES MULTIFAMILY SUBMARKETS

High-rise Construction (8+ Stories Above Ground)

• Concrete and/or steel construction; typically 150 to 350 units, averaging 18 stories.

• Found mostly in Downtown Minneapolis, but buildings have also been constructed in the U of M neighborhoods, and select closer-in suburbs.

• Accounted for 12% of new apartment units (~4,900) completed last decade.

Mid-rise Construction (4 to 7 Stories)

• Generally consists of 1-2 concrete base level floors with 4-5 wood-frame floors above.

• Vast majority of new apartment supply in the Twin Cities; 68% of new units (~28,700) in the last decade.

Low-rise Construction (< 4 Stories)

• Wood-frame; typically located in the suburbs or moderately-priced central-city areas.

• Generally smaller in project size with about 70-75 units on average.

• Accounted for approximately 11% of new units delivered last decade (~4,700).

Gut Rehab Conversions of Historic Properties, Old Warehouses, and Other Buildings

• Found almost exclusively in Downtown St. Paul and the North Loop neighborhood in Downtown Minneapolis.

• Thirty conversions provided about 7% of all new units (~3,200) delivered last decade.

Rental Townhomes & Detached Homes

• Two-story wood-frame projects; average project size is 45-50 units.

• Found almost exclusively in newer suburbs and exurban cities; includes ten affordable projects in Dakota County.

• Represented only 2% of new rental supply delivered last decade, or just over 1,000 units.

Over the last decade, new apartment units in the Twin Cities were delivered in five main types of building construction:

NEW MULTIFAMILY BUILDING TYPES IN THE TWIN CITIES


Hub Minneapolis 26 stories

Residences at 1700 6 stories

Greenway Terrace 3 stories

Schmidt Artist Lofts

Sundance at Settler’s Ridge

Downtown Minneapolis – More than 1,120 non-senior units were delivered in 2019 in Downtown Minneapolis. While this total fell about 17% below 2018’s high level of production, it still was one of the strongest totals for any year last decade.

Highlights:

• Six buildings came online in five neighborhoods last year. Only Elliot Park failed to see a new project opening.

• Two-thirds of new units opened in high-rise towers, including City Club (307 units; 17 stories), Ironclad (166 units; 14 stories) and Rafter (282 units; 28 stories).

• Nearly 280 new affordable rental units opened in three buildings between the 183-unit 1500 Nicollet complex, the 72-unit Great River Landing, and The Vicinity, a mixed-income building with 24 affordable units among 94 market-rate units. Great River Landing is unique in its provision of support services for people who were formerly incarcerated.

Minneapolis Uptown – Uptown continued its two-year trend of low production last year with just two projects opening, for a total of 40 units. Over the last decade, Uptown showed a boom-and-bust development pattern with one to two years of high production of 400-550 units mixed in with years of low activity of only 50-100 units.

Highlights:

• Lander Group opened Zeo, a 25-unit boutique apartment building at 32nd and Hennepin.

• North Bay Cos. opened Prox 31, a 15-unit infill project in the Cedar Isles Dean area, northwest of Lake Bde Maka Ska.

• Fitting with the boom-and-bust pattern, Uptown is expected to see 812 new units open in five projects in 2020. Two large projects – 200-unit Lakehaus at 3100 Lake Street and 317-unit Daymark Uptown on the former Sons of Norway site – will once again test market depth in the broader Uptown area.

U of M Neighborhoods – In 2019, the U of M submarket saw delivery of 485 units in seven projects. This total was just above the ten-year average yearly production (474 units) for this submarket.

Highlights:

• Two of last year’s new projects are mixed-income properties in the Prospect Park neighborhood. Green on 4th delivered 66 affordable units along with 177 market-rate units, and The Louis, from Aeon, opened 63 affordable and seven market-rate units.

• Five new projects in 2019 ranged from just 7 to 85 units, representing infill and redevelopment in Marcy Holmes, Dinkytown and the West Bank neighborhoods. Among these were Archer (43 units), Lume (25 units) and Luna (85 units).

• Deliveries in 2020 could hit roughly 680 units if all five projects under construction now are completed on schedule.

MULTIFAMILY DEVELOPMENT PATTERNSDowntown Minneapolis I Minneapolis Uptown I U of M Neighborhoods


Source: Dougherty Mortgage LLC; excludes age-restricted (senior) units.

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

1,400

1,200

1,000

800

600

400

200

0

Num

ber o

f Uni

ts

Affordable

Market Rate

DOWNTOWN MINNEAPOLISNew Units Delivered 2010 – 2019

807 Units Ave./Yr.

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

600

500

400

300

200

100

0

Num

ber o

f Uni

ts

Affordable

Market Rate

MINNEAPOLIS UPTOWNNew Units Delivered 2010 – 2019

245 Units Ave./Yr.


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

1,200

1,000

800

600

400

200

0

Num

ber o

f Uni

ts

Affordable

Market Rate

U OF M NEIGHBORHOODSNew Units Delivered 2010 – 2019

474 Units Ave./Yr.


Minneapolis Neighborhoods – Just over 650 non-senior rental units were delivered in 2019 throughout the neighborhoods in Minneapolis (outside of the U of M neighborhoods and Uptown). This was clearly the highest total of the decade, and the culmination of a continued upward trend over the last ten years.

Highlights:

• Nine buildings came online in six neighborhoods with just under half (306 units) coming from four buildings in Northeast.

• The average project size in 2019 – at 72 units – was remarkably similar to the decade-long average of 74 units. This size reflects the constraints of redevelopment and infill on sites in the central city.

• About 150 affordable units opened in the Minneapolis neighborhoods last year, a bit higher than the annual average of 129.

• Deliveries are expected to skyrocket to nearly 1,400 new units in 2020 in the Minneapolis neighborhoods with 14 projects currently under construction.

Downtown St. Paul – Downtown St. Paul showed an inconsistent pattern last decade, but it ended with peak production of 618 new rental units in six developments in 2019.

Highlights:

• Two projects in 2019 more than doubled the affordable production total for the decade in Downtown St. Paul: Press House, a 144-unit conversion of the former Pioneer Press building, and the second phase of the large Dorothy Day development project from Catholic Charities. This latter project offers 177 permanent housing units with supportive services for very low-income persons.

• All six developments that opened last year Downtown are within ½-mile from a Green Line LRT station; all are considered transit-oriented developments.

• Downtown St. Paul has been the undisputed leader in the conversion of historic warehouses and offices to rental apartments. Last year, four of the six new projects fell into this category: Press House (114 units), Commission House (26 units), The Jax (48 units), and R7 Lofts (48 units).

St. Paul Neighborhoods – The St. Paul neighborhoods saw peak production in 2019 with seven projects delivering 666 units in four neighborhoods including Battle Creek, a long overlooked area.

Highlights:

• Four projects in the St. Paul neighborhoods brought 431 affordable units to market, the largest such total of any submarket last year. Dominium built the largest of these with the 217-unit Union Flats project in the St. Anthony Midway area. Last decade, more affordable production occurred in the St. Paul neighborhoods (1,233 units) than all other submarkets except the Minneapolis neighborhoods (1,291 units).

• Market-rate openings last year in St. Paul’s neighborhoods included The Grove at 246 Snelling Avenue (118 units) and Capital View Apartments (109 units) along Old Hudson Road on the far eastern side of the city, an area with no new rental development otherwise.

• Deliveries in 2020 could hit roughly 600 units if all four projects under construction now are completed on schedule. Two of the projects are located on Snelling Avenue in the burgeoning district near the new Allianz soccer stadium.

