Apartment rents were up 9.7 percent last year to anaverage monthly rate of $751, according to Pat Smith,an apartment sales specialist with Coldwell BankerBurnet in Minneapolis. The biggest increases were seenin Minneapolis, up 16 percent, and St. Paul, up 12percent.

Vacancy rates, meanwhile, averaged about 1.5 percent,although some submarkets like Woodbury are in the 3.5percent to 4.5 percent range due to constructionactivity, Smith said.``In some cases, owners are passing on outrageousincreases in rents,'' says Tom Cooper, a vicepresident and partner with the Minnesota BrokerageGroup.

Contributing to the rising rates is a continued dearthof new construction activity. Last year, just 1,097units were added to the Twin Cities multi-housingmarket and so far this year there have been only 640 newunits, Cooper said. Only eight multi-housing projectsare likely to go up between mid-2000 and mid-2001.Barriers to new construction remain,such as lack of available land zoned for high density,high property taxes, high construction costs, andcommunity resistance to high-density development.