When will Rochester stop building new apartment buildings? – Post Bulletin

ROCHESTER — The number of apartment units in Rochester is somewhere north of 6,400 and counting.

Add to that another 2,000 units for which the preliminary plans have been submitted to the city, a zoning review is underway or the building itself is currently under construction, and we’re looking at a lot of apartments in Rochester.

Some units are priced for people on meager incomes — as low as 50% of the annual median income for the county — and some are priced for a more affluent set.

“There’s a huge amount of rental demand because of the Mayo Clinic,” said Nick Stageberg, who along with his wife, Elaine Stageberg, are the principals behind Black Swan Living, a real estate equity group that owns and manages nearly 1,000 apartment and townhouse units in Rochester. “There’s more demand in Rochester because of that.”

The Stagebergs have been in the apartment business in Rochester for 10 years, with the bulk of their building purchases coming in the last four to five years, Nick Stageberg said. He sees it not only as a business but as a way to contribute to the community.

“We’ve never sold an asset,” he said. “We believe in building and buying properties that we’re proud to own forever.”

That means managing the properties from within the company, not hiring outside management. And it means re-investing the company’s profits in further expansion. In fact, he said, 5% of the profits go to growth and 5% go to charity.

“I’m an eternal optimist,” he said. “There are so many headwinds in this business, and developers go bust all the time. But we have a secure plan.”

Joe Ahlquist / Post Bulletin

But that doesn’t mean he doesn’t see changes to the apartment marketplace in Rochester. For example, the number of commercial real estate transactions is currently down 90% year over year from 2022. And the number of new apartment properties, while still growing, will likely slow down over the next few years. That, Stageberg said, will impact the rental market moving forward as Mayo Clinic expansion and Rochester’s continued growth add more demand for the number of rental units available.

“Multifamily housing is something we’re really focused on for the next couple of years,“ said Dandra Drees, community and business development specialist for the city of Stewartville, which added the 55-unit Flats 55 in 2021.

With several single-family home lot developments in the city just minutes south of Rochester, Drees said Stewartville aims to offer a variety of housing options for potential residents. And as Rochester grows, in both Rochester and its surrounding communities there is a nonstop effort to keep up with the demand.

Jeffrey Brown’s place in the apartment marketplace is a bit different than the Stagebergs. The principal of North Rock Real Estate and North Rock Hospitality, his company manages only about 75 units in four buildings in Rochester, but North Rock has been involved in numerous development projects including Riverwalk and the Waters on Mayowood.

“I am constantly asked by people, ‘When will there be enough apartments?'” he said. “For the first time, we may be seeing a little bit of an oversaturation. But with the plans by Mayo and the last 20 to 30 years of growth rate — 2-3% of (annual) growth in our housing is a big number now — we’re always going to need more housing.”

Brown pointed to simple math and the U.S. Census. By now, Rochester’s population is nearing 130,000, he said. Annual 2% growth is an additional 2,600 or so people a year. So, while the apartment market might have a surplus of units right now, that will soon change.

“The market will create forces where we have enough, then we’ll be short. It’s cyclical,” he said. “We haven’t we…