MULTIFAMILY DEVELOPMENT PATTERNSMinneapolis Neighborhoods I Downtown St. Paul I St. Paul Neighborhoods


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

700

600

500

400

300

200

100

0

Num

ber o

f Uni

ts

Affordable

Market Rate

ST. PAUL NEIGHBORHOODSNew Units Delivered 2010 – 2019

295 Units Ave./Yr.


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

700

600

500

400

300

200

100

0

Num

ber o

f Uni

ts

Affordable

Market Rate

DOWNTOWN ST. PAULNew Units Delivered 2010 – 2019

239 Units Ave./Yr.


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

700

600

500

400

300

200

100

0

Num

ber o

f Uni

ts

Affordable

Market Rate

MINNEAPOLIS NEIGHBORHOODSNew Units Delivered 2010 – 2019

349 Units Ave./Yr.


First-Ring Suburbs – Delivery of new non-senior rental units in the first-ring suburbs of the Twin Cities in 2019 exceeded 1,000 units, only the second time that happened last decade. Seven projects totaling 1,063 units opened in Edina, Richfield, Columbia Heights, Roseville, South St. Paul, and Mendota Heights. The significant shift toward the east side of the metro represented a further maturing of the market, with developers exploiting opportunities in areas overlooked during the previous years of the decade.

Highlights:

• Edina led all first-ring suburbs with 286 units opening in the Southdale area and at 50th & France. This latter district saw the opening of 101-unit Nolan Mains, only the second new housing project in the broader 50th & France district (including adjacent Minneapolis).

• Traditionally less active cities such South St. Paul (67 units), Columbia Heights (148 units) and Mendota Heights (70 units) also added new non-senior rental units last year. Richfield saw a very large project open in The Chamberlain, a 316-unit mixed-income project with 283 newly-constructed and 33 renovated units.

• Another strong year is forecast for 2020, with seven projects under construction in the first-ring suburbs, totaling 1,160 units. Projects are well spread out across the Twin Cities: Golden Valley, St. Louis Park, Robbinsdale, Richfield, Newport, Maplewood, and Edina each have a project expected to open.

Southwest Suburbs – The southwest suburbs hit near-peak production in 2019 with 1,040 new non-senior units delivered, slightly below the high mark of 1,054 new units opened in 2015. This continued a five-year stretch of nearly 800 units delivered on average per year, third highest in the Twin Cities behind Downtown Minneapolis (907 units/year average) and the first-ring suburbs (870 units/year average).

Highlights:

• New projects were spread out among seven cities in the southwest suburbs and included two large transit-oriented developments in the future Green Line LRT extension corridor: 332-unit RiZe at Opus Park adjacent to the future Opus station platform in Minnetonka, and 222-unit Elevate at Southwest Station at the terminal station platform in Eden Prairie.

• Demonstrating the outward push of rental development in the southwest, projects opened last year in Chanhassen (130 units) Chaska (117), Prior Lake (50), Savage (54), and Shakopee (57).

• As with the first-ring suburbs, the southwest suburbs have a very large number of units that are planned, approved or under construction for delivery over the next few years. Dougherty Mortgage is tracking nine projects with roughly 1,600 units that are under construction and could open in 2020. Given the low level of production compared to household growth last decade in the southwest, higher numbers of new units should be absorbed well in this expansive submarket.

MULTIFAMILY DEVELOPMENT PATTERNSFirst-Ring Suburbs I Southwest Suburbs


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

1,200

1,000

800

600

400

200

0

Num

ber o

f Uni

ts

Affordable

Market Rate

FIRST-RING SUBURBSNew Units Delivered 2010 – 2019

539 Units Ave./Yr.


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

1,200

1,000

800

600

400

200

0

Num

ber o

f Uni

ts

Affordable

Market Rate

SOUTHWEST SUBURBSNew Units Delivered 2010 – 2019

484 Units Ave./Yr.


Northwest Suburbs – In 2019, production dropped to 392 non-senior units delivered in the northwest suburbs, a solid year in the historical context, but well below the peak years of 2017 and 2018.

Highlights:

• Ironwood Apartments in New Hope (183 units) led all projects last year, followed by Vincent Woods I in Rogers (84 units) and Bottineau Ridge phase II in Maple Grove (50 affordable units).

• An additional project – Nova at Riverdale Station – opened next to the Riverdale Northstar commuter rail station in Coon Rapids. It is the 71-unit initial phase of a much larger TOD project being developed by Sherman Associates.

• New product deliveries are expected to stay at virtually the same level in 2020 as in 2019, with 391 units under construction and planned to open. Another phase of The Reserve at Arbor Lakes will add 123 units, while a second phase of Sherman Associates’ Riverdale station project will bring 184 market-rate units. Finally, Vincent Woods II will open with 84 more units in Rogers.

Southeast Suburbs – After being the lowest-producing submarket from 2010 through 2014, the southeast suburbs rallied to become a notable producer over the past five years. In four of the past five years, this submarket saw delivery of 400 or more units, or more than 2,300 over five years. Following a record 828 new units in 2018, deliveries in 2019 in the southeast suburbs dropped back to 423 units in four projects.

Highlights:

• Projects opened in Eagan (183 units), Lakeville (120 units), Hastings (88 units), and Rosemount (32 units). All were market-rate properties, with three being low-rise projects of two or three stories above ground.

• No new affordable projects opened in the southeast suburbs last year, following the trend from 2018. Conversely, over the first eight years of the last decade, the southeast produced an average of 50 affordable units per year.

• Deliveries in 2020 are expected to skyrocket to 1,400+ units as twelve projects are under construction in seven southeastern cities. This includes multiple projects in Apple Valley, Burnsville, Rosemount, and Woodbury.

Northeast Suburbs – Last decade, the northeast submarket produced the second-lowest number of units among the five suburban submarkets. The region has many smaller cities in the first and second rings of development around St. Paul, and projects tend to be slightly smaller in size than the average new rental project in the Twin Cities.

Highlights:

• In 2019, the northeast suburbs delivered roughly 400 units, a solid total for this submarket. Five cities saw new projects, including far-flung East Bethel with a 68-unit project.

• New market-rate products offered in the northeast are among the lowest-priced in the Twin Cities, with the overall submarket average asking rent for new projects never exceeding more than $1.75 per square foot in the 2010s. This low rent potential makes it more difficult to make projects financially feasible in the northeast suburbs.

MULTIFAMILY DEVELOPMENT PATTERNS Northwest Suburbs I Southeast Suburbs I Northeast Suburbs


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

800

700

600

500

400

300

200

100

0

Num

ber o

f Uni

ts

Affordable

Market Rate

NORTHWEST SUBURBSNew Units Delivered 2010 – 2019

309 Units Ave./Yr.


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

900

800

700

600

500

400

300

200

100

0

Num

ber o

f Uni

ts

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SOUTHEAST SUBURBSNew Units Delivered 2010 – 2019

256 Units Ave./Yr.


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

600

500

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300

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Num

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f Uni

ts

Affordable

Market Rate

NORTHEAST SUBURBSNew Units Delivered 2010 – 2019

262 Units Ave./Yr.


Asking Rents in the Twin CitiesDougherty Mortgage analyzed 4th quarter 2019 pricing data at 121 “newer” market-rate projects (opened in 2017 or after) throughout the 7-county Twin Cities Metro Area (table at right). The analysis includes a survey of asking rents before concessions or discounts, as quoted by building owners or representatives. The survey summarizes the rent structure for 14,824 market-rate units delivered since the start of 2017, including roughly 240 units that opened just after the start of 2020. It is important to note that actual, achieved rents at projects could vary considerably from the asking rents included in this survey.

The overall asking rent for newer, market-rate apartments in the Twin Cities increased to $2.24 per-square-foot (psf) in 4th quarter 2019, a big jump over the $2.15 psf figure a year earlier. Each submarket showed a price gain, however the six submarkets in Minneapolis and St. Paul far outpaced the five suburban submarkets. It is important to remember that price changes in a given submarket might be driven more by the opening of new projects than by price changes at existing projects.

Prices Are a Function of Geography: From the Urban Core OutwardThe 4th quarter 2019 survey revealed a clear geographic pattern of declining prices for newer units as submarkets become more distant from the urban core. We identified four tiers in the Twin Cities. The price difference between the top and bottom tiers is substantial; between 39% and 55%.

