Michel Commercial Real Estate

?? Minnesota’s Economy is Thriving in 2024! Fueled by significant job creation and rising wages, a net total of 41,695 jobs have been added YTD with the leisure and hospitality industry leading, followed by education, health services, and professional and business services.

?? Buyer Interest is Strong in the Twin Cities — EXCEPT in St. Paul. Why? The reason is simple: rent control. In 2021, before rent control was in place, we sold a property in St. Paul with significant buyer interest, leading to 15 tours. Today, we’re marketing similar properties in similar areas, yet despite our extensive efforts and over 11,525 views of our marketing materials, we've had only 5 tours. >>> The feedback from buyers has been consistent: Why invest in a city where doing business has become an uphill battle? ------ On a positive note, the buyers who are still investing in multifamily properties in St. Paul are benefiting from significantly lower price-per-unit deals compared to the suburbs. Trade offs.

?? The Nuances of Location in Real Estate – Bloomington ?? The well-known rule of real estate is "location, location, location," but not all locations are created equal. Bloomington, MN, is a prime example with I-35W splitting the city into two distinct areas. Though unofficially referred to as "West" and "East Bloomington," the income disparity is clear—higher in the west and lower in the east, as shown by the income heat map below. ?? While this wealth divide isn't unique to Bloomington, it underscores the importance of thoroughly understanding the location of your investment. When assessing multifamily properties, it’s essential to move beyond surface-level data and recognize the subtle nuances of the city. Success hinges on maintaining both a broad and detailed perspective of a property's location and its realistic future potential.

?? ?? Success Story – Affordable Housing Preserved! Affordable housing is in crisis, with many nonprofits facing collapse. A nonprofit facing bankruptcy turned to our team to secure a buyer, ensuring the preservation of 56 apartment homes for women and their children. Thanks to the collaboration of other nonprofits and government agencies, these families can remain housed and continue receiving the services they rely on. Transactions involving deeply affordable housing, that serve the lowest-income residents in our communities, can take as long as 2-3 years to complete. Recognizing the urgency and the estimated $20MM replacement cost for this housing, a dedicated team came together and took swift, decisive action. This success was made possible by the persistence and commitment of everyone involved. Your efforts are truly appreciated! Trellis Missions Inc. Programs City of St. Louis Park Minnesota Housing

The market is shifting, with rising buyer interest and pricing, particularly for suburban properties. I discussed these trends with Todd Dexheimer —listen to our conversation for more insights. https://lnkd.in/geTfazbe

The Twin Cities multifamily market is a national leader in absorption rates for newly developed units, driven by near-record demand, particularly in suburban areas.

?? Real-Time Market Shift ?? Recent activity on our listings has exceeded expectations, driven by a surge in buyer eagerness and increasingly aggressive offers. For example, our recent listing in Blaine (Glenfield Park Estates, 152-units) saw 12 tours and 9 offers, reflecting a 75% offer rate. As values begin to rise and with the Federal Reserve signaling larger interest rate cuts, we anticipate continued increases in values and sustained strong, competitive activity. ? For Buyers: Prices are still below their peak but are starting to climb. Now is an opportune time to buy, as further rate cuts are likely to continue driving values higher. ? For Sellers: Our recent deals have generated significant interest, including 21 tours and 14 offers in Champlin. We've seen substantial price jumps, with some as high as 10% in our 'Best & Final' rounds. It seems we've reached the bottom of the valuation decline, and the outlook for stronger valuations is promising. Thanks for the ink, Finance & Commerce!

?? ?? Renovated Properties with Higher Rents Often Have Greater Demand and Occupancy. Why? ?? Demand for Renovated Units: In the Twin Cities, suburbs with rising incomes see increased demand for renovated units, as higher-quality residents prefer these updated properties. The limited availability of renovated units in these desirable areas further amplifies their demand. ?? Challenges for Unrenovated Properties: In contrast, properties that aren't updated often experience a decline in resident quality, leading to issues such as late payments, bad debt, and evictions. This can trigger a vicious cycle where multiple applications are received for available units, but the applicants fail to meet the rental criteria. This is a clear indicator that the property could benefit from a renovation, as the area's quality resident base is seeking upgraded living spaces.

While the stock market is unpredictable, multifamily fundamentals in the Twin Cities are thriving.

?? ?? A client purchased trophy assets in some of the best submarkets of the Twin Cities and requested a submarket comparison of their portfolio. Edina clearly stands out in terms of superior rents (averaging 18% higher rent) compared to the other top-performing submarkets, despite the recent data indicating rent declines in the submarket. This trend underscores Edina's strong and stable market fundamentals.