Apartment rents were up 9.7 percent last year to anaveragemonthly rate of $751, according to Pat Smith,an apartment salesspecialist with Coldwell BankerBurnet in Minneapolis. The biggestincreases were seenin Minneapolis, up 16 percent, and St. Paul, up12percent.

Vacancy rates, meanwhile, averaged about 1.5 percent,althoughsome submarkets like Woodbury are in the 3.5percent to 4.5 percentrange due to constructionactivity, Smith said.``In some cases,owners are passing on outrageousincreases in rents,'' says TomCooper, a vicepresident and partner with the MinnesotaBrokerageGroup.

Contributing to the rising rates is a continued dearthof newconstruction activity. Last year, just 1,097units were added to theTwin Cities multi-housingmarket and so far this year there havebeen only 640 newunits, Cooper said. Only eight multi-housingprojectsare likely to go up between mid-2000 and mid-2001.Barriersto new construction remain,such as lack of available land zoned forhigh density,high property taxes, high construction costs,andcommunity resistance to high-density development.