A rendering of Opus Development’s 30-story apartment it will build along Nicollet Mall, adding to Minneapolis’ market boom. (The Minnesota Star Tribune)

Another gap along the Nicollet Mall is about to get filled.

On Friday, Opus Development closed a deal to redevelop the block at 4th Street and Nicollet Mall that has been a parking lot since the demolition of the Ritz Hotel more than 25 years ago. The Minnetonka firm said it would build a 30-story tower with 369 apartments on it.

The rectangular-shaped building will be distinguished by a series of undulating balconies with glass rails that create a wavelike pattern that is similar to Aqua, an award-winning 82-story skyscraper in downtown Chicago.

Ernesto Ruiz-Garcia, design director for the Opus AE Group, said the undulating shape of the balconies will create a visual texture that will change based on your point of view.

"The interactions between the balconies create a geometric pattern that will become more prominent the closer you are to the building," he said. "The rest of the design is intentionally reserved so that it doesn't compete with the balconies."

The unnamed project will become the largest residential project under construction in the city. It comes at a time of stiffening competition among rental property owners and growing concerns about the depth of the luxury rental market.

"People are wondering when we'll hit the tipping point, but if Opus is pulling the trigger it's a good sign about their analysis of that market," said Steve Cramer, president and chief executive of the Minneapolis Downtown Council and Downtown Improvement District. "This indicates continuing strength of this market and moves us closer to our goal of doubling our downtown population."

The tower will set atop 9,500 square feet of street-level retail space directly across the street from the Minneapolis Central Library with a connection to the public skyway system.

The project is part of a residential and commercial boomlet at the north end of Nicollet Mall, which is anchored at its south end by apartment and condo towers that were developed in the 1970s and '80s. And it is situated between the North Loop and Mill District areas of downtown, both of which are developing into neighborhoods with their own distinct identities.

Within just a few blocks, there are several large apartment buildings nearing completion, including the Maverick apartments at 100 Washington Av. United Properties is finalizing its plans for a combination hotel/apartment tower that will fill the former Nicollet Hotel block at 3rd Street and Nicollet Mall. That project is expected to include a Four Seasons Hotel.

The city has dubbed the area the Gateway District because it functions as a key connection between the north end of Nicollet Mall and the Mississippi River.

Within that Gateway, Opus recently completed the Nic on Fifth apartment tower and the Xcel Energy headquarters building.

"Opus is proud to continue playing a significant role in the transformation of the north end of Nicollet Mall," said Matt Rauenhorst, an Opus vice president. "We're committed to Minneapolis' vision for growth."

That growth and the city's hope for a bigger downtown population are raising concerns that there's more supply than demand. On Thursday, Marquette Advisors released a report showing that the apartment absorption rate across the metro is slowing, but analysts said that demographic trends and a robust economy will support additional development — provided it's in a prime location and has all the amenities and design features that will draw renters.

Downtown Minneapolis already has the highest average rents and vacancy rates in the metro area. And though hundreds of new units have hit the market, the average vacancy rate in downtown Minneapolis during the second quarter declined slightly to 5.7 percent, just slightly above what's considered equilibrium. When you factor in all the new apartments that hit the market at that time and are still in lease-up, the average vacancy rate was 7.3 percent.

In Minneapolis, renters now have plenty of options, so it is no longer a given that a building will lease-up regardless of its location and amenities. In downtown, the absorption rate — or number of units that get rented — so far this year was about half its average over the past three years.

The absorption rate across the metro is also slowing and lags slightly behind the total number of new units that have hit the market.

Marquette said that 3,500 new units are scheduled to open in 2016. The vacancy rate, including all new product, will increase slightly to 3.6 to 3.9 percent by the end of the year. And with another 3,500 to 3,800 units expected to hit the market next year, the vacancy rate is likely to increase to 4.4 percent to 4.7 percent by the end of next year.

Though the rental rate is slowing slightly, rents are still on the rise. During the second quarter, the overall average market rent increased 2.2 percent to $1,078 across the 13-county metro.

Floor plans at the latest Opus project will range from alcoves (the latest term for a studio) to three-bedroom units, including 36 penthouse suites. All the units will have granite countertops, stainless steel appliances and floor-to-ceiling windows. The project is slated for completion in summer 2018.

Like Nic on Fifth, the new building will have a full slate of high-end amenities including a bike lounge with repair station, a sauna and steam room and a sixth floor "amenity deck" with a yoga room, pool and outdoor cabanas.

Jim Buchta • 612-673-7376