United States -  Minneapolis - St Paul

Overview:

The Minneapolis-St. Paul metropolitan area benefits from a well-diversified economy. The Twin Cities enjoys a broad mix of demand sources, including financial, health care, and consumer goods corporate business; strong convention traffic from the spring through the fall; and tourism related to sporting events, regional shopping, and theater productions. Major projects within the metro area include the construction of U.S. Bank Stadium (NFL Minnesota Vikings) and adjacent Downtown East mixed-use development, as well as enhanced light-rail connectivity between Downtown St. Paul and Minneapolis. These developments have fostered the selection of the Twin Cities as the upcoming host to the Super Bowl and the NCAA Final Four. Furthermore, this growth has attracted the interest of hotel developers, and numerous lodging projects are in the works for the metro area.

Market-wide occupancy surpassed 68% in 2015, and average rate reached a record high $112. Recent hotel openings include the 342-room JW Marriott at Mall of America and the 302-room Hyatt Regency Bloomington Central Station. Downtown Minneapolis hotels under construction include the AC by Marriott, Embassy Suites by Hilton, and the Hewing Hotel, while a Hyatt Place and Hampton Inn & Suites are under construction in Downtown St. Paul. Given consideration to transaction volume, new supply, and demand trends, we anticipate the value of Minneapolis-St. Paul hotels to remain fairly steady over the next two years.

Transaction activity remains strong in Minneapolis-St. Paul. Thirteen major sales (identified as $10 million and over) have occurred in the metro area since January 2014, totaling $506 million in transaction volume, including such assets as the W Minneapolis The Foshay (highest total price paid at $86,000,000 or $376,000 per key) and the Marquette Minneapolis for $265,000 per key. Strong investor interest remains for the Twin Cities, and existing owners continue to invest in their assets, as a majority of Downtown Minneapolis and St. Paul properties have been recently renovated or are scheduled for renovation in the next twelve months. Large sporting events such as the 2016 Ryder Cup at Hazeltine, Super Bowl LII in 2018, and the NCAA Final Four in 2019 are expected to garner national attention; moreover, the Super Bowl will generate a significant amount of lodging demand during a period of low occupancy for the market. Given the diversity of the local economy, Minneapolis-St. Paul is anticipated to continue to be a strong major metropolitan area, with moderate demand growth expected in the near future.

* The HVI is an index, a statistical concept reflecting a measure of the difference in the magnitude of a group of related variables compared with a base period. As such, it is a measure of broad market trends, rather than a conclusion as to the specific value of any asset, and cannot be applied to an individual asset. A good comparison is the Consumer Price Index. While this index provides a reliable measure of the overall rate of inflation in a region, it does not indicate how the price of milk has changed at your grocery store. So how can the HVI be of use to an individual investor? Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent big picture data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Valuation Trends and Predictions:

Minneapolis - St Paul United States
Previous Year -1% (60 of 71) +1% (49 of 71)
Growth in 2017 +1% (49 of 71) +2% (36 of 71)
Growth in next 3 years +4% (64 of 71) +10% (36 of 71)

Change In Value For Market:

Minneapolis - St Paul RevPAR % Change

For more information, please contact:

Tanya Pierson, MAI
TPierson@hvs.com
  • +1 303 588-6558 (w)