• First tier: highly-concentrated submarkets at the center of the Twin Cities – Downtown Minneapolis, the U of M neighborhoods, and Uptown – about $2.70 psf average.

• Second tier: the broader neighborhoods of Minneapolis and St. Paul plus Downtown St. Paul – $2.39 to $2.43 psf average.

• Third tier: the first-ring suburbs at $2.14 psf average.

• Fourth tier: the outer suburbs and exurban cities at $1.75 to $1.93 psf average.

There can be significant pricing variation from project to project in a given submarket. However, the general pattern discussed above reflects benefits more likely to be found as one moves into the urban core: proximity to job concentrations, prevalence of restaurants, cultural amenities and entertainment options, a broad array of transit options (including dedicated bikeways), and lively, walkable neighborhood settings.

Gaining Rent by Reducing Unit SizeAnother pattern affecting pricing is a move toward smaller sized units, especially in the urban core submarkets. With the exception of three-bedroom plans, unit sizes for newer product decreased across-the-board in the six central-city submarkets (chart above). In the cases of Uptown and the St. Paul neighborhoods, significant drops of 76 to 187 square feet occurred two or three floorplan types. The emergence of micro-unit buildings in these and other urban core areas are a main driver of this trend, but so is the overall trimming of unit sizes in all types of buildings. The reduction in unit size helped push rents for newer units in the urban core up by $0.04 to $0.27 psf on average last year, depending on the submarket.

The suburbs showed a different pattern last year. Four of five suburban submarkets saw average size increases in two or three floorplans types, and decreases in just one or two types. And where there were reductions, they were typically minimal (20 square feet or less). The first-ring suburbs showed the most pronounced pattern: average two- and three-bedroom unit sizes jumped by 52 and 196 square feet, respectively, as new projects came on-line with large, expensive units targeted at empty-nesters. Increasing unit sizes throughout the suburbs helped keep a lid on prices for newer units, with no submarket increasing by more than $0.04 psf in average rent last year.


NEW PRODUCT PRICING TRENDS

Submarket Pricing: Asking Rent Per Square FootNewer Market-Rate Units (Opened 2017 and After)

Twin Cities (7 Counties) | 4th Quarter 2019

Overall Survey Representation Rent/SF* Units Projects

Downtown Minneapolis $2.71 2,633 16 U of M Neighborhoods $2.70 1,447 9 Minneapolis Uptown $2.69 507 6 Minneapolis Neighborhoods $2.43 946 14 Downtown St. Paul $2.41 692 7 St. Paul Neighborhoods $2.39 508 6 First-Ring Suburbs $2.14 2,321 17 Southwest Suburbs $1.93 2,017 15 Northwest Suburbs $1.82 1,245 8 Southeast Suburbs $1.80 1,291 11 Northeast Suburbs $1.75 1,217 12

Total: Twin Cities $2.24 14,824 121 *Weighted Average

Source: Dougherty Mortgage LLC

Change in Unit Sizes by SubmarketNewer Market-Rate Units

Twin Cities (7 Counties) | 4th Quarter: 2019 vs. 2018

— Change in Average Unit SF — Rent/SF Studios 1BRs 2BRs 3BRs Change

Downtown Minneapolis (4) (38) (26) 52 $ 0.04 Minneapolis Uptown (34) (83) (181) (187) $ 0.16U of M Neighborhoods (27) (7) (23) 3 $ 0.13Minneapolis Neighborhoods (10) (12) (62) (83) $ 0.06St. Paul Neighborhoods (33) (76) (144) N/A $ 0.27Downtown St. Paul (21) (20) (1) 32 $ 0.20First-Ring Suburbs (7) 8 52 196 $ 0.04Southwest Suburbs (19) 5 1 (25) $ 0.04Northwest Suburbs (10) (5) (10) 0 $ 0.02Southeast Suburbs (29) 21 13 (13) $ 0.02Northeast Suburbs 9 (21) 20 69 $ 0.01

Source: Dougherty Mortgage LLC

NEW PRODUCT PRICING TRENDSPricing Structure by Twin Cities Submarket l 4th Quarter 2019

SUBMARKETS IN THE CENTRAL CITIES

Downtown Minneapolis $2.71 / sq. ft. average

U of M Neighborhoods $2.70/ sq. ft. average

Minneapolis Uptown $2.69 / sq. ft. average

Minneapolis Neighborhoods $2.43 / sq. ft. average

Downtown St. Paul $2.41 / sq. ft. average

St. Paul Neighborhoods $2.39 / sq. ft. average

Insufficient Data

$5,100

$1,198$2,204$1,135

$4,675

$1,820

$3,420

$3,500$1,495

$1,885 $3,698

$2,421$1,625 $2,378

$1,795 $3,134$5,300

$1,488

$1,055

$1,558$1,125

$1,367$1,496

$9,793

$1,316 $1,640

$1,145

$1,264

$4,997$3,456

$10,230

$1,499

$4,458$2,495

$4,750$3,508

$2,857$1,726

$1,925

$6,000

$2,800

$1,771

$2,007 $2,429$2,127 $3,120

$2,358

$1,793$1,650

$1,211 $1,373$1,195 $1,513

$1,050

$983

$1,297

$1,208$1,357

$1,025

$3,400$2,023

$3,085$2,779

$5,957$4,031$6,202

$1,200 $1,617$1,971

Legend: Low Asking Rent High Asking Rent

Denotes reduced scale due to space limitations

Average Asking Rent

2BR1BR

Studio

3BR


Downtown Minneapolis $2.71 / sq. ft. average

U of M Neighborhoods $2.70 / sq. ft. average

Minneapolis Uptown $2.69 / sq. ft. average

Minneapolis Neighborhoods $2.43 / sq. ft. average

Downtown St. Paul $2.41 / sq. ft. average

St. Paul Neighborhoods $2.39 / sq. ft. average

SUBMARKETS IN THE CENTRAL CITIES

Legend: Low Asking Rent


High Asking RentStudio

1BR

2BR

3BR

Average Asking Rent

NEW PRODUCT PRICING TRENDS Pricing Structure by Twin Cities Submarket l 4th Quarter 2019

NEW PRODUCT PRICING TRENDSPricing Structure by Twin Cities Submarket l 4th Quarter 2019

SUBURBAN SUBMARKETS

First-Ring Suburbs $2.14 / sq. ft. average

Southwest Suburbs $1.93 / sq. ft. average

Northwest Suburbs $1.82 / sq. ft. average

Southeast Suburbs $1.80 / sq. ft. average

Northeast Suburbs $1.75 / sq. ft. average

$2,099$2,999

$2,900

$3,357$2,403

$2,316$1,824

$1,804$2,100

$3,185$2,718

$1,566$1,390 $1,975

$2,345

$1,465

$6,585$2,830

$1,850

$2,528$1,700

$1,740 $2,426

$1,655

$2,195$1,378

$1,396$1,280

$1,370

$9,642

$1,549$1,399

$1,469$1,297$1,541

$1,582

$1,846$1,281

$1,358

$1,300

$1,180

$4,283$3,295$2,463

$3,882$2,225

$2,063$3,262

$850

$995$950

$1,100

$990

$1,165

$1,270$1,040

$1,025

$1,395

$1,045 $1,165

Legend: Low Asking Rent High Asking Rent


Average Asking Rent

2BR1BR

Studio

3BR


First-Ring Suburbs $2.14 / sq. ft. average

Southwest Suburbs $1.93 / sq. ft. average

Northwest Suburbs $1.82 / sq. ft. average

Southeast Suburbs $1.80 / sq. ft. average

Northeast Suburbs $1.75 / sq. ft. average

SUBURBAN SUBMARKETS

Legend: Low Asking Rent


High Asking RentStudio

1BR

2BR

3BR

Average Asking Rent

NEW PRODUCT PRICING TRENDS Pricing Structure by Twin Cities Submarket l 4th Quarter 2019


THE 2010s: A TRANSFORMATIVE DECADE FOR HOUSING

Multifamily production of roughly 42,600 non-senior units in the 2010s transformed the Twin Cities housing market in many ways. Overall, new multifamily development in the urban core provided a timely response to a recovering economy and employment gains, enabling larger numbers of households to live close to growing job concentrations. As well, new apartments provided a wide range of consumer choices in housing styles and locations for those uninterested in homeownership (or unable to buy). And at the city level, new rental projects helped give neighborhood identity to former commercial districts or mixed-use areas lacking housing options.

