A new report from Bloomington-based United Properties points out that the area's population growth is fueling demand for multifamily residential housing, with no peak in sight. Between 1990 and 2000, metro area population grew by 353,000 to almost 2.7 million people.

The current vacancy rate is hovering around 2.2%, according to a second quarter market survey by GVA Marquette Advisors, a Minneapolis-based commercial real estate firm. The United report puts the vacancy rate at about 2.5%.

Moreover, the vacancy rate for all types of housing is less than 1% in the metro area--the lowest in the country, United says. Cities such as Minneapolis and St. Paul are aggressively pursuing new multifamily development. Suburban communities such asPlymouth, Eden Prairie, Eagan and Woodbury are following suit. In late June, Minnesota Gov. Jesse Ventura signed into law legislation authorizing a 25% reduction on property taxes on apartment buildings--a move that may well trigger a new surgein construction in the Twin Cities.