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2025 Q3 Multifamily Market Report: Minnesota 411

Mon, 03 Nov 2025 18:25:30 GMT

Download the latest insights on Twin Cities multifamily trends—vacancy tightening, resilient rent growth, and a shifting investment landscape.

The Minneapolis multifamily market is showing signs of renewed strength in Q3 2025. After peaking at a record-high vacancy rate of 8.4% earlier this year, the market has rebounded to 6.3%—its lowest level in five years. This shift is driven by strong demand, a resilient labor market, and a sharp slowdown in new construction.

With fewer than 1,100 units delivered in Q2 and new starts down 80% from 2022, supply is thinning. Meanwhile, absorption surged to 2,500 units—double the pre-pandemic average—pushing rents up 1.9% year-over-year, outpacing national trends.

This report dives deep into:

Vacancy and Rent Trends by building class and unit type
Sales Volume and Price Per Unit for Class B & C buildings
Featured Listings and Recent Transactions across the Twin Cities
Expert Commentary on what’s driving the market shift

Whether you're an investor, owner, or operator, this report offers actionable insights to help you stay ahead of the curve.

Ready to make your next move in the multifamily market?

At 1st Select , we don’t just track the market—we help you thrive in it. From property management to investment analysis, our team is here to support your success.

Give us a call or fill out the form below and a market expert will be in contact to help you achieve stable success.

Preparing for Fall Inspections in Minnesota Multifamily Properties

Wed, 08 Oct 2025 17:56:51 GMT

Fall inspection season is here - are your properties prepared?

As the seasons change in Minnesota, multifamily property owners face more than dropping temperatures and falling leaves—they also face inspection season. Staying compliant with city and state requirements is essential, but the smartest owners go beyond the basics to protect their investment and keep tenants happy. Here’s what to expect from official inspections in Minneapolis, St. Paul, and across Minnesota, and what additional steps you should be taking every fall.

What Minnesota & Local Inspections Typically Cover

State and city inspections vary depending on the jurisdiction, but most multifamily rental inspections focus on the same key areas of health, safety, and habitability.

1. Life Safety Systems

Working smoke detectors and carbon monoxide detectors.
Accessible, unblocked exits.
Fire extinguishers and alarms in working condition.

2. Structural Safety

Secure handrails and guardrails on stairs and balconies.
No broken steps, loose railings, or unstable flooring.
Entrances and common areas that are free of hazards.

3. Plumbing & Electrical

No leaks, drips, or water damage.
Properly vented water heaters and functioning plumbing fixtures.
Covered electrical panels and no exposed wiring.

4. Heating Requirements

Heating systems must be capable of maintaining at least 68°F inside, even during subzero temps.
Safe operation of boilers, furnaces, or other heating equipment.

5. General Sanitation

Clean common areas with no evidence of pests.
Trash storage and disposal systems in good order.
Property free of accumulation of debris.

In Minneapolis and St. Paul, inspections are also tied to rental licensing programs, with added emphasis on safety, habitability, and proper property upkeep.

Beyond Compliance: Smart Fall Maintenance for Multifamily Properties

Passing inspection is the baseline—but proactive owners know that fall is the best time to prepare for Minnesota’s harsh winter. These items may not always appear on the official checklist, but they can prevent emergencies, protect property value, and keep tenants comfortable.

1. HVAC Systems & Filters

Replace filters to improve air quality and system efficiency.
Schedule a furnace or boiler tune-up to avoid breakdowns during January’s deep freeze.
Inspect thermostats and pilot lights for proper function.

2. Doors & Windows

Check weather stripping and seals to prevent drafts and reduce utility costs.
Test locks and latches for security.
Inspect caulking around frames to stop moisture intrusion.

3. Gutters, Drainage, & Roofing

Clear leaves and debris before snow creates blockages.
Make sure downspouts extend several feet from the foundation to prevent basement flooding.
Inspect roofing for loose shingles, flashing, or soft spots that won’t hold up to heavy snow loads.

4. Fire Safety Follow-Through

Beyond alarms and detectors, ensure nothing blocks stairwells or exit doors.
Check that fire extinguishers are accessible and properly charged.
Verify that emergency lighting works during power outages.

5. Common Area Cleanliness

Deep clean lobbies, laundry rooms, and stairwells before winter salt and moisture make maintenance harder.
Ensure proper lighting in parking areas and entryways for resident safety during darker evenings.
Inspect flooring for wear that could create slip hazards.

6. Signage, Licenses, & Permits

Confirm that rental licenses and permits are current and posted as required.
Replace faded or missing emergency signage.
Check parking lot or garage signage before winter plowing begins.