Looking back over the past decade of rental housing production in the Twin Cities gives us perspective on how the market has evolved and where it is likely to go in the 2020s. Among the things we learned:

• Many commercial districts in the suburbs could re-energize and modernize by adding new rental housing.

• Affordable housing shouldn’t be primarily a central-city phenomenon, but should be found much more often in the suburbs, home to 72% of the jobs and 76% of the households in the Twin Cities.

• Investment in transit infrastructure pays off for housing development; developers build near transit stations and renters see strong value in housing with nearby transit options.

• Micro units (efficiency and one-bedroom units of roughly 350 to 600 square feet) make economic sense to many younger renters in the central cities.

• The suburbs greatly lack new rental housing overall, and the potential to add housing outside of the urban core is strong (chart below). Only 13,109 new rental units were produced in the outer suburbs last decade while 97,000 new households were created.

1) Dougherty Mortgage Multifamily Database.

2) Metropolitan Council: Thrive MSP 2040 Forecasts, January 1, 2020 Update.

Rental Housing Production vs. Household Growth: 2010-2019Non-Senior Units

Twin Cities (7 Counties)

New Penetration Residual Non-Senior New Rate of New Housing Development Ring Rental Units1 Households2 Rental Units Demand

Urban Core:Central Cities & First Ring 29,473 55,396 53% 25,923Suburban & Exurban Ring:Southwest Suburbs 4,842 31,000 16% 26,158Northwest Suburbs 3,091 22,342 14% 19,251Southeast Suburbs 2,799 23,458 12% 20,659Northeast Suburbs 2,377 20,265 12% 17,888

Subtotal 13,109 97,065 14% 83,956Twin Cities Total 42,582 152,461 28% 109,879

Rental Housing Production by Submarket: 2010-2019Non-Senior Units


New Units DeliveredSubmarket Market Rate Affordable Total % of Total

Downtown Minneapolis 6,898 1,167 8,065 18.9%First-Ring Suburbs 4,621 768 5,389 12.7%Southwest Suburbs 4,259 583 4,842 11.4%U of M Neighborhoods 4,476 260 4,736 11.1%Mpls. Neighborhoods 2,201 1,291 3,492 8.2%Northwest Suburbs 2,318 773 3,091 7.3%St. Paul Neighborhoods 1,721 1,233 2,954 6.9%Northeast Suburbs 2,383 236 2,619 6.2%Southeast Suburbs 2,131 426 2,557 6.0%Uptown Minneapolis 2,240 208 2,448 5.7%Downtown St. Paul 1,825 564 2,389 5.6%

Total 35,073 7,509 42,582 100.0%

Source: Dougherty Mortgage Multifamily Database

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Burnsville

Maple Grove

Helena Twp.

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Douglas Twp.

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Empire Twp.

Hampton Twp.

Camden Twp.

Dahlgren Twp.

Marshan Twp.

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Hollywood Twp.

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Belle Plaine Twp.

Waconia Twp.

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Cedar Lake Twp.

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Denmark Twp.

New Market Twp.

Watertown Twp.

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Brooklyn Park

Prior Lake

Laketown Twp.

Greenvale Twp.

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Coon Rapids

Young America Twp.

Spring Lake Twp.

Maplewood

Fridley

Roseville

Apple Valley

Victoria

Hastings

Farmington

Sciota Twp.

Hancock Twp.San Francisco Twp.

Shoreview

Nininger Twp.

Stillwater Twp.

Anoka

Louisville Twp.

Stillwater

Champlin

Richfield

Randolph Twp.

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Golden Valley

North Oaks

Mound

Wayzata

Ravenna Twp.

Inver Grove Heights

Credit River Twp.

Oakdale

Waterford Twp.

Arden Hills

Crystal

St. Lawrence Twp.

Shorewood

Baytown Twp.

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West Lakeland Twp.

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White Bear Twp.

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New Brighton

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Hopkins

New Hope

Newport

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Mounds View Dellwood

St. Paul Park

Jackson Twp.

Watertown

Hanover

Robbinsdale

Centerville

Mayer

Marine on St. Croix

Bayport

Cologne

N St. Paul

Columbia Heights

St. Anthony

Tonka Bay

Miesville

Oak Park Heights

Coates

Elko New MarketNew Prague

Circle Pines

Bethel

Falcon Heights

Northfield

Hampton

SunfishLake

SLP

Grey CloudIsland Twp.

Lilydale

Woodland

Osseo

GemLake

Randolph

Vermillion

NYA

Excelsior

Maple Plain

Long Lake

Greenwood

MB

St. Bonifacius

New Germany

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Lexington

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Lakeland Shores

Lauderdale

Loretto

Mendota

Rockford

ML

St. Marys Point

Hamburg

New Trier

Hilltop

Landfall

D A K O T AD A K O T A

A N O K AA N O K A

H E N N E P I NH E N N E P I N

S C O T TS C O T T

C A R V E RC A R V E R

R A M S E YR A M S E Y

W A S H I N G T O NW A S H I N G T O N

µ 0 4 8 Miles

Affordable

Mixed Income

Market Rate

Future Stage Red Line Station Service Areas

Green Line LRT and Station Service Areas

Green Line Extension LRT and Station Service Areas

Northstar CR and Station Service Areas

Red Line BRT and Station Service Areas

Blue Line LRT and Station Service Areas

1

23

4 5 6

7

89

1011

12 13

14

15

SEE INSETPP. 14-15

District Projects Units

1 Ramsey “COR” 5 5032 610 & Zane / Brooklyn Park 1 4843 Arbor Lakes / Maple Grove 5 8284 Ridgedale Mall-Carlson Center / Minnetonka 3 3575 Hwys. 55/169 / Golden Valley-Plymouth 3 3746 West End / Golden Valley-St. Louis Park 5 9317 Elmwood-Excelsior / St. Louis Park 6 6688 Downtown Hopkins 3 4569 Southdale Mall District / Edina 5 93810 West I-494 Strip / Bloomington 5 94511 South Loop / Bloomington 1 39512 Egan Drive / Savage 3 36813 Downtown Apple Valley 6 80614 Eagan Town Center 4 33215 Downtown Forest Lake 5 389

Concentrations of Multifamily Development300+ New Units (Non-Senior)


GEOGRAPHIC PATTERNS – The maps on pages 12-15 were designed to be simple with the intention of emphasizing new multifamily development across the Twin Cities. One dot represents one project, regardless of project size.

Housing Type: Blue Line LRT and Station Service Areas (½ mile)

Green Line LRT and Station Service Areas (½ mile)

Green Line Extension LRT and Station Service Areas (½ mile)

Northstar C.R. and Station Service Areas (½ mile)

Red Line BRT and Station Service Areas (½ mile)

Future Stage Red Line Station Service Areas (½ mile)

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Stillwater Twp.

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Randolph Twp.

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Ravenna Twp.

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Waterford Twp.

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St. Lawrence Twp.

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Baytown Twp.

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Bayport

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Falcon Heights

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A N O K AA N O K A


S C O T TS C O T T




µ 0 4 8 Miles

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Mixed Income

Market Rate







12 | MARKET VIEWPOINT: TWIN CITIES MULTIFAMILY MARKET 2019-20 MARKET VIEWPOINT: TWIN CITIES MULTIFAMILY MARKET 2019-20 | 13

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Hastings

Farmington

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Nininger Twp.

