The Local 25 apartment complex at 2533 3rd Ave. S. in the Whittier neighborhood of Minneapolis is being remodeled and rents are rising. CARLOS GONZALEZ cgonzalez@startribune.com (The Minnesota Star Tribune)

The squat apartment building behind the Minneapolis Institute of Art looks like a miniature version of the luxury complexes surrounding the University of Minnesota: It's boxy and modern, clad in gray and yellow and marked with the name "Local 25."

The resemblance is no accident. CPM Cos., one of the developers that in recent years has redefined student housing at the U, has started to spread into south Minneapolis' Whittier neighborhood — a traditionally affordable and diverse area with its own college campus.

In January, CPM completed the five-story Chroma building on E. 26th Street, on a lot that was once home to a dry cleaner and a gas station. Plans are underway for an even bigger building with a rooftop deck at Franklin and Lyndale avenues. And then there's Local 25, an apartment building on S. 3rd Avenue where tenants were recently told they could either pay more or move out to make way for Minneapolis College of Art and Design (MCAD) students.

MCAD sent CPM a cease-and-desist notice in April, saying the company couldn't use the college's name in its communications with tenants or its marketing materials.

"There's nothing wrong with building buildings or rehabbing buildings, and if our students choose to live there, that is fine," said MCAD President Jay Coogan. "But to have the materials go out with our name on it, particularly to existing tenants who were going to have their rent increased, was not acceptable."

Coogan said CPM responded with an apology and said it would not use the college's name again. CPM principal Daniel Oberpriller did not respond to multiple requests for comment.

CPM isn't the only developer to buy an old apartment building in Whittier, renovate and raise rents. But luxury student housing is new for the neighborhood where, according to census data, the $822 median monthly rent is less than tenants pay elsewhere in Minneapolis.

Laura and Rigoberto Gonzalez have rented a two-bedroom in what is now the Local 25 building for five years. To stay, they would have to pay $1,600 a month in rent and fees — $650 more than they pay now. With two children starting college, they say they simply can't afford it.

In addition to the exterior upgrade, CPM repainted and put in new carpets, lighting and unit numbers in common areas inside the building. The apartments themselves haven't been updated yet, the Gonzalezes said, but they suspect it's all part of an effort to attract wealthier tenants.

"That's why they fixed the exterior — to bring in people with money. When they have that exterior that's not new, who are they going to bring in? Latinos, African-Americans. People without many resources," Rigoberto Gonzalez said in Spanish.

Modeled after U housing

Luxury student housing has proved successful at the U. The new apartment buildings around campus — where monthly rent can run more than $1,000 per bed — have filled up, and more construction is planned, said Bill Dane, a staff attorney at University Student and Legal Services who represents students in housing matters.

The market relies, in part, on how much college students' parents are willing to pay for a safe place close to campus, said Mary Bujold, president at Maxfield Research and Consulting.

"The students aren't paying for it," she said. "So if their parents will continue to pay for it, then I think the students love it."

Whittier was once a wealthy neighborhood, home to prominent Minneapolis residents including the city's first mayor.

The mansions are still there, but they're interspersed with midcentury rentals. Though rent is relatively low, about half the residents pay more than 30 percent of their income for housing.

Renting a 529-square-foot, one-bedroom apartment at the Chroma building costs $1,375 a month, according to the building's website. The site emphasizes the amenities tenants can expect to find in Whittier — "the cultural heart of Minneapolis" — from walkability to cultural diversity.

"Culture isn't just for the weekend in Whittier," the site says.

Whittier does have a lot to offer — proximity to downtown, blocks of trendy restaurants, easy access to public transit — and in some ways, it's surprising that development didn't come sooner, said Whittier Alliance Executive Director Ricardo McCurley.

"Our concern is we don't want things to change too quickly to the point at which we miss something drastic and dangerous happening to our current residents," he said.

Emma Nelson • 612-673-4509