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The paint was barely dry on the walls of Junction Flats, a luxury apartment building in downtown Minneapolis, when an out-of-town investor swooped in and paid $49 million — a whopping $270,000 per unit — to buy it.

That sale wasn’t a fluke.

Investors from across the country are descending on the Twin Cities and outbidding one another for apartment buildings.

“Every sale in the last 18 months has set a new pricing record,” said Abe Appert, senior vice president with CBRE in Minneapolis. “It’s unprecedented.”

Investors are expected to spend about $800 million on apartment buildings in the Twin Cities this year. And a deal is looming that could value a single property at more than $100 million, brokers said.

The demand is shaped by the confluence of strong fundamentals in the Twin Cities rental market, including a high rate of construction, a low number of vacancies and an abundance of capital seeking a safe haven and solid return.

Across the country, investors are on track to spend a record amount on multifamily properties this year. Through the first half of the year, apartment building sales topped $34 billion and are likely to exceed a record $60 billion by the year’s end, according to commercial real estate brokerage Cassidy Turley.

Experts say that cap rates, or yield on investment, for apartment buildings in most U.S. markets, including the Twin Cities, exceed other investments. They are expected to remain stable, drawing more buyers.

“We’re seeing all kinds of new high-water marks in terms of prices,” said Julie Lux, associate vice president with Cassidy Turley. “But our market is still a bargain for investors from the East and West coasts.”

Appert said that on every one of his listings this year he’s received 10 to 20 bids, and that more than 80 percent of the largest properties that have traded hands this year have sold to out-of-town buyers, of which more than half are first-time buyers in this market.

Barry Mandel, a developer from Milwaukee, recently bought Lemay Lake Apartments, a 282-unit development in Eagan, and is considering others in the Twin Cities. “These types of acquisitions allow us to diversify our asset base to include select Midwestern markets, and provide our investors with opportunities in markets with which they have familiarity and a high level of comfort,” Mandel said.

And in May, Washington-based Weidner Apartment Homes paid nearly $31 million for the 119-unit Vue apartments near Loring Park. That was almost $260,000 per unit, which was a record in the Twin Cities until Junction Flats closed earlier this month. Last year, the average per-unit price for Twin Cities apartment building deals was just $78,000.

The Twin Cities has the fourth-lowest apartment vacancy rate in the nation. Meanwhile, 3,415 new apartments were added during the first nine months of the year, with another 1,531 units expected to hit the market by the end of the year, according to third-quarter data from Marquette Advisors. Most of these new buildings have leased up ahead of schedule, bolstering confidence among the investors looking at the market.

The Nic on Fifth, a luxury high-rise apartment building in the heart of downtown, sold earlier this month sold for what is rumored to be far more than Junction Flats. Its price hasn’t yet been recorded.

Meanwhile, a sale of 222 Hennepin, a lively mixed-use development that includes 232 luxury apartments and a Whole Foods grocery, is on the horizon. After opening last year, the building is already 98 percent occupied.

The Twin Cities is also seeing the appearance of a growing number of “merchant developers” that plan to sell their buildings after lease-up. Trammell Crow, for example, was a leading commercial developer in the Twin Cities until the economic downturn in 2008. They returned a few years ago to build several commercial and residential projects, including Junction Flats, which they sold to an South Carolina company.

“Our going-in investment objective was always to sell Junction Flats,” said Grady Hamilton, a principal in Trammell Crow’s Chicago office.

The firm is just months from opening Arcata, a 165-unit luxury apartment building next to the Colonnade office tower in Golden Valley. And it has just begun work on the Island Residences, a 174-unit development on a small island next to the Carlson Towers, the Minnetonka office complex that Trammell Crow developed in the 1980s.

Despite being one of the tightest rental markets in the nation, the Twin Cities is far from being the most active market for multifamily buyers. Several less populated regions have seen far more sales. In Denver, for example, there were $2.3 billion in sales through September.

The disparity between such markets is a reflection of a dearth of properties for sale rather a lack of demand. Historically, the Twin Cities has been a market where apartment properties rarely changed hands.

About 90 percent of the big apartment communities in the Twin Cities are locally owned. In many markets, particularly newer boomtowns like Austin, Texas, national investors own up to half of the apartment complexes.

“It’s a farming mentality here,” Appert said. “We tend to be the ones to grow your crops, harvest them every year and put that money back into the land and then pass that land back to down to the next generation. Whether you own a cornfield or an apartment building, the mentality is the same here.”

That’s beginning to change. Earlier this year, a portfolio of 11 properties, mostly vintage buildings in Minneapolis that had been in the same family for more than 50 years, were acquired by a joint venture of a Lake Forest, Ill., investment firm and CPM Property Management of the Twin Cities. The sellers received more than 20 offers.

Investors’ demand for Twin Cities apartment properties will eventually cool, local brokers said, but there’s no evidence that it will happen soon. One sign of the heat: for the $600 million in apartment buildings sold by CBRE this year in the Twin Cities, the cumulative value of the bids reached nearly $6 billion.

“There’s still money out there wanting to be spent,” Appert said. “When you have more than $5 billion in bids wanting to get into the market but didn’t, there’s all the more reason to believe the market has sustainability.”

Jim Buchta • 612-673-7376