Stillwater Twp.

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Louisville Twp.

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Richfield

Randolph Twp.

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Ravenna Twp.

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Credit River Twp.

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Waterford Twp.

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St. Lawrence Twp.

Shorewood

Baytown Twp.

Carver

West Lakeland Twp.

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New Brighton

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New Hope

Newport

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Mayer

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A N O K AA N O K A


S C O T TS C O T T




µ 0 4 8 Miles

Affordable

Mixed Income

Market Rate







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Mixed Income

Market Rate





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NORTH


Minneapolis Districts 1 West Broadway & Penn District 4 2402 Near Northeast – Marshall Avenue 4 3873 Downtown – North Loop 22 2,5034 Downtown – Skyway Core 7 1,8195 Downtown – Loring Park 5 8066 Downtown – Elliot Park 3 4177 Downtown – Gateway and Mill Districts 8 1,2098 Downtown – St. Anthony / East Bank 8 1,3119 U of M – Marcy Holmes 7 33610 U of M – Dinkytown 16 1,44911 U of M – West Bank 3 557


12 U of M – Stadium Village / Prospect Park 17 2,39413 Cedar / Isles / Dean 4 45114 Uptown 17 1,88715 South Minneapolis – Blue Line Corridor 12 528 St. Paul Districts 16 Green Line West – Midway 7 1,05917 Green Line East – Midway / Frogtown 8 38818 Downtown Core 10 1,51519 North Quadrant & Lowertown 8 69620 Koch Redev. Site / Otto & Shepard Rd. 2 405

Concentrations of Multifamily Development300+ New Units (Non-Senior)


2010s DECADE

CENTRAL CITY DEVELOPMENT LOCATIONS


Blue Line LRT and Station Service Areas (½ mile)

Green Line LRT and Station Service Areas (½ mile)

Green Line Extension LRT and Station Service Areas (½ mile)

Northstar C.R. (½ mile)

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Eagan

Scandia

Afton

Minneapolis

Columbus

Grant

Lakeville

East Bethel

Andover

May Twp.

Nowthen

Orono

Corcoran

PlymouthMedina

Ramsey

Rogers

Woodbury

Ham Lake

Dayton Lino Lakes

Oak Grove

Bloomington

Rosemount

Forest Lake

Shakopee

Minnetrista

Benton Twp.

Eureka Twp.

Eden Prairie

Burnsville

Maple Grove

Helena Twp.

Edina

Linwood Twp.

Douglas Twp.

Cottage Grove

Empire Twp.

Hampton Twp.

Camden Twp.

Dahlgren Twp.

Marshan Twp.

Independence

Minnetonka

Vermillion Twp.

Hollywood Twp.

Chaska

Lake Elmo

Belle Plaine Twp.

Waconia Twp.

St. Francis

Cedar Lake Twp.

Savage

Denmark Twp.

New Market Twp.

Watertown Twp.

Greenfield


Sand Creek Twp.

Brooklyn Park

Prior Lake

Laketown Twp.

Greenvale Twp.

Chanhassen

Coon Rapids

Young America Twp.

Spring Lake Twp.

Maplewood

Fridley

Roseville

Apple Valley

Victoria

Hastings

Farmington

Sciota Twp.


Shoreview

Nininger Twp.

Stillwater Twp.

Anoka

Louisville Twp.

Stillwater

Champlin

Richfield

Randolph Twp.

St. Louis Park

Golden Valley

North Oaks

Mound

Wayzata

Ravenna Twp.

Inver Grove Heights

Credit River Twp.

Oakdale

Waterford Twp.

Arden Hills

Crystal

St. Lawrence Twp.

Shorewood

Baytown Twp.

Carver

West Lakeland Twp.

MendotaHeights

White Bear Twp.

Waconia

New Brighton

BrooklynCenter

Mahtomedi

Belle Plaine


Hopkins

New Hope

Newport

Jordan


W St. Paul

Little Canada

Deephaven Lakeland


St. Paul Park

Jackson Twp.

Watertown

Hanover

Robbinsdale

Centerville

Mayer

Marine on St. Croix

Bayport

Cologne

N St. Paul

Columbia Heights

St. Anthony

Tonka Bay

Miesville

Oak Park Heights

Coates


Circle Pines

Bethel

Falcon Heights

Northfield

Hampton

SunfishLake

SLP


Lilydale

Woodland

Osseo

GemLake

Randolph

Vermillion

NYA

Excelsior

Maple Plain

Long Lake

Greenwood

MB

St. Bonifacius

New Germany

Pine Springs

Lexington


Lakeland Shores

Lauderdale

Loretto

Mendota

Rockford

ML

St. Marys Point

Hamburg

New Trier

Hilltop

Landfall


A N O K AA N O K A


S C O T TS C O T T




µ 0 4 8 Miles

Affordable

Mixed Income

Market Rate






Blue Line LRT and Station Service AreasHousing Type:Affordable

Mixed Income

Market Rate

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Eagan

Scandia

Afton

Minneapolis

Columbus

Grant

Lakeville

East Bethel

Andover

May Twp.

Nowthen

Orono

Corcoran

PlymouthMedina

Ramsey

Rogers

Woodbury

Ham Lake

Dayton Lino Lakes

Oak Grove

Bloomington

Rosemount

Forest Lake

Shakopee

Minnetrista

Benton Twp.

Eureka Twp.

Eden Prairie

Burnsville

Maple Grove

Helena Twp.

Edina

Linwood Twp.

Douglas Twp.

Cottage Grove

Empire Twp.

Hampton Twp.

Camden Twp.

Dahlgren Twp.

Marshan Twp.

Independence

Minnetonka

Vermillion Twp.

Hollywood Twp.

Chaska

Lake Elmo

Belle Plaine Twp.

Waconia Twp.

St. Francis

Cedar Lake Twp.

Savage

Denmark Twp.

New Market Twp.

Watertown Twp.

Greenfield


Sand Creek Twp.

Brooklyn Park

Prior Lake

Laketown Twp.

Greenvale Twp.

Chanhassen

Coon Rapids

Young America Twp.

Spring Lake Twp.

Maplewood

Fridley

Roseville

Apple Valley

Victoria

Hastings

Farmington

Sciota Twp.


Shoreview

Nininger Twp.

Stillwater Twp.

Anoka

Louisville Twp.

Stillwater

Champlin

Richfield

Randolph Twp.

St. Louis Park

Golden Valley

North Oaks

Mound

Wayzata

Ravenna Twp.

Inver Grove Heights

Credit River Twp.

Oakdale

Waterford Twp.

Arden Hills

Crystal

St. Lawrence Twp.

Shorewood

Baytown Twp.

Carver

West Lakeland Twp.

MendotaHeights

White Bear Twp.

Waconia

New Brighton

BrooklynCenter

Mahtomedi

Belle Plaine


Hopkins

New Hope

Newport

Jordan


W St. Paul

Little Canada

Deephaven Lakeland


St. Paul Park

Jackson Twp.

Watertown

Hanover

Robbinsdale

Centerville

Mayer

Marine on St. Croix

Bayport

Cologne

N St. Paul

Columbia Heights

St. Anthony

Tonka Bay

Miesville

Oak Park Heights

Coates


Circle Pines

Bethel

Falcon Heights

Northfield

Hampton

SunfishLake

SLP


Lilydale

Woodland

Osseo

GemLake

Randolph

Vermillion

NYA

Excelsior

Maple Plain

Long Lake

Greenwood

MB

St. Bonifacius

New Germany

Pine Springs

Lexington


Lakeland Shores

Lauderdale

Loretto

Mendota

Rockford

ML

St. Marys Point

Hamburg

New Trier

Hilltop

Landfall


A N O K AA N O K A


S C O T TS C O T T




µ 0 4 8 Miles

Affordable

Mixed Income

Market Rate







2010 2013 2016 2019

NUMBER OF PROJECTS OPENED

65

10

70

60

50

40

30

20

10

0

Throughout the last decade, several metrics show that the market for newly-constructed rental units continually expanded from year to year across the Twin Cities. Three annual measures in particular – the number of projects opening, the number of cities with new projects, and the share of units built in the suburbs – clearly reveal the trends of increasing volume and geographic expansion.