Why Going Beyond the Minimum Matters

Fall prep isn’t just about passing inspection—it’s about protecting your investment.

Cost Control – Small repairs now prevent expensive mid-winter emergencies. For example, a $200 gutter cleaning is cheaper than a $5,000 water damage claim.
Tenant Retention – Residents notice when a building is well-maintained, leading to fewer complaints and longer leases.
Peace of Mind – Owners and managers avoid last-minute scrambles when inspectors arrive or when the first snowstorm hits.

Need a Hand?

Of course, managing both official inspections and proactive maintenance can be time-consuming. If this checklist feels overwhelming, that’s where we come in.

Our team specializes in multifamily property management throughout Minneapolis, St. Paul, and greater Minnesota. We handle the compliance requirements and the preventative steps that keep your property running smoothly year-round.

Fill out the form below or contact us at:

�� 612-524-1000

✉️ info@1stSelect.net

2025 Q2 Commercial Office Market Report | Twin Cities, Minnesota

Wed, 20 Aug 2025 17:29:23 GMT

Minnesota 411: Commercial (Office) Insights from Q2 of 2025

Check out our report for expert insights into vacancy rates, rental trends, absorption metrics, and investment activity across the Twin Cities. This data-driven analysis highlights key shifts in office space demand, submarket performance, and leasing behavior—essential for brokers, investors, and commercial property owners navigating today’s evolving real estate landscape.

Minneapolis Expands Fair Housing Protections Effective August 1st, 2025

kdessart@1stselect.net (Kate Dessart) — Thu, 03 Jul 2025 18:21:04 GMT

Minneapolis Expands Fair Housing Protections Effective August 1, 2025

Beginning August 1, 2025 , the City of Minneapolis will implement amendments to its Civil Rights Ordinance, expanding the list of protected classes and broadening the scope of anti-discrimination rules for housing providers. These changes were adopted under Ordinance No. 2024-00563 and will significantly impact the multifamily housing market.

Overview of Current Fair Housing Framework

At the federal level, the Fair Housing Act prohibits discrimination based on:

Race
Color
Religion
Sex (including gender identity and sexual orientation)
Familial status
National origin
Disability

The Minnesota Human Rights Act (MHRA) extends these protections further by including:

Creed
Marital status
Public assistance status
Age
Sexual orientation
Gender identity

Minneapolis has historically adopted all federal and state protections, with additional local protections previously in place for:

Gender identity (before federal recognition)
Public assistance
Political affiliation (in employment)

The 2025 amendments add new classes and expand definitions in ways that are particularly relevant to landlords, leasing agents, and multifamily property operators.

New Protected Classes in Minneapolis (2025)

The ordinance introduces three new protected characteristics in housing:

1. Housing Status

Prohibits discrimination based on whether an individual has a fixed, regular, or adequate nighttime residence. This includes:

People experiencing homelessness
Individuals staying in shelters
Those in transitional housing or otherwise unstably housed

This addition aims to prevent denials of housing based solely on current housing instability or a lack of formal address history.

2. Justice-Impacted Status

Protects individuals with any kind of criminal legal system involvement. This includes:

Arrests without conviction
Convictions
Periods of incarceration
Supervision such as probation or parole

Importantly, this protection applies regardless of the nature or timing of the criminal record, making blanket policies that disqualify based on any criminal history non-compliant under city ordinance.

3. Height and Weight

Landlords may not refuse housing or otherwise discriminate based on a person’s actual or perceived height or weight. This protection acknowledges growing evidence of size-based discrimination and promotes equal access to housing regardless of body type.

Expanded Definitions of Existing Classes

The ordinance also broadens the definitions of several existing protected classes:

Race

The updated definition of "race" explicitly includes:

Hair texture
Hair styles commonly associated with racial identity, such as braids, locks, twists, afros

This expansion aligns with “CROWN Act”-style protections seen in other jurisdictions and protects against grooming policies that disproportionately affect Black residents.

Familial Status

Minneapolis expands the concept of familial status beyond the federal standard. The new language includes:

Individuals providing care for someone unable to meet their own essential health or safety needs due to disability, age, or illness

This change ensures caregivers—such as adult children, partners, or non-biological guardians—are protected under fair housing laws.

Disability

The definition now includes conditions that:

Are episodic or in remission
Substantially limit one or more major life activities when active

This clarification reinforces existing ADA and MHRA obligations, especially in evaluating requests for reasonable accommodations or modifications.

