Minneapolis Property Values: Alarm Bells Should Be Going Off

"The City is worth about $2 billion dollars less than a year ago."

By Carol Becker

The Minneapolis City Assessor presented the 2025 property value estimates to the City Council and alarm bells should be going off for anyone who cares about this city. The value of property represents our belief in our collective future and the numbers say that belief is declining.

The Assessor estimates the overall value of the City declined about $2.1 billion dollars from 2023 to 2024 or about 3.1% in one year. In 2023, all the property in the City was estimated to be worth $67.5 billion dollars.  In 2024, all the property in the City was estimated to be worth only $65.4 billion dollars. To put it in simply, the City is worth about $2 billion dollars less than a year ago.

Unsurprisingly, downtown saw the largest decline, a 13% loss in commercial property value. Valuations of commercial property is based on the rent that property can generate, and foot traffic is only 55% of its pre-pandemic levels.  (https://downtownrecovery.com/charts/rankings) Offices are empty and retail has fled so rents have declined, leading to declines in commercial property values. Employment in Finance, the City’s largest private sector employer, declined 6.8% compared to prior to the pandemic. (DEED QCEW)

Rental property lost 9.5% of its value from 2023 to 2024. All rental property was valued at $14.3 billion in 2023 and only $13.7 billion in 2024, for a loss of over half a billion dollars for property owners in one year.  The most obvious reason is that Minneapolis voters authorized the City Council to enact rent control, which will stifle the rental market. Also, the City has made it harder for landlords to screen out or deal with problem tenants. Many rental property owners are now paying for security due to the lack of police.  Taxes and other costs continue to increase faster than inflation. It makes sense that rental property is less valuable. Minneapolis reduced zoning regulations with its 2040 Plan in an attempt to attract more rental property, but it is hard to see investments continuing when the value of those investments decline.  

Single family homes collectively lost 1.2% of their value.  This isn’t surprising as the population declined 1.1%, the last two years, from 429,985 in 2020, to 425,096 in 2022. (U.S. Census) Many homeowners will most see double digit tax increases next year, even if the City, School Board and County do not increase their levies, due to the decline in commercial and rental property.

The decline in ownership housing is the most disturbing, as it represents a real loss of wealth for regular people. Residents lost about $100 million in wealth in one year. And it is simply a reflection of the belief in the viability and attractiveness of our city. The causes seem obvious. Crime increased compared to prior to the pandemic. Travel in the City is being stifled to accommodate bike lanes, making it harder for both residents and non-residents to access jobs and businesses. Retail employment declined 12.6% since 2019, (DEED QCEW) with Target’s leaving Uptown being the most obvious loss. Homeless encampments make whole neighborhoods crime magnets.

One would think our newly elected City Council would be laser-focused on these issues given billions of dollars and the future of the City is at stake. Coming up with new ways to recruit and retain police. Finding ways to make it easier for people to get to jobs and businesses. Meeting with business owners to understand why they may consider leaving the City. Bringing in new tools to strengthen small businesses. Accelerating the conversion of commercial spaces to housing in downtown. Meeting with landlords about what can be done to reduce their costs. Strategizing now on how to reduce property tax levies, as the City has a growing housing affordability problem and property taxes make housing less affordable. 

Instead, the priorities of our new City Council, so far, have been a divisive vote on Gaza, and driving Uber and Lyft from the region.  But they have a year and a half in this term, plenty of time to change their agenda to focus on the real issues of the City. And I hope they do. The lives of hundreds of thousands of people depend on it.