A new report from Bloomington-based United Properties points outthat the area's population growth is fueling demand for multifamilyresidential housing, with no peak in sight. Between 1990 and 2000,metro area population grew by 353,000 to almost 2.7 millionpeople.

The current vacancy rate is hovering around 2.2%, according to asecond quarter market survey by GVA Marquette Advisors, aMinneapolis-based commercial real estate firm. The United reportputs the vacancy rate at about 2.5%.

Moreover, the vacancy rate for all types of housing is less than1% in the metro area--the lowest in the country, United says.Cities such as Minneapolis and St. Paul are aggressively pursuingnew multifamily development. Suburban communities such asPlymouth,Eden Prairie, Eagan and Woodbury are following suit. In late June,Minnesota Gov. Jesse Ventura signed into law legislationauthorizing a 25% reduction on property taxes on apartmentbuildings--a move that may well trigger a new surgein constructionin the Twin Cities.

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