More and more apartments on the way; is this necessary?

Yahoo

6 days ago

Jul. 12—Dear Answer Man: It seems like every week, the Post Bulletin publishes a story of a proposal to build a new apartment building in Rochester. It is hard to believe that the need for more apartments is that great. I would like to know the occupancy rate for all existing apartment units as an aggregate in each of these categories: senior independent living (places such as Shorewood, Madonna Towers, etc.); low-income senior independent living; low-income general apartments; market-rate apartments; and high-end units. — Doubting Dianne.
Dear Dianne,
Answer Man hasn't been handed a research project this big since he finished that last underwater basket-weaving class to graduate from college.
Breaking it down like you've asked is something that the county does. You can read the 2020 "Comprehensive Housing Needs Analysis for Olmsted County, Minnesota," and in the near future (maybe a couple of weeks ... or less), we'll report on the 2025 update to this study, which is expected. That said, the 2020 report showed pretty much every category with 90% occupancy or higher.
Another study, the U.S. Department of Housing and Urban Development's "Comprehensive Housing Market Analysis" for Rochester, published in 2022, has more of the same. Some of the key takeaways:
* From 2000 to 2020, the number of households has grown from about 71,000 to 92,000, but the percentage of ownership has dropped from 78% to 73.5%.
* The vacancy rate (in all apartment sectors) by the second quarter of 2022 had dropped to 4%.
* The report's three-year forecast period (bringing us up to 2025) estimated a need for 1,275 new apartment units.
* At that time, only 850 were permitted.
That last point would be why we so often report that Rochester is in dire need of more apartments.
And the demand isn't letting up. Destination Medical Center is a driving force behind Rochester's continued population growth. For three straight U.S. censuses — 1990, 2000 and 2010 — Rochester grew by more than 20% per decade. The 2020 census saw "only" 13.7% growth, but the overall numbers were nearly 15,000 people added. I'd bet a dollar that the 2030 census will see another 15,000 new residents (or more) in Rochester.
And that's just Rochester. Byron, Kasson, Pine Island, Stewartville — pretty much every town within 15 miles of Rochester — saw growth in the last census, and each continues to grow.
Want proof? Awesome business reporter Jeff Kiger wrote how Black Swan Living recently opened the 65-unit Stone Haven Apartments in Byron. Within a few weeks, it was 70% rented. That was two weeks ago. Another bet? I'd wager the complex is well into the 80% or 90% range by now.
Those apartments are — I hate to throw the "upscale" label around, but — really nice. Individual garages. Across the street from a grocery store. Ten minutes from Rochester.
So, why aren't people just living in houses?
Again, we go to another reporter extraordinaire, Matt Stolle. Part of the increased popularity of apartments is affordability. As Matt wrote in March 2025, "In 2014, the median home price in Rochester was $173,692. By 2024, it had jumped to $319,271 — an 84% increase."
The other reason is sort of adjacent to that price information and what you've asked about the different categories. Seniors who want to avoid all the yard and snow maintenance love the idea of independent living (Shorewood, etc.). People just starting out need a place they can afford, even on a working-class salary, and sometimes that's not the traditional single-family home. Hence, the demand for market-rate apartments. Folks who aren't in the market to buy but come to Rochester with a high-paying job seek out those places like The Berkman or Riverwalk apartments.
Sadly, those places don't advertise their vacancy rates. In fact, as apartment companies are privately owned, they don't give daily or monthly updates on the availability of units.
That said, that HUD analysis noted that while the number of units in Rochester is increasing, so is the average rental price. That economics class I took at good old Answer Man University taught me that if supply is going up, but the price (a function of demand) is also rising, then you don't have enough of what people want to buy yet.
When prices start to level off, well, that will be an indicator that we've reached the point to stop building.
So plan to read more about new apartment developments. It's the way of the future in Rochester.
Got a query? Answer Man will get the facts, rent-free. Send questions to Answer Man at [e-mail].