Construction workers today placed the final beam atop a 26-story luxury apartment high-rise that signals a new housing boom in downtown Minneapolis.
The $68 million building by The Opus Group is one of several large housing developments that are part of a $1 billion construction boom in the city this year.
A few dozen construction workers tilted their heads back in unison to watch a crane lift the final beam about 300 feet off the ground. The workers signed their names on the beam -- and mounted a small pine tree on it.
"That's just kind of a traditional thing that we've done in topping out ceremonies," Construction Manager Leith Dumas said. "I don't know where it got started, but it's a real traditional way to top off a building -- hoist a Christmas tree up."
Dumas said the more than 200 names inscribed on the beam will serve as kind of time capsule. Construction will now shift toward more interior work.
When the Nic on 5th is finished next fall, the building will include 253 luxury apartments, varying in size from 550 to 2,800 square feet, Opus vice president Tom Lund said. Rents will range from $2,000 to $7,500 a month.
"We have higher ceilings. We've got great finishes. We've got a spa and a pool," he said. "All kinds of great amenities that some of the older product doesn't have."
Lund said one of the biggest amenities offered by the building is its location near the corner of Nicollet Mall and 5th Street, hence its name.
"We felt particularly good about this site because of its central location downtown and proximity to light rail, on the Nicollet Mall, close to all the corporate users downtown," he said. "We just felt like it was kind of dead center where you'd want to put a luxury high rise."
The Nic on 5th is just one of several multimillion dollar apartment complexes under construction in Minneapolis this year. Work is underway on a 36-story, 354-unit apartment building near Loring Park on the western edge of downtown.
Construction cranes also tower over other areas of the city, including the riverfront near downtown and over the Midtown Greenway near the Uptown area.
Jeremy Hanson Willis, director of the city's department of Community Planning and Economic Development said the total value of construction projects in the works this year topped $1 billion last month.
Last year the city reached the $1 billion mark for the first time since 2000. Hanson Willis said the trend is being led by housing construction.
"There are a number of factors that are driving the housing boom in Minneapolis," he said. "Chief among them is the demographic shift of people moving back into cities."
Hanson Willis said the people moving into cities are primarily baby boomers and young professionals. Both groups want to live in areas that are close to transit lines, bikeways and entertainment venues and development is most active in areas of the city that offer those amenities, he said.
A similar wave of demand several years ago led developers to overbuild condominiums downtown. However, industry officials say as the national and state economies have improved over the years, the market has rebounded and vacancy rates downtown are next to zero.
Hanson Willis said the rental market is particularly active.
"As a result of the recession, more and more people are choosing to rent over home ownership," he said. "Second of all, we have an increasingly mobile society so people are choosing mobility that they get from renting. That's especially true for the Millennials, the younger generation."
The luxury apartment construction boom has also been good for the condominium market, said Fritz Kroll, who sells downtown residential housing for Edina Realty. He said 2012 was a good year for condo sales and 2013 has been even better.
"What's so nice about these big high-rises is that anyone that is downtown or drives past downtown, they're a big banner ad for showing people, 'hey, people are moving down here, there's activity, there's things happening,'" Kroll said. "It draws attention to downtown living overall -- whether people choose to rent or buy."
Kroll said he expects some of those downtown renters paying $1,500 a month will eventually decide that it makes more sense to buy than to keep paying rent.
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