United States -  Minneapolis - St Paul

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 recent completion 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 host of  Super Bowl LII in 2018 and the NCAA Final Four in 2019. 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 remained stable at 68% in 2016, and average rate (ADR) reached a record high $118, followed by a decline in both metrics in 2017, largely due to significant supply additions in the greater metro area. In addition to hotel development, Minneapolis has realized a strong surge in new residential urban development with the evolution of such large projects as the 1.1-million-square-foot East Town Towers and the $1.1-billion U.S. Bank Stadium. One of the largest projects proposed for development in Minneapolis is the 33-story Gateway Tower, planned for a site at the north end of Nicollet Mall, which would be anchored by RBC Wealth Management. Large sporting events, such as the 2016 Ryder Cup at Hazeltine, Super Bowl LII in February 2018, and the upcoming NCAA Final Four in 2019, help to garner national attention; moreover, the Super Bowl generated 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.

Currently, several major hotel projects are underway in the metro area. Downtown Minneapolis hotels under construction include the Canopy by Hilton Thresher Square, The Elliot Hotel Autograph Collection, Moxy by Marriott, and Element at Target Field, while a Residence Inn by Marriott is under construction in Downtown St. Paul, and an InterContinental, to be connected to the Minneapolis-St. Paul International Airport Terminal InterContinental, is set to open in the summer of 2018. The supply pipeline remains strong for the Twin Cities; numerous other projects near the Mall of America, in both downtown areas, and surrounding suburbs are in the planning stages.

Transaction activity remains strong in Minneapolis-St. Paul. Twenty major sales (identified as $10 million and over) have occurred in the metro area since January 2016, totaling nearly $640 million in transaction volume, including such assets as the 821-room Hilton Minneapolis, the Radisson Water Park of America in Bloomington, and the Marquette Minneapolis (highest per key price paid at $376,000). 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. 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.

* 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.

Change In Value For Market:

Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Minneapolis - St Paul RevPAR Change

Minneapolis - St Paul RevPAR

Year RevPAR
2007 $64.12
2008 $62.75
2009 $50.69
2010 $55.06
2011 $60.91
2012 $63.00
2013 $67.46
2014 $72.53
2015 $76.71
2016 $80.61
2017 $77.59
2018 $79.93
2019 (f) $80.31
2020 (f) $82.32

For more information, please contact:

Tanya Pierson, MAI
[email protected]
  • +1 303 588-6558 (w)