TOWER— A initial market assessment prepared by Maxfield Research and Consulting, finds considerable potential demand for new housing in Tower, with an emphasis on new housing opportunities for active seniors in a downtown location. The analysis also found potential for the construction of market rate housing for a general population in a lower density setting elsewhere in the community.
The assessment, meanwhile, found less potential for a downtown apartment appealing to those 54 years of age or younger. “Development costs and muted demand prevents a single development of this size from being financially feasible at the site,” noted the report. “In most circumstances, demand of at least 40 to 50 units is needed to support market rate rental housing in a downtown site location.”
City officials are currently working with the Minnesota Housing Partnership to explore the construction of a downtown apartment building, most likely located on the vacant Main Street site between the Timberjay office and The Car Wash. The state of Minnesota allocated considerable funding for new housing last year and the city is hoping to be able to obtain some of that funding to provide more housing opportunities in the city. The Maxfield report found potential demand within Tower’s primary market area for up to 87 market rate and 51 units of affordable active adult units through 2029. “We estimate the site in Tower could capture 35 and 25 units, respectively,” notes the report.
The Maxfield study was an initial assessment. Should city officials opt to move forward, they would likely retain Maxfield to conduct a feasibility study of a specifically identified project.
The initial assessment concludes that about 75 percent of the demand for rental housing would come from Tower’s primary market area, which includes the city and several adjacent townships. The rest would come from outside the market area, mostly from seniors from the Twin Cities who are interested in the outdoor recreational amenities available in the area. The report specifically lists Lake Vermilion and the Boundary Waters Canoe Area Wilderness as amenities that are likely to attract active seniors, particularly recent retirees.
According to Maxfield, the area’s population trends argue for apartment options geared toward seniors, with some allowance for younger residents as well. “For example, younger and older people are more attracted to higher density housing located near city services and entertainment while middle-aged people (particularly those with children) traditionally prefer lower-density single-family homes,” notes the report. “If an all-ages rental project was entertained at the downtown site, the target market would be seniors but could also market to younger households desiring rental housing.”
The report concludes that expanding opportunities for middle-aged families would best be done through the construction of townhomes, twin homes, or villas in lower-density settings. That housing is currently being developed elsewhere within the city.
The impact of the baby boom continues to make itself apparent as the study found that older adults and seniors make up 57 percent of the population within Tower’s primary market area currently, a population that is expected to continue to grow.
Within Tower itself, the population continues to trend older as well. As of 2020, those over age 55 constituted 46 percent of the population within the city.
New housing could help to arrest a gradual decline in the city’s population, which Maxfield estimated at 396 currently, a decline from the 430 residents identified in the 2020 census. Maxfield projects the city’s population will continue its slide, reaching just 377 by 2030 without the creation of additional housing.