New Requirements for Reasonable Accommodations

The ordinance strengthens requirements around reasonable accommodations in two key areas:

Pregnancy and Related Conditions

Housing providers must provide reasonable accommodations for individuals experiencing pregnancy, childbirth, or related health conditions. This includes temporary physical modifications, alternative communication, or modified policies where feasible—unless doing so would impose an undue hardship.

Religion and Religious Expression

Landlords must accommodate sincerely held religious beliefs or observances. This could apply to dress codes, display of religious symbols, or holiday observances, as long as the accommodation does not create undue hardship or fundamentally alter the nature of the housing operation.

Interaction with Minnesota Statutes (Chapter 504B)

The City ordinance does not replace or conflict with Minnesota’s Chapter 504B , which governs landlord-tenant law. Rather, it adds an additional compliance layer specific to Minneapolis. Some key areas of overlap and reinforcement include:

Eviction and screening practices : Chapter 504B already restricts the use of certain eviction records. The justice-impacted status protection under city law now adds further constraints on how criminal history can be considered.
Support animals : State law (504B.113) outlines verification rules for emotional support animals. Under Minneapolis ordinance, these requests are additionally protected under broader disability and accommodation standards.
Identification requirements : Under state law, landlords must accept ITINs in place of Social Security numbers; housing status protections now make blanket rejections based on housing history impermissible.

Enforcement and Applicability

The ordinance applies to:

All housing providers operating within the City of Minneapolis
Property owners, landlords, managers, leasing agents, and real estate professionals
Any entity involved in the sale, rental, or management of housing

Complaints under this ordinance will be handled by the Minneapolis Department of Civil Rights , which has authority to investigate and enforce anti-discrimination measures. Remedies can include cease-and-desist orders, monetary penalties, and corrective actions.

Effective Date

These changes take effect August 1, 2025 , and will apply to all new and renewed housing applications, leases, and interactions as of that date.

What To Do With Tenant Belongings in Minnesota

kdessart@1stselect.net (Kate Dessart) — Wed, 14 May 2025 16:44:10 GMT

When a tenant moves out, whether it’s at the end of a lease, after an eviction, or due to abandonment, landlords in Minnesota often find themselves asking the same question:
What am I legally supposed to do with the stuff they left behind?

If handled it wrong, you could end up liable for damages. But if you follow Minnesota law (specifically Statute § 504B.271 ), you can protect yourself and your property. Here’s what you need to know.

Minnesota Statute § 504B.271 – Know the Basics

Under Minnesota law, landlords must follow a specific process when dealing with a former tenant’s personal property left behind:

You can’t just throw it out. You’re required to remove, store, and care for the tenant’s belongings in a “reasonably secure” location.
There’s a 28-day waiting period. You must wait 28 days from when you reasonably determine the unit has been abandoned—or receive official notice from the tenant—before you can dispose of or sell the items.
You must give written notice before selling anything. If you intend to sell the property to recover costs, you must notify the tenant by mail (first-class and certified) and post a notice on the premises at least 14 days before the sale.
Profit can use the proceeds to cover storage and removal costs , but anything left over must be held for the tenant if they make a written request.

Failing to comply can open you up to penalties—up to twice the actual damages or $1,000 (whichever is greater), plus attorney fees.

Document Everything as Value Can Be Hard to Define

One tricky part of this process is assessing the value of what’s left behind. What looks like junk to you might be meaningful (or expensive) to someone else. Since “value” is subjective, most landlords go by fair market value.

To protect yourself and log items thoroughly:

Take a full inventory of all personal property.
Photograph or video everything before moving or storing it.
Record the condition and any identifying features.

This kind of documentation creates a clear paper trail and helps defend your decisions if questions or disputes come up later.

Make Compliance Easier with Professional Support

Let’s be honest, dealing with tenant belongings can be time-consuming and legally risky. Between logistics, documentation, and legal deadlines, it’s easy to make a costly mistake.

A professional property management company can handle the process for you:

Ensure full compliance with state law
Manage notifications and storage timelines
Accurately document and assess property
Reduce the risk of tenant claims or legal trouble with proper communication

Whether you own a single multifamily property or manage a small portfolio, having expert help gives you peace of mind—and keeps your operations on solid legal footing.

Need Help Handling Tenant Belongings the Right Way?

Tenant belongings shouldn’t become a legal headache. By knowing the rules under Minnesota Statute § 504B.271, documenting thoroughly, and following the proper timelines, you can stay compliant and avoid unnecessary risk.

At 1st Select, we help Minnesota property owners protect their investments and stay in full legal compliance. From move-outs and abandoned property to full-service management, we’re here to make your life easier.