2010s TREND: CONTINUED MARKET EXPANSION

Steady Increase in Volume• Just ten new projects opened in 2010 across the

Twin Cities, while 65 opened in 2019, a 6-fold increase.

• With the exception of 2014, the number of new projects increased each year compared to the previous year.

• There are 122 projects currently under construction across the Twin Cities, and well more than half are expected to open in 2020.

More Cities in the Mix• In a nearly linear pattern, the number of cities

seeing a new rental project steadily increased last decade, from only five cities in 2010 to 28 cities by 2019.

• Currently, 37 cities have projects under construction for opening within the next two years.

A Move to the Suburbs• Development increasingly migrated outward from

the central cities to the suburbs in the 2010s. In the first five years of the decade, 30% of the new units were built in the suburbs each year, on average. By the second five years, 51% of the units opened in the suburbs annually, on average.

• Fifty-one percent of units under construction are located in the suburbs.


2010 2013 2016 2019

60%

50%

40%

30%

20%

10%

0%

SUBURBAN SHARE (%) OF NEW UNITS

48%

27%

2010 2013 2016 2019

30

25

20

15

10

5

0

NUMBER OF CITIES WITH NEW PROJECTS

28

5




As the decade closed, the rental market in the Twin Cities showed many signs of maturing, with much of the growth potential in the central cities realized. As markets mature, products become more specialized with the aim of capturing every last consumer before demand flattens or starts to decline. A variety of diverse rental products emerged in the last half of the 2010s in the Twin Cities. Some examples are shown below.

Micro UnitsOnly one micro unit building – 48-unit Cozy Flats in Minneapolis – was built in the Twin Cities prior to 2015. Conversely, 15 micro unit buildings opened in 2015 or after, with nearly 900 units. Another six micro buildings with 420 units were under construction at decade’s end. Micro units bring cost-conscious renters to new buildings by offering lower gross rents in exchange for smaller unit sizes. Micro unit buildings are still a phenomenon exclusive to Minneapolis and St. Paul.

Example: Nolo Flats, a 71-unit building offering micro units in the North Loop of Minneapolis.

High-rise TowersTwenty-one high-rise buildings (8+ stories) opened last decade, offering nearly 4,900 units. Three-quarters of this total was produced after 2015. About 60% of the new high-rise supply opened in Downtown Minneapolis (11 projects), followed by the U of M neighborhoods in Minneapolis (24% in four projects) and the suburbs (12% in four projects). Currently, six towers of 8-28 stories are under construction for 2020 or 2021 delivery; all but one are in Downtown Minneapolis neighborhoods.

Example: 26-story Nic on 5th in Downtown Minneapolis.

Gated Communities with Vast AmenitiesDoran Companies opened one of the first gated rental communities in Maple Grove late last decade and is now leasing a second development in Shakopee. Renters seeking amenity-rich projects in highly-secured communities represent a new niche market in the Twin Cities.

Example: 380-unit Reserve at Arbor Lakes in Maple Grove.

Narrowly-targeted Supportive HousingIn the past few years, highly-specialized housing with services has opened for such populations as young adults aging out of foster care, homeless teens, veterans, Native American youth, and formerly incarcerated adults. Sixty percent of new units for targeted populations have opened since 2016. In total, about 1,300 units of housing for targeted populations opened in 23 developments last decade in the Twin Cities.

Example: Prior Crossing, 42 units of housing for homeless youth on the Green LRT line in Midway St. Paul.

Affordable Senior Housing While not covered in this report, the affordable senior housing supply has taken-off since 2016, with 2,360 new units opening between 2016 and 2019, more than twice the production of the prior six years. For the first time, developers have tried their hand at new affordable assisted living projects involving low-income tax credits in combination with elderly waiver and group residential housing funding.

Example: The Grainwood, a 170-unit affordable senior housing development in Prior Lake.

2010s TREND: PRODUCT DIVERSIFICATION



2010s TREND: TRANSIT-ORIENTED DEVELOPMENT BOOM

New Rail Transit Attracts DevelopmentOver the last decade, the existing Green and Blue LRT lines were the site for 13,860+ new non-senior units in the Twin Cities; this total rises to more than 16,000 when one adds the units built in the Green line extension under construction in the west and southwest suburbs.

The Northstar commuter rail line, which brings riders from Big Lake in Sherburne County and five additional stops to Downtown Minneapolis, had 11 projects (943 units) built within 1/2 mile of a station platform last decade. This trend continues in this decade, with units planned at the Riverdale stop in Coon Rapids and other locations.

As the decade progressed, more development became focused in the Blue and Green line LRT corridors (existing and future spurs), along the Northstar commuter rail line, and in the emerging Red and Gold bus rapid transit (BRT) lines. Including development within 1/2 mile of a stop in any rail or bus rapid transit corridor, transit-oriented development accounted for more than 17,200 units in 136 projects in the Twin Cities last decade.

Rail Nodes in Dense Urban Areas: Convenient for Thousands of RentersEleven rail transit station platforms each saw at least 1,000 new multifamily units built last decade within a 1/2 mile radius, the distance considered transit-oriented. The transit stop with the largest number of nearby transit-oriented units – 3,610 – was the Government Plaza station in Downtown Minneapolis on the Blue/Green LRT lines. Four other Downtown Minneapolis stops, plus three U of M/East Bank Green line stops and three Downtown St. Paul Green line stops, topped the list of the most well-located stations in the Twin Cities.

New Multifamily Development Within 1/2 Mile of Rail Transit Station Platforms

Twin Cities 2010-2019

Transit Line Projects Units

Blue Line LRT* 53 7,536Green Line LRT 52 6,327Green Line LRT Extension 17 2,140Northstar Commuter Rail 11 943

Metro Area Total 133 16,946% of All New Multifamily** 34% 40%

* Includes five stations in Downtown Minneapolis that also serve the Green Line.** Non-senior units only.



Rail Transit Station Platforms With the Highest TOD Density1,000+ New Multifamily Units (Non Senior)

Twin Cities 2010-2019

– Within 1/2 Mile –Transit Station Submarket Transit Corridor Projects* Units*

Government Plaza DT Minneapolis Blue & Green LRT 16 3,610Target Field DT Minneapolis Blue & Green LRT 25 3,396Warehouse District/Hennepin Ave. DT Minneapolis Blue & Green LRT 15 2,940Nicollet Mall DT Minneapolis Blue & Green LRT 14 2,926Stadium Village U of M (East Bank) Green LRT 15 2,307US Bank Stadium DT Minneapolis Blue & Green LRT 11 2,088Central DT St. Paul Green LRT 17 2,023Prospect Park U of M (East Bank) Green LRT 14 1,956Union Depot DT St. Paul Green LRT 15 1,668East Bank U of M (East Bank) Green LRT 9 1,41910th Street DT St. Paul Green LRT 10 1,353

* Note: Many projects in areas noted above are located within 1/2 mile of two or more station platforms.

2010s TREND: CHANGING DEFINITION OF SUITABLE SITES

As easily-developable sites became scarcer during the latter part of the decade, developers turned to site locations not typically considered in past eras. These included industrial brownfield parcels and grayfield sites, those that held obsolete commercial uses such as strip shopping malls, old office buildings, and outright parking lots.

Industrial Parcels with Prime Housing PotentialNumerous former industrial sites have been recently turned into large-scale housing developments, most successfully by Dominium with affordable projects in Minneapolis, St. Paul, and Minnetonka. Often, older industrial buildings are large in size and well-located within the urban grid. Parcels in the central cities or along rail transit corridors offer unique opportunities, such as along the new Green Line LRT extension through the southwest suburbs.

