Rochester's rapidly changing landscape tilted toward apartment complexes in 2016 as the city issued permits for about eight times more units than it did two years ago.
Apartment projects began to go up throughout every quadrant of the city at a rate never seen before in Rochester.
In late December, the city was on track to issue permits for 1,000 apartment units for the year, according to director of building and safety Randy Johnson. In 2014, that number was just 124. He said while 1,165 apartment units were approved in 2015, it was 2016 when most of that construction started.
"It's unprecedented. We typically average between 150 to 200 units a year," Johnson said. "We saw more new apartments last year than the last eight years combined."
While apartments are going up at a record rate, there are tenants for them. Developers urge inspectors to certify new complexes as soon as possible because people are wanting to move into them.
Johnson added his staff is being kept busy with apartment inspections and even more are in the pipeline.
"We aren't seeing the usual winter slowdown," he said.
Nate Stencil, of Sioux Falls, S.D.-based Stencil Homes, said the 663 market-rate apartments he has built in Rochester since 2014 are almost all leased. He has more openings in January and February as the two buildings of his The Pines apartments open for tenants a month apart.
Stencil also has a high-end project underway in downtown and an affordable housing complex in the pipeline for southeast Rochester.
"In development, we've done just as much as anybody in the last few years," he said.
Unlike many developers who have come to Rochester in the last few years, Stencil makes it clear that Destination Medical Center was not what first attracted him to this market.
"That really had nothing to do with our thoughts. Rochester has a really strong median income. There have been a lot of years of small growth or no growth in multi-family housing," he said. "Three years ago, an awful lot of people were living in less-than-desirable conditions. Building now allows people to move up and frees up lower-level products."
Most of the apartments Stencil has built in Rochester are priced in the mid- to high range of market rate. A one-bedroom apartment at Nue 52 costs $1,070, which is about the same rate as smaller studio apartments in many of Rochester's new complexes.
Concerns about affordability have been raised with so many of the new Rochester apartments targeting higher-income residents and leaving low-income people with few options. Longtime Rochester developer Joe Weis' 1st Avenue Flats apartments are the only ones under construction in 2016 that are considered affordable. Rents will start at $860 when it opens in May.
Weis sees new housing in the lower price ranges as the area other developers are neglecting at the moment, while they are flooding the higher price ranges.
"I wouldn't think of doing a market-rate apartment right now," Weis said. "All of the apartments going up kind of boggles my mind."
The big question is whether Rochester's population is growing fast enough to provide tenants for all of these apartments.
"We're watching to see how the market handles all of the new products as they come online," Stencil said. "I believe it will handle it very well."
2016 Post Bulletin 'Year in Review' Publishing Schedule:
- Saturday (12/24): Year in photos
- Monday (12/26): Southeast Minnesota
- Tuesday (12/27): Education, state government
- Wednesday (12/28): Arts and entertainment; Arts person of the year
- Today (12/29): Business; Business person of the year
- Friday (12/30): Health care and public safety
- Saturday (12/31): Local government and the newsmaker of the year