�� 612-524-1000 to schedule a free consultation.
�� Or email us at info@1stselect.net

Understanding Minnesota's Energy Benchmarking Program: A Guide for Property Owners

kdessart@1stselect.net (Kate Dessart) — Wed, 02 Apr 2025 21:22:37 GMT

Perhaps you’ve heard that the State of Minnesota will be auditing large buildings for energy inefficiency this year. You might be wondering if your investment properties are impacted and how to prepare. This is a significant change that will come with challenges, but don’t worry. 1st Select Property Management is here to break everything down for you.

What’s the State of MN Energy Benchmarking Program?

The Minnesota energy benchmarking law, Minn. Stat. 216C.331, is a significant legislative change aimed at increasing transparency in building energy usage. This law is particularly important for multifamily and commercial property owners, as it mandates annual energy usage reporting for large buildings.

The purpose of energy benchmarking is to create transparency in building energy usage, identify inefficiencies, promote energy conservation, save money on energy costs, and reduce greenhouse gas emissions.

What buildings are affected?

The law requires large buildings that are 50,000 square feet or larger to report their annual energy usage data to the state. The program rolls out in phases based on building size:

Buildings 100,000 square feet and larger must begin reporting by June 1, 2025.
Buildings 50,000 square feet and larger must begin reporting by June 1, 2026.

Some exclusions exist, including:

Residential properties with fewer than five dwelling units
Manufacturing properties
Mining/Agricultural/Electric Power Generation facilities

The easiest way to determine if your building is affected is to utilize the Touchstone IQ Lookup Tool.

What’s considered “energy”? How will we report it?

Energy includes electricity, natural gas, steam, or other products used for heating, cooling, lighting, water heating, or powering other end uses in a building.

Reporting Process:

Create an ENERGY STAR Portfolio Manager Account:
Go to the ENERGY STAR Portfolio Manager website and create an account.
Add your building(s) to your account with all relevant property information.
Identify and add your State of Minnesota Building ID using the Building ID Lookup Tool .
Upload Energy Data:
Enter 12 full months of whole-building energy data from the previous calendar year (January 1 – December 31) into the Portfolio Manager.
Utility providers like Xcel Energy, Minnesota Power, and CenterPoint offer automatic uploads of aggregated whole-building energy data directly into the Portfolio Manager. For other providers, you may need to manually enter the data or upload it via a spreadsheet.
Run the Data Quality Checker:
After entering the energy data, use the Data Quality Checker in the Portfolio Manager to check for possible errors.
Connect and Share with the State of Minnesota:
Connect your Portfolio Manager account with the State of Minnesota and share your building's data.
Complete the Energy Reporting Form:
Confirm property details and energy data in the Large Building Energy Benchmarking Portal.
Submit your report through the portal.

What Happens Next?

Like most energy benchmarking programs, the goal is to create transparency about energy usage. However, compliance will likely require upfront investments in energy audits and potential upgrades or retrofits to meet the reporting requirements. This should help create more efficient and cost-effective buildings in the long term but may present surprise costs for some owners.

As a multifamily property owner, it's essential to start preparing for compliance with the Minnesota energy benchmarking law. 1st Select Property Management is here to help you navigate these new requirements and improve your building's energy efficiency. Contact us today to learn more about our services and how we can assist you in meeting the new standards.

Resources:

Benchmarking Portal - https://benchmarkingmn.org/portal/login
ENERGY STAR Portfolio Manager - https://portfoliomanager.energystar.gov/pm/login?testEnv=false
Touchstone IQ Building ID Lookup - https://buildingid.touchstoneiq.com/

Program Overview - https://mn.gov/commerce/energy/consumer/energy-programs/large-building-energy-benchmarking.jsp
216C.331 ENERGY BENCHMARKING STATUTE - https://www.revisor.mn.gov/statutes/cite/216c.331

Ratio Utility Billing: What Minnesota Owners/Tenants Need to Know About RUBs

kdessart@1stselect.net (Kate Dessart) — Wed, 19 Feb 2025 20:33:13 GMT

Ratio Utility Billing (RUBS) and How It Affects Minnesota Property Owners and Renters

MN passed a new, specific law, regarding Rationed Utility Billing (RUBs) in the 2023 session that took effect on Jan 1, 2025. Prior to 2025, there was a lot of uncertainty surrounding the legal and ethical way to apportion a utility charge across multiple residents and the owner. Much of the uncertainty was cleared up in the 2024 law.

This article will explain what RUBS is, how it works, and the reasoning behind its implementation, tailored specifically for the Minnesota real estate market. Whether you're a property owner looking to streamline utility billing or a tenant wanting to understand your utility charges better, this guide is for you.

