Minnesota’s Economic News – W/E 4/9/21
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On Monday, I wrote about how businesses are beginning to flee Minneapolis due to rising crime. Residents are starting to look elsewhere too.
The Star Tribune reported:
Vanessa Rybicka once enjoyed living on the edge of downtown Minneapolis and walking to her office, stores and restaurants. But in recent months she has seen fewer cops, more harassing pedestrians and fights breaking out daily on Nicollet Mall. She now shops in the suburbs.
Others in her Loring Park building are moving out. Rybicka is ready to follow.
“I’m moving my business out to the suburbs,” said Rybicka, who owns a professional services firm. “I can’t deal with it.”
William and Suzanne Bengtson have felt isolated as the businesses they normally patronize are closed and a tent encampment sprouted in Loring Park near their residence. They’ve seen a rise in homelessness and crime downtown.
“We love downtown because we love the restaurants, we love the theater, and that’s all shut down because of COVID and the riots on top of that,” William Bengtson said.
They watched the looting unfold Wednesday night from their high-rise in dismay.
“It’s heartbreaking to hear the helicopters. It’s heartbreaking to hear the sirens day in and day out. It’s heartbreaking to see people who look like you not have access to what everybody else has access to,” said Suzanne Bengtson, who is Black. “It’s been hard to be downtown.”
Alarmed over reports of robberies and other crime recently, Iliyah Johnson made plans to move to south Minneapolis in September as her lease came up for renewal.
She was with her 3-year-old and 8-month-old daughters Wednesday on Nicollet Mall when they saw what would become the instigator of the riots: a man shooting himself as police closed in.
“It’s too violent here in this area,” said Johnson.
This decreased demand is starting to show up in the numbers:
The normally hot downtown housing market is already taking a hit. Last year condos often sold before they were on the market, but this summer there are more of them available, they’re taking longer to sell and price gains are easing. The number of condo listings that hit the market during July was up 32% across the metro and 46% in Minneapolis compared with last year, according to the Minneapolis Area Realtors.
The rental apartment market downtown is also softening because of weaker demand and increasing supply. At 6.4%, the average vacancy rate in the area is above the metro average and — except for downtown St. Paul — is among the highest in the metro, according to a second-quarter report from Marquette Advisors.
And this is also being seen in prices. Zumper’s National Rent Report for September looks at ‘Notable Changes this Past Month’ and finds that Minneapolis “had the 5th largest decrease in 1-bedroom median rent at -4.3% from last month to $1330.”
When rents rise we often hear people call for rent control – price ceilings. Now that they are falling will we hear people call for rent controls to enact price floors?
John Phelan is an economist at the Center of the American Experiment.