After a busy morning on the St. Paul Campus last week, I grabbed the latest Pioneer Press on my way back to Minneapolis. After hopping aboard the Campus Connector and making myself comfortable, I began to skim the front page headlines and my jaw dropped at what I saw. Rottlund Homes, a longtime Twin Cities homebuilding giant, announced that they were going out of business following completion of their existing projects.
I first heard of Rottlund last year when a housing studies grad, now a project manager for the company, came and spoke to our class. I quickly learned that Rottlund is a common name around the Twin Cities area, with an immense local portfolio of residential developments, consisting almost exclusively of single family and low-density homes in the suburbs. They have been in operation for over 35 years.
Claiming to have succumb to the recent economic recession and housing crisis, Rottlund's fall came as a stark reminder of the uncertainty surrounding today's housing markets. So what can we learn from this? In my personal opinion, it really goes to show the importance of the market versatility that today's housing developers must adapt to in order to remain prosperous.
Catering to the overwhelmingly home-owning suburban markets, Rottlund prospered for several decades tapping the growing cultural trend of homeownership. Following the recent mortgage and foreclosure crisis (which had devastating effects on our economy), the rate of home buyers dropped dramatically. Although the majority of our homes remain owner-occupied, there has been little demand for new home construction in the suburbs.
But the decline in demand in that particular market stood alongside a rise in demand for affordable rental housing, and falling vacancy rates in market rate rentals as well. It may not be wise for me to suggest that Rottlund could have stayed afloat by developing urban apartment complexes, but a change in tide has indeed led to prosperity for several development companies around the Twin Cities. Trying their take at residential development, Doran Companies (native to commercial development) has seemingly struck gold supplying the rental market around the East Bank Campus. Construction is underway on their third apartment complex in the area over a two-year period, following the huge successes of Sydney Hall and 412 Lofts.
The times are a-changin'
Hope you had a great Thanksgiving Break!
Jesse LaMaack, Housing Studies B.S.
photo credit: http://www.bizjournals.com/twincities/news/2011/11/17/rottlund-homes-going-out-of-business.html