What is RUBS?

RUBS, or Ratio Utility Billing System, is a method used to allocate utility costs among tenants based on specific factors such as unit size and number of occupants. Unlike individual metering, RUBS estimates utility usage and distributes costs fairly among residents and the owner.

How RUBS Works

RUBS uses predefined formulas to calculate each tenant's share of utility costs. Here’s a breakdown of how it works for different utilities, referencing the recent legislative changes:

Water/Sewer: The cost is divided based on the number of occupants in each unit relative to the total number of occupants in the property. Property owners must also account for common use amenities like washing machines, pools and irrigation systems. These common area amenities must have an allocated usage applied in the formulas and paid by the owner.
Gas (Heat): This is calculated based on the square footage of each apartment. A Common Area Deduction (CAD) is applied to factor out common area heating.
Electricity: This 2025 law made it illegal to use RUBs to pass on a house meter. The Resident can only be responsible for electricity usage if there is a meter or submeter measuring exact usage.
Trash. The 2025 law did not specifically address trash.

Let's say we have a property with three units and a total water/sewer bill of $300 for the month. Here's how the costs might be allocated:

Unit 1: 2 occupants

Unit 2: 3 occupants

Unit 3: 1 occupant

Total occupants: 6

Unit 1: (2/6) * $300 = $100

Unit 2: (3/6) * $300 = $150

Unit 3: (1/6) * $300 = $50

However, if the building has any common area water usage, like a washing machine, the owner must allocate some of the water/sewer charges to the owner. The amount was not specified in the law. Whatever an owner chooses, they should be able to justify the amount.

For gas, if the total square footage of the property is 3,000 sq ft and the gas bill is $600:

Unit 1: 1,000 sq ft

Unit 2: 1,200 sq ft

Unit 3: 800 sq ft

Total square footage: 3,000 sq ft

Unit 1: (1,000/3,000) * $600 = $200

Unit 2: (1,200/3,000) * $600 = $240

Unit 3: (800/3,000) * $600 = $160

Similarly, if the building has any heated common area, like interior hallways, laundry rooms, exercise rooms, etc., the owner must allocate the expense of heating that space to the residents. In the example above, we believe you can apply the same costs to the owner on a square footage basis. So, the new formula might have 500 square feet of common area, changing the above formula to:

Unit 1: (1000/3500) * 600 = $171.42

Unit 2: (1200/3500) * 600 = $205.72

Unit 3: (800/3500) * 600 = $137.14

Owner: (500/3500) * 600 = $85.71

Why RUBS?

For property owners, RUBS offers a fair and efficient way to manage utility costs. It helps in recovering utility expenses and encourages tenants to be mindful of their usage. There are many surveys showing a 20-30% decrease in utility usage when Residents are responsible for utility usage. Using RUBs is a cost savings and good for the environment.

For tenants, RUBS ensures that utility costs are distributed equitably. Tenants pay for their proportionate share based on their usage, fostering a sense of fairness and responsibility.

Minnesota-Specific Regulations

As previously mentioned, Minnesota has implemented specific statutes governing RUBS starting on January 1 ^st , 2025. These regulations require property owners to use standardized formulas for utility billing and establish administrative and late fees. Here are some limits specified in the new law:

Administrative Fees: $8/month

Late Fees: $5/month

Utility Recovery Administrative Fee: $15/month (if utilities are not transferred to the tenant's name.)

Implementation and Compliance

Property owners must ensure compliance with Minnesota's RUBS regulations by updating lease agreements and informing tenants of any changes. Tenants should review and sign the new Utilities and Service Addendum to acknowledge their understanding of the new billing methodology.

This regulation has specific required notices, methods of billing, requirements to accept payment plans and more. It is so complex that prominent Minnesota Real Estate law firms have recommended against implementing RUBs. Their concern was that one error may delay or prevent an eviction. To avoid this, you may want to hire a utility management company or let your property manager do it for you. If you want to proceed alone, we strongly recommend you read the legal text below:

https://www.revisor.mn.gov/statutes/cite/504B.216

Conclusion

RUBS is a practical solution for managing utility costs in Minnesota's real estate market. By understanding and implementing RUBS, property owners can ensure fair billing practices, and tenants can enjoy transparent and equitable utility charges. Non-compliance with these regulations can result in significant penalties, including fines and legal actions. For any questions or further information, property managers are always available to assist.

Still feeling overwhelmed or have more questions about how RUBS will affect your investment property? Give 1st Select Property Management a call and discover how we assist clients with legal changes every day.