Shifting gears

Major apartment complex near Lake Calhoun attracting strong interest while condo projects nearby see slow sales activity

When Scott Bukstein decided it was time to find a new place to live, he thought a condo might be the way to go.

But after looking at about 20 different units, the 25-year-old Minneapolis renter changed his mind.  

“None fit what I was looking for in regard to location and design,” he said.

Then he found an apartment that did.

Bukstein will be among the first tenants to move into Lake Calhoun City Apartments when the 3036 W. Lake St. complex opens in September. The 158-unit, five-story building is the first new large-scale apartment complex built near Lake Calhoun since the Calhoun Beach Club went up in the late 1990s.

In stark contrast to some of the condominium developments planned nearby, Lake Calhoun City Apartments is having no trouble attracting tenants. Nearly 35 percent of the units were taken by mid-August, after less than five months of preleasing. Some condo projects, such as the Lander Group’s 2626 West Lake and Hornig Companies’ The Portico at 1601 Lagoon Ave., haven’t been able to reach that mark after more than a year of sales.

As the housing market continues to flounder, would-be buyers are taking a closer look at renting, and Lake Calhoun City Apartments is the first of several new Southwest apartment complexes to benefit.  

Despite the addition of more than 2,300 units this year, demand for apartments in the Twin Cities is outpacing supply, according to a recent report from GVA Marquette Advisors, an international real estate consulting firm with offices in Minneapolis. The report also said vacancy rates are down and rents are up.

Jonathan Holtzman, CEO of apartment management company Village Green, said the market didn’t swing in favor of apartments until about a year ago. Before that, the rental business was a more difficult place to be, said Holtzman, whose company will manage Lake Calhoun City Apartments and Eitel Building City Apartments, a development under construction in Loring Park.

“Some people would say it was risky,” Holtzman said about Lake Calhoun City Apartments, which was proposed in 2005, when the housing market was still on fire. “We find that the best time to start developing is when the market is soft.”

Holtzman said Lake Calhoun is a big attraction for renters and he expected Lake Calhoun City Apartments to do well from the onset, but he said the current market conditions are helping. Concerns about the housing market are turning some buyers into renters, at least temporarily.

Bukstein is one of those. He said he’d probably rent for a while as the housing market straightens itself out. But he also loves the building and its location, so he doesn’t mind plunking down a lot of cash — rents at the new apartment complex range from $1,000 to more than $2,000 per month — to live there.

Village Green isn’t offering any concessions or discounts to renters. There’s no need to, said Anthony Kranz, leasing manager for Lake Calhoun City Apartments.

“It’s a perfect market for us right now,” he said.

Those who sign a lease do get all of the perks that come with living in the apartment, though, such as grocery and restaurant delivery services and amenities including a “serenity” garden and an indoor-outdoor pool.

Many renters simply find the lifestyle appealing, said Scott Mann, who is building a new 109-unit apartment complex at 2833 Lyndale Ave.    

“People want something that they don’t have to get locked into, but they can still have the amenities of a condo,” he said.

At 2900 Aldrich Ave., Greco Real Estate Development is building a 242-unit apartment building. Preleasing has not begun for either the Greco project or Mann’s development. Mann said there’s enough room for all the new apartments in the Uptown area.

Holztman isn’t worried about the competition either, or a rebounding housing market for that matter.

“The fact that we’re hot right now is a bonus,” he said. “We don’t think it’s going to last that long. We think housing is going to come back.”

Mary Bujold, president of Minneapolis-based real estate consulting firm Maxfield Research, said the housing market isn’t on its way to a swift recovery. Homeowners need to start selling for the market to recover, she said, and that’s not happening yet.

“There is a slowdown, but it’s causing so much consumer uncertainty that people aren’t willing to do anything,” she said.

But people in-between homes, or those looking for the convenience and amenities of an apartment, are willing to rent.  

Bukstein is looking forward to

“What’s important to me is having a place I’m excited to come home to,” he said.  

Reach Jake Weyer at 436-4367 or [email protected]