Map at right: Dominium’s Union Flats at the edge of vast industrial uses to the north and east in the St. Anthony Park neighborhood of St. Paul. (Base map: Google)

Regional Shopping Malls Draw RedevelopmentWith Southdale being the best example, developers began to focus in the latter half of the 2010s on redevelopment opportunities around regional shopping malls. Parcels with obsolete big box retailers and little-used parking lots have proven to be very viable sites for new multifamily development, adding housing into the mix of retail, service, office, and entertainment uses already in-place.

Map below: 2010s projects built or under construction near Southdale Mall.

Grayfield Sites in Dense Commercial AreasMany first- and second-tier suburbs of the Twin Cities hold sizeable commercial districts that never included housing uses. They are becoming desirable multifamily locations, helping to convert large zones of parking lots and obsolete commercial buildings into horizontal mixed-use residential areas with a wide array of destinations for renters. A good example is the west portion of the I-494 strip in Bloomington, where nearly 1,000 units have been built.

Southdale Center

Fran

ce A

venu

e

W. 66th Street

York

Ave

nue

66 West / 39 Units

1

One Southdale Place / 231 Units

5

Onyx Edina / 242 Units

Millennium on 66th (U/C) / 393 Units

2

Aria Edina / 185 Units

3

4

SOUTHDALE – EDINA

1 2

3

4

5

6

71 France / 241 Units

6

Raymond Avenue

University Avenue

Union Flats

ST. ANTHONY PARK INDUSTRIAL AREA

Vandalia Street

Green Line LRT Raymond Ave. Station


In 2014, Dougherty Mortgage started measuring the overall average price per square foot for newer projects (three years old or less) in the 4th quarter in each Twin Cities submarket. We continued this measurement through 2019, gathering six years’ worth of data, as shown below.

To the surprise of no one, asking prices for new rental units in the Twin Cities increased at a strong clip during the last decade, with annual increases in virtually all metro area submarkets each year.* Over the decade, the Twin Cities overall average asking price for newer units increased from $2.05 per square foot in 2014 to $2.24 at the end of 2019. During this period, new rental product openings steadily shifted toward the suburban submarkets, which accounted for roughly half of all openings in the second half of the decade, up from only 30% in the first half. More product openings in the relatively lower-price suburbs had a moderating effect on the overall Twin Cities average asking price. However, pricing gains in the core city submarkets – particularly Downtown Minneapolis, the U of M neighborhoods, and Uptown – bolstered a solid overall price gain in the Twin Cities between 2014 and 2019.

*It is important to remember that asking prices are mostly a benchmark for the direction of the trends in pricing, and not necessarily definitive indicators of ultimate market prices. Rents that households ultimately pay (“effective rents”) are often lower than asking rents due to concessions or move-in discounts offered by the owner, and prices may be negotiated downward directly by renter prospects as well.


Asking Prices for Newer Rental Units in the Twin Cities: 2014-2019 (4th Qtr.)Overall Submarket Average Price per Square Foot

Units Opened for Three Years or Less

$2.80

$2.60

$2.40

$2.20

$2.00

$1.80

$1.60

$1.40 Downtown U of M Minneapolis/ Minneapolis/ Downtown St. Paul/ First-ring Southwest Northwest Southeast Northeast Minneapolis Neighborhoods Uptown Neighborhoods St. Paul Neighborhoods Suburbs Suburbs Suburbs Suburbs Suburbs

2014

2015

2016

2017

2018

20192019 Twin Cities Average: $2.24

$2.71 $2.70 $2.69

$2.43 $2.41 $2.39

$2.14

$1.93

$1.82 $1.80 $1.75

2010s TREND: ESCALATING PRICES FOR NEW PRODUCT


Despite solid gains in affordable rental housing production last decade, the overall shortfall of units only worsened. By not producing enough units to satisfy demand in the 2010s, the problem spills over into the 2020s, making this decade’s challenge that much greater.

The Urban Core Far Outproduces the SuburbsThe pattern of affordable rental development in the Twin Cities last decade was clear: the urban core communities provided the bulk of all units. Minneapolis and St. Paul together accounted for approximately 48% of all new production in the decade (5,292 units), while the close-in first-ring suburbs added an additional 15% (1,680 units; chart at right). In producing 63% of all new units in the Twin Cities, the central cities and first-ring suburbs greatly overproduced relative to their proportion of population (37%), households (38%) and jobs (46%) in the Twin Cities.

Pushing the Problem to the Next DecadeBased on the Met Council’s estimates of affordable housing demand, the Twin Cities housing production system should have delivered about 42,000 units last decade to serve renters at or below 60% of area median income (AMI) (See chart below). In reality, a little more than 11,000 affordable rental units (of all types, including for seniors) were built. Thus, three quarters of new demand went unsatisfied. The lack of affordable rental production last decade is an all-out crisis as the production shortfall carries forward in the form of higher numbers of low-income renters who are cost-burdened or who are forced to live in overcrowded or substandard units. And the solution lies mainly with the outer suburbs, which collectively need production increases on the order of seven to eight times last decade’s output (only 4,100 units) just to keep pace with growing need, to say nothing of catching up for prior shortfalls.

2010s TREND: WORSENING SHORTAGE OF AFFORDABLE HOUSING


1) Dougherty Mortgage Multifamily Database.

2) Metropolitan Council: 2011-2020 Allocation of Affordable Housing Need (10/4/17). Affordable rental (<60% AMI) need is calculated at 80% of the total affordable demand estimate for the Twin Cities, equating to 42,056 new affordable rental units needed in the 2010s, excluding any vacancy factor.

Affordable Rental Housing Production vs. Demand Growth: 2010-2019General-Occupancy, Targeted Groups, Seniors


New Affordable New Demand Percent of New Demand Rental Units for Affordable Demand Satisfied Not Served by Development Ring Opened1 Rental Units2 by Production New Production

Urban Core:Central Cities & First Ring Suburbs 6,972 8,557 81% 1,585Suburban & Exurban Ring:Southeast Suburbs 1,415 9,138 15% 7,723Northwest Suburbs 1,124 7,086 16% 5,962Southwest Suburbs 807 11,987 7% 11,180Northeast Suburbs 752 5,288 14% 4,536

Subtotal 4,098 33,499 12% 29,401Twin Cities Total 11,070 42,056 26% 30,986

New Affordable Rental Units Produced by Twin Cities Submarket

2010-2019

Central Cities 5,292

First-Ring Suburbs 1,680

Southeast Suburbs 1,415

Northwest Suburbs 1,124Southwest Suburbs 807Northeast Suburbs 752



MARKET OUTLOOK 2020

As we begin 2020, more rental housing is in the construction pipeline than at any time in decades – perhaps ever – in the Twin Cities. Nearly 16,700 non-senior rental units were under construction at the end of 2019 according to our research, with virtually all of it expected to open within the next two years, and far more than half in 2020 alone. Annualized over the next two years, this construction total is one-third higher than the 6,300 units that have opened per year on average in the past three years. Clearly, the full Twin Cities rental market is poised for a big test for product absorption, achievable rents, and vacancy rates over the next several years.

In terms of submarkets, Downtown Minneapolis continues to attract the most development, and 3,400 units are being built there now. Nearly 2,400 units are expected to open in 2020, making Downtown Minneapolis easily the most competitive submarket this coming year. Next, the southwest continues to lead all outer suburban submarkets with roughly 2,200 units under construction, with as many as 1,800 opening this year. Shakopee and Minnetonka will lead in unit deliveries in this submarket.

Additional submarkets with high amounts of construction in the pipeline include the first-ring suburbs (2,043 units), the Minneapolis neighborhoods (2,021 units), and the southeast suburbs (1,888 units). Within these submarkets, competitive areas over the next two years will include the West End in St. Louis Park/Golden Valley (536 units), Robbinsdale (350 units), Longfellow in Minneapolis (531 units), and Burnsville (529 units), Woodbury (471 units), and Apple Valley (373 units) in the southeast suburbs.

