Minneapolis, MN

Construction in Minnesota is tapering off as the economy slows. The state has generally enjoyed population growth over the last 50 years, and this is beginning to come to an end.

Commodities prices and overall construction activity have both been unusually high for a few years and are recovering as well. Therefore, the cumulative effect of these trends is a reduction in total volume of almost 12% over 2022 and a forecasted decline of almost 8% in 2023. After that, the market should level off.

The Twin Cities, the largest metro area in the state, recently amended their land-use laws to effectively outlaw single-family residential zoning. This has translated into more than 21,000 new projects in the pipeline and kept rents lower than in comparable cities. It will take some time for the full effect of this trend to be seen, but it will most likely mean more multifamily projects and less infrastructure spending as the area has a reduced need for highways.

The local economy is approaching what economists call “full employment,” with the unemployment rate hovering at around 2%. It has been ticking up as the economy cools, however. We expect unemployment and inflation to settle at around 3% by the end of next year.

* Other structures include religious buildings, amusement, government communications, and public recreation projects.