Density spreads outside downtown Minneapolis into neighborhoods

Six stories of apartments will go up north of Broadway in Northeast. The two blocks west of the 38th Street light-rail station will be transformed by more than 200 new apartments. A four-story building with 49 apartments is under construction just off Interstate 35W on 35th Street.

Most new housing in Minneapolis is in or near downtown, Uptown and the University of Minnesota. But that's starting to change. Density is spreading to neighborhoods of single-family homes.

"It's an uncomfortable conversation that is most definitely worth having," said Mayor-elect Jacob Frey. "A world-class city that is affordable to everyone will require growth and additional housing stock."

Faced with a growing population, rising rents and little money to pay for low-income housing, the Minneapolis City Council is counting on the law of supply and demand to slow the rise of prices. They've cut several land-use regulations and regularly bend zoning rules so developers can build more multifamily housing in more places.

Now, with a mayor-elect who campaigned on greater housing density, and an incoming City Council with a mandate to address the city's lack of affordable housing, Minneapolis is poised for an era of upward growth — beyond downtown.

Density has its skeptics. Denis Houle, president of the Armatage Neighborhood Association in southwest Minneapolis, said he suspects demand for apartments won't keep pace with construction. And if single-family homes are replaced with apartments, he said, houses in the city will become more expensive.

"If people can't find a house in Minneapolis, then are they going to go to the suburbs?" Houle said. "I think we've had too much density for density's sake."

Minneapolis has issued permits for 14,250 new homes in the past five years, 94 percent of them apartments or condos. But it still hasn't kept up with the demand. The rental vacancy rate is under 3 percent, and large portions of the city are too expensive for the lower-middle class.

Since there is no room for the city to expand its physical boundaries, the only way to build more homes is up. Small apartment buildings must be replaced with larger ones, and single-family homes must be replaced by multifamily homes.

"If supply doesn't keep up with demand, then people of means have the ability to outbid everyone else for the housing that exists," said Jason Wittenberg, the land-use, design and preservation manager for the city of Minneapolis.

Though it's counterintuitive, even construction of luxury apartments can help make the city more affordable.

"Building an upscale apartment project doesn't necessarily mean that immediate area is going to become more affordable, in fact rents might increase in that area, but at the macro level, increasing that supply eases the pressure on the market and allows for rents in the region to stabilize," Wittenberg said.

A four-story building under construction at the corner of 38th Street and 28th Avenue wraps around the little two-story brick building that's the home of A Cupcake Social and the flower shop Studio Emme.

The building will house 53 market-rate apartments and is the first phase of a multi-building project on 38th Street just west of the light rail platform. Three more buildings, with groundbreaking slated for 2018, will add up to 164 units and several storefronts hugging the Cardinal Bar and the light rail stop.

"Obviously as a business owner, the more people that are drawn to the area, the better for me," said Suzette Herr, the owner of A Cupcake Social.

Other neighbors aren't thrilled.

"My concern is, what are they going to do about parking?" said Jim Hansen, who lives a block north of 38th Street. "I'm not opposed to development and growth, but you've got to remember that people who live and shop there have to have a place to park."

Michael Lander, the developer, said the project is possible because of a cultural shift: Many of the younger people who live nearby are less preoccupied with parking than their parents' generation.

"If you polled all the people in the neighborhood that are over 50, 80 percent of them wouldn't be excited about my project," Lander said. "Millennials want a different way to live than their parents. They're not nearly as car-oriented."

Density is not enough, however, said Lander. The project at 38th Street makes sense because it's close to the Blue Line light rail, and the buildings are designed to give pedestrians a rich street-level experience, he said, something neighborhoods rarely concern themselves with when a new proposal comes along.

"What really makes a great city is the frontages and ground-floor conditions," Lander said. "Most of the conversations end up being about how tall it is and how many cars it has, and very little of the conversation is about the ground floor."

Through the first nine months of 2017, the city has approved two dozen large residential developments. Five of those are outside Uptown, downtown, near Northeast and the area near the U, and those five projects represent 510 new housing units.

The new mayor and council are likely to weigh encouraging more development in neighborhoods when they update the city's comprehensive plan in the spring, and discuss expanding the areas zoned for heavier development.

"There is increasing support in our community for housing options," said Council Member Lisa Bender, current chair of the Zoning and Planning Committee. "That still has to be a very delicate conversation in the context of each neighborhood."

Some neighborhoods are still ready to do battle. Developers John Gross and Andrew Commers wanted to build an eight-unit condominium a half-block from the west shore of Lake Harriet on 44th Street. They asked for permission to build a four-story building in a part of the city where the height limit is about half that high.

Several lakefront homes sit next to the proposed building, and their owners pushed back.

"The west side of Lake Harriet, the Linden Hills area, will look like the north end of Lake Calhoun in no time," said Kelly Noble, whose home backs up to the proposed condominiums.

Her neighbor, Loran Meccia, said a variance would be a "gross abuse" of the Shoreland Overlay District, a special set of zoning restrictions for property near lakes and rivers, and would be a blow to her family's financial well-being.

"We have invested in this property," she said. "And there is going to be a looming five-story structure behind us."

The developers' request was denied.

adam.belz@startribune.com 612-673-4405 • Twitter: @adambelz