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Explaining the multifamily housing boom in the Twin Cities suburbs. (Yes, there is one.)

In recent years, multifamily has increased from making up 29 percent of new units constructed in Twin Cities suburbs in 2013 to 50 percent in 2017.

Picture the suburbs. What do you see? Cul-de-sacs? Big homes with attached garages amid expansive, carefully manicured lawns?

In a lot of cases, that’s not far off the mark. But it’s also not the whole story: Increasingly, suburbs around the country are making room for a different kind of development: multi-family homes: Apartments, duplexes, triplexes and fourplexes.

In 2017, communities in the Twin Cities metro permitted more than 15,200 new housing units, an increase over 2016 and a high not seen since 2005, according to building permit survey data from the Metropolitan Council collected since the 1970s. But it's not just home construction generally that's been on the rise. Multi-family home construction as a share of residential construction is up. In 2017, multi-family units made up more than half of new residential units permitted — a number that’s been on a general upward trajectory in recent years.

Much of the new construction is familiar to city-dwellers: These are the high-rises that have claimed spots in neighborhood skylines, and the new duplexes, apartment buildings and other multi-family living spaces tucked into neighborhoods across communities.

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But the cities aren’t the only place seeing an increase in multi-family construction: the suburbs have seen it, too.

Prior multifamily boom

As a share of permitted housing units, multifamily housing has ebbed and flowed in the Twin Cities. After seeing a general decline in the early-to-mid 2000s, Twin Cities communities have tended toward resurgence in multifamily home permits since about 2010, as the economy was recovering from the Great Recession.

Multifamily increased from making up 20 percent of new units constructed in Twin Cities suburbs in 2009 to about half in 2017 (for these purposes, the suburbs include Anoka, Carver, Dakota, Scott and Washington counties, and all communities in Hennepin and Ramsey counties except Minneapolis and St. Paul).

This isn’t the first time the suburbs have built up. The 1970s also saw a relatively high share of multifamily permits, too.

When you look across the seven-county Twin Cities metro the increase in multifamily housing varies by suburban county, but in general the share of new residential units permitted that were multifamily has risen in recent years. The metro’s urban centers, Minneapolis and St. Paul also saw increases in multifamily housing.

Multi-family units permitted in Twin Cities, 1970–2017
Charts show the percentage of all permitted housing units that were multifamily units. Note that this includes multiple units in the same development.
Hennepin (not Minneapolis)
Ramsey (not St. Paul)
St. Paul
Source: Metropolitan Council

The numbers shown are housing units permitted — so 100 apartments in one complex would each count as a unit, as would a single-family home. Multi-family, in this case, includes apartment buildings, duplexes, triplexes and quadruplexes. Townhomes are not included; they are counted as single-family homes.

The 1970s boom in suburban multifamily development may have been due to general flight to the suburbs: the 1950s through 1970s saw many people — in particular, white people — move from the cities to the growing suburbs.

In raw numbers, there were actually more multifamily units permitted in the 1970s and mid-’80s than there are these days, but there was a lot more construction in general then than there is now, too.

The Twin Cities were also known, along with parts of New Jersey and California, for providing incentives at times to distribute rental and affordable housing outside as well as within the urban core, said Christopher Niedt, the academic director of the National Center for Suburban Studies at Hofstra University.

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Millennial and boomer-driven

Today, the drive for multifamily in general, including in the suburbs, is largely driven by two different demographics: millennials and baby boomers.

Many millennials came of age in the recession and don’t quite have the financial capacity (or don’t want) to  buy a traditional single-family home, even as they start to get married and have kids.

“They maybe have done more of the large metropolitan area living and now are seeking more space,” said Chris Osmundson, the director of development for Alatus LLC, a Minneapolis real estate development firm that is currently working on Rice Creek Commons in Arden Hills, which will include multi-family housing, among other projects. Young families might be able to get more space in an apartment in the suburbs than in the cities for the same price.

These days, there’s a big demand for new homes, but as the materials for building them and other associated fees have risen, new construction is harder for most people to afford.

“Single-family homes are more expensive than multi-family, and if people want new construction, most people have a budget and a price point they want to fall within, and it can be challenging for folks,” said Jeff Bergom, director of sales at Minneapolis-based Ron Clark Construction and Design, which largely works on multifamily developments. “That’s where the multifamily piece has come in nicely. You can get a really nice style of multifamily ... that in most cases is more affordable than a single-family.”

And then there’s the matter of maintenance. Owning a home means mowing the lawn, maintaining the exterior, and in Minnesota, shoveling snow. As people’s lives get busier, many are looking to dump some of the extra maintenance, an option multi-family homes maintained by associations provide, Bergom said.

That goes for baby boomers, too, who might want to downsize once their kids leave home, to travel more, and to not worry about mowing the lawn and scraping icy sidewalks.

Living differently

The fact that multi-family units are making up a big share of new homes these days may be similar to years past, but in some ways, many the multi-family developments going up in the suburbs today are different than the ones built in prior decades.

Whereas those complexes might have been residential only — just apartments, just condos — “We’re seeing an increased movement toward-multi-use developments,” Niedt said.

Mixed-use developments are characterized by combining commercial and residential features. At City Walk in Woodbury, for instance, there are restaurants, a coffee shop, among other shops, and a playground within walking distance of and at ground-level below housing.

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“Partly that reflects a mainstreaming of what used to be called the smart growth movement, a movement of planners and architects and environmentalists who for many years have been advocating for compact mixed-use development and walkable communities,” Niedt said

For some living in suburban multi-family developments, that means not necessarily having to get in a car on Saturday morning to grab a coffee or exercise.

“We’re starting to see some shift in consumer demand ...we’re starting to see people’s preferences shift towards the type of lifestyle that this mixed-use development can provide,” Niedt said.

Pros and cons

Multifamily developments don’t always go over well with neighbors, not in the urban core or in the suburbs.

This month, the Edina city council rejected a plan for a seven-story complex that would have included retail, office space and 135 apartments — some available to families with 60 percent of the city’s median income — near Southdale Center. Neighbors opposed the height of the development, and a city council member cited concerns that the project didn’t also develop a site next door, the Star Tribune reported.

Sometimes, when multifamily developments are proposed in the suburbs, residents worry about negative effects on their property values.

A 2005 study by the Massachusetts Institute of Technology’s Center for Real Estate found that “the introduction of large-scale, high-density mixed-income rental developments in single-family neighborhoods does not, in fact, affect the value of surrounding homes.”

Many suburban cities are increasingly eager to embrace density: generally speaking, the more homes on a plot of land, the higher the tax revenue and the less expensive per unit to serve with utilities and other city services, Osmundson said.

For some cities, tax revenues generated by these bigger developments can pay for the city services they need, yes, but in some cases also subsidize services in other parts of town.

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Not all affordable

Almost certainly, the boom in multi-family housing in the Twin Cities suburbs has given more people more home buying and rental options outside the urban core. There are homes to suit more budgets, more family sizes and varying appetites for home maintenance.

Since homes in multi-family developments are traditionally less expensive than single-family homes, it may be tempting to see the boom in apartment, duplex and other multi-family units as a good sign for housing affordability, Niedt said.

But many of the new units are luxury units with amenities that are not within reach of lower-income renters.

For lower-income families in the Twin Cities, the cost-burden of renting a home has increased substantially in recent years.

“At the national level, there’s been a multifamily boom, and we might think that’s a really good thing because we have all these new rental units coming online for people who need them, but increasingly, these new rental units are considerably more expensive than the units of 10 and 20 years ago,” Niedt said.