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M A R K E T V I E W P O I N T S E P T E M B E R 2 0 1 8 MARKET UPDATE:Affordable Rental Housing in the Twin Cities Production Summary 2010-2018 . . . . . . . . . . . . . . . 1-2 Populations Served, Affordability Mix, Rent Levels and Unit Types . . . . . . . . . . . . . . . . . . . . . 3-4 Production vs. Need . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Details of New Supply by Submarket . . . . . . . . . . 6-12 Top Producers, Pipeline and Case Studies . . . . 13-14 Key Issues Facing Affordable Housing . . . . . . . . . . . . 15 Emerging Tools for Affordable Rental Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Dougherty Mortgage and Affordable Housing Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-18 AFFORDABLE RENTAL HOUSING PRODUCTION: A NATIONAL IMPERATIVE The recovery of the broader housing market after the 2007-2011 collapse was welcome news to the country, but the renewed strength has not benefitted all households. Much needed new rental construction since 2013 in the nation’s metro areas has largely served middle- and upper-income renters, understandable given years’ worth of pent-up demand from the recession and the decades-long growth of baby boomer and millennial renter groups. However, construction targeted to low- and moderate-income renters has grown much more slowly this decade, and production totals across the country have fallen far short of need. Stagnant wages, rapidly increasing market rents, and the “upscaling” of older rental projects have added to the tremendous pressure on low- and moderate- income renters and the supply of units affordable to them. Civic and business leaders across the country are awakening to the severe shortage of affordable rental units and the critical role that they play in the economic and social health of the country. A wide variety of tools – among them inclusionary zoning laws, housing trust funds, tenant protection ordinances, and new funding sources – are gaining support at the state and local levels to counter cuts in many federal housing programs. However, the need for new affordable housing is vast, and the problem is only worsening. Dougherty Mortgage continually strives to be part of the solution by raising awareness of the widespread need for new affordable rental housing in all communities. We also proudly continue to help finance thousands of affordable rental units in the Twin Cities and throughout the country. We hope you find this report informative and helpful. IN THIS ISSUE: ABOUT THIS REPORT Author: Thomas G. O’Neil, Vice President, Dougherty Mortgage LLC (612-317-2122, toneil@doughertymarkets.com). Design/Layout: Shannon Churchward, Churchward Design. Data Sources: Met Council, Minnesota Housing and other government offices, project web sites, rental clearinghouse web sites, industry reports, accounts from newspapers and other media outlets, and leasing personnel, building managers, and other real estate professionals. Photos: All photos are original from Dougherty Mortgage LLC except where noted. This report is provided for educational purposes for our clients and business associates. The unauthorized use of this work is prohibited. © 2018 Dougherty Mortgage LLC. Images above: The Rose (Aeon), The Grainwood (Dominium). Disclaimer: This report assesses the seven-county Twin Cities affordable rental market as of September 2018. Projects analyzed generally contain 10 or more units. 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. Site-specific development decisions using this report’s information should not be made without a separate and full review of all available information by professional analysts.