Overall, the coming decade should see much more construction in the suburbs as developers look to markets with untapped demand. Currently, 51% of units under construction are in the suburbs (pie chart at left), a proportion that has been consistent for the last five years. Regardless of the annual total of new units, however, far more than half of multifamily construction going forward should be in suburban communities. Only 13,000 new rental units were built in the outer suburbs last decade but growth there approached 100,000 households. Only a few suburbs can say that they have had significant amounts of new rental construction, leaving most areas with good opportunities for new development.

Rental Housing Under Construction by Submarket – YE 2019Non-Senior Units


Submarket Market Rate Affordable Total % of Total

Downtown Minneapolis 3,057 339 3,396 20.4%Southwest Suburbs 1,544 622 2,166 13.0%First Ring Suburbs 2,006 37 2,043 12.2%Minneapolis Neighborhoods 1,552 469 2,021 12.1%Southeast Suburbs 1,759 129 1,888 11.3%Northeast Suburbs 934 415 1,349 8.1%Northwest Suburbs 900 168 1,068 6.4%St. Paul Neighborhoods 902 3 905 5.4%Uptown Minneapolis 813 0 813 4.9%U of M Neighborhoods 701 0 701 4.2%Downtown St. Paul 334 0 334 2.0%

Total 14,502 2,182 16,684 100.0%


Minneapolis 41.5%St. Paul 7.4%

Southwest Suburbs 13.0%

First-Ring Suburbs 12.2%

Southeast Suburbs 11.3%Northeast Suburbs 8.1%Northwest Suburbs 6.4%

Rental Units (Non Senior) Under Constructionby Development Ring – YE 2019

Twin Cities


TWIN CITIES MULTIFAMILY MARKET 2019-20 | 23

ABOUT DOUGHERTY MORTGAGE

A Leading Lender with a Nationwide PresenceDougherty Mortgage LLC is a top provider of conventional and affordable multifamily financing, with offices throughout the country. Dougherty Mortgage specializes in providing access to federal agency loan programs to customers interested in Fannie Mae DUS®, Freddie Mac Program Plus®, and FHA financing solutions. Dougherty Mortgage has also been awarded designation as a lender/partner with USDA under the Community Facilities guaranteed loan program. In addition to conventional multifamily financing, Dougherty Mortgage also provides financing solutions for affordable housing, senior independent and assisted living residences, hospitals, health care facilities and student housing. Over the past decade, Dougherty Mortgage has consistently been a top-10 HUD/FHA lender in terms of the number of loans, dollar amount, or both. Dougherty Mortgage is also one of the country’s fastest-growing Fannie Mae DUS® lenders.

Affordable Housing Finance – A Variety of SolutionsIn addition to extensive conventional financing experience, Dougherty Mortgage offers comprehensive debt solutions for affordable rental housing projects in all types of settings. As a leading Fannie Mae and HUD/FHA lender, we recognize the challenges associated with affordable housing finance and guide our clients through the process at all stages. Some of the many solutions we help our clients with include Fannie Mae DUS® and FHA-insured mortgages, tax-exempt credit enhancement, low-income housing tax credits, historic and new markets tax credits, and various government programs that offer subordinated loans or grants.

Our affordable housing clients include both non-profit and for-profit multifamily housing owners, developers and operators. Whether our clients are looking to refinance, acquire, build, or rehabilitate, we offer compelling financial options and work diligently to develop a creative, tailored solution for each transaction.

Integrated Financing Solutions – Dougherty Mortgage and Dougherty & CompanyDougherty Mortgage LLC partners with an affiliated entity, Dougherty & Company LLC, on many affordable transactions that involve 4% low-income housing tax credits coupled with tax-exempt bonds. On all types of housing transactions, Dougherty & Company may also serve as the underwriter for tax increment revenue bonds, subordinate bonds, housing and healthcare bonds, and other types of issuances.

Dougherty Mortgage LLC90 South Seventh Street, Suite 4300Minneapolis, MN 55402612-317-2100866-922-0786 Toll-freewww.doughertymarkets.com

For more information about this report, please contact Thomas G. O’Neil at Dougherty Mortgage LLC 612-317-2122, [email protected]


Avenida Crossing$33.8 millionFannie Mae

Dallas, TX l January 2020

Bowman Pointe Phase III$13 millionFannie Mae

Little Rock, AR l January 2020

Ridgeside Apartments$9.1 millionFannie Mae

Hixson, TN l December 2019

Soll Apartments$26.7 millionFannie Mae

Des Moines, IA l September 2019

REPRESENTATIVE TRANSACTIONS – CONVENTIONAL/MARKET RATE

Loden SV$42 millionFannie Mae

Shoreview, MN l May 2019

Hawks Landing$6.0 millionFannie Mae

Kingsville, TX l June 2019

The Plantation Apartment Homes$20.7 millionFannie Mae

Olive Branch, MS l February 2019

Bear Canyon$23.1 millionFannie Mae

Tucson, AZ l February 2019

Crossroads at Terrell$35 million

HUD 221(d)(4) N-CTerrell, TX l December 2019

Sundance at Settler’s Ridge$53.5 million

HUD 221(d)(4) N-CWoodbury, MN l December 2019

The Reserve at Venice$46.7 million

HUD 221(d)(4) N-CVenice, FL l November 2019

Parker Station Flats$42.3 million

HUD 221(d)(4) N-CRobbinsdale, MN l November 2019

Community Health Centers of the Central Coast

$16.2 millionUSDA Financing

Templeton, CA l November 2019

Waverly Apartment Homes$29.7 million

HUD 221(d)(4) N-CBurleson, TX l September 2019

Audubon Park Apartment Homes$20.8 million

HUD 223(a)(7) RefiZachary, LA l September 2019

Viridium$34.2 million

HUD 221(d)(4) N-CMinneapolis, MN l August 2019

Fannie Mae

HUD/FHA and USDA Rural Development Community Facilities


Gateway Northeast$21 million

Fannie Mae Forward M. TEBMinneapolis, MN l January 2020

Westcreek Townhomes$14.9 millionFannie Mae

San Antonio, TX l October 2019

Glynn Pines$7.3 millionFannie Mae

Brunswick, GA l July 2019

The Trails of Oak Creek$8.3 millionFannie Mae

Kettering, OH l July 2019

REPRESENTATIVE TRANSACTIONS – AFFORDABLE

Westgate Apartments$3.6 millionFannie Mae

Hibbing, MN l June 2019

CHAF Portfolio$13.9 millionFannie Mae

St. Petersburg, FL l April 2019

Aspen Bluff Apartments$538,000

Fannie Mae SupplementalPeoria, IL l January 2019

Stonebridge Apartments$3.2 millionFannie Mae

Columbia, TN l November 2018

Holmes Greenway Apartments$10.5 million

HUD 221(d)(4) Sub RehabMinneapolis, MN l November 2019

Brooks Landing & Brook Gardens $14.8 million

HUD 221(d)(4) LIHTC PilotFirst transaction in country done under this program

Brooklyn Park, MN l August 2019

Lakeland Shores Apartments$1.8 million

HUD 202/223(f) Mod RehabDuluth, MN l April 2019

Unity Place$12.8 million

HUD 221(d)(4) Sub RehabBrooklyn Center, MN l March 2019

The Winslow$20.9 million

HUD 221(d)(4) N-CWest St. Paul, MN l December 2018

Riverside Homes$10.9 million

HUD 221(d)(4) Sub RehabMinneapolis, MN l November 2018

The Chamberlain$47.8 million

HUD 221(d)(4) N-CRichfield, MN l July 2018

Eastgate Apartments$16.1 million

HUD 221(d)(4) N-CRochester, MN l May 2018

Fannie Mae

HUD/FHA

Mortgage banking for multifamily housing, senior housing, student housing, and healthcare facilities

90 South Seventh Street, Suite 4300Minneapolis, MN 55402

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