Multi-Family Market Snapshot

Indianapolis
Multi-Family Market Snapshot
Second Quarter • 2014
Economy
Indianapolis Multi-Family
Economic Indicators
2Q 13
2Q 14
12-Month
Forecast
Indianapolis Employment
931K
944K
Indianapolis Unemployment
7.1%
5.2%
U.S. Unemployment
7.5%
6.1%



2Q 13
2Q 14
12-Month
Forecast
127.4K
129.9K
6.0%
5.4%





Market Indicators
Inventory
Overall Vacancy
Net Absorption
309
2,140
Under Construction
2,993
3,786
Average Actual Rent
$827
$851
Net Absorption/Asking Rent
Four Quarter
Trailing Average
4Q Trailing
Average
1,200
$860
1,000
$840
800
$820
600
$800
400
$780
200
$760
0
$740
-200
$720
2010
2011
2012
Net Absorption
2013
2014
Asking Rent, $/Unit
Overall Vacancy
12%
Market Overview
10%
8%
Historical Average = 7.9%
6%
4%
2%
0%
2010
2011
2012
Indianapolis remains in the midst of an economic expansion
while the U.S. and Indiana economies are finally witnessing
sustained improvement. Absent the weather-induced first-quarter
pause in growth, real GDP has averaged 3.0% over the last year.
That rate of growth exceeds the average 2.6% GDP from
2005–2007—commonly referred to as the last real estate boom.
Further, since March, positive economic data has been piling up,
substantially brightening the economic outlook for the year. The
Consumer Confidence Index rose to 85 in June, the highest level
since January 2008. Consumer confidence matters: it reflects
sentiment that underlies and drives consumer spending, the
largest component of GDP. This bodes well for rent growth.
Additionally, the ISM Non-Manufacturing Index and the NFIB
Small Business Optimism Index continued to rise significantly
throughout the second quarter of 2014—a sign that consumers
are not the only ones feeling more confident. But perhaps no
data better demonstrates the improving economy than the recent
job numbers. In June, the U.S. economy created 288,000 net
new jobs, and the unemployment rate dipped near a six-year low
to 6.1% as hiring became increasingly broad-based with small,
medium and large firms onboarding. Meanwhile, Indiana gained
10,000 private sector jobs in June, with every major industry
sector experiencing growth. In fact, Indiana’s private sector gains
signified the largest June increase on record. Since July 2009,
the low point of employment in the state, Indiana’s private sector
has expanded by over 235,000 jobs. Central Indiana’s recovery
is even stronger, with the Indianapolis MSA having already
regained all of the jobs lost during the recession and total private
sector jobs growing 3.3% year-over-year in June.
2013
2014
The Greater Indianapolis multi-family market absorbed 1,064
units during the second quarter, elevating net absorption for the
year to 2,140 units and continuing a streak of five years of
uninterrupted occupancy growth. As a result the multi-family
vacancy rate for all classes of product currently registers 5.4
percent, a decline of 60 bps from a year prior. Strong demand
metrics continue to drive new development, with 1,128 units
IndIanapOlIs
Multi-Family Market Snapshot
second Quarter • 2014
delivered so far in 2014 and a remarkable 4,100 units in various
stages of construction. Despite the delivery of new units, strong
underlying demand metrics and favorable demographics will be
sufficient enough to translate into continued declines in vacancy
rates and increases in rents in the majority of submarkets for the
next 12–18 months.
In the investment arena, multi-family transaction volume remains
solid with over 2,450 units sold in the greater Indianapolis
market over the past six months. Notable investment sales for
the year have included Waterside at Castleton, Harrison Place,
Madison Park, Southgreen Apartments, Inverness Apartments,
Villa Paree, Eagle Creek, Quail Run, Suncrest, Arbor Manor and
Shadeland Court. This investor interest in Central Indiana has
compressed cap rates for Class A, higher-end suburban
properties to the mid-to-low 6 percent range, nearly 100 bps
below prior-year levels. Because cap rate compression in
primary market cities has dropped into the mid-to-low 5 percent
range, investors have sought higher yield opportunities in
historically strong secondary multi-family markets like
Indianapolis. In fact, according to Real Capital Analytics,
secondary markets posted a 36% year-over-year improvement in
the second quarter and have outperformed volume gains in
larger markets so far this year as investors have become
increasingly focused on opportunities inherent in these markets.
actual Rents vs. Vacancy
SINCE 2010 VACANCY IS DOWN 4.7% AND RENTS ARE UP 10%.
SiNCe 2010 VACANCY iS DOWN 4.7% AND ReNTS ARe UP 10%
$860
12%
$840
10%
$820
8%
$800
6%
$780
4%
$760
2%
$740
$720
0%
2010
2011
2012
Actual Rent, $/Unit
• Despite the delivery of new product, vacancy will remain
lower than at any time since the mid-1990s and will track
in the mid-5% range.
• Expect to see piqued interest by out-of-state buyers who
seek to take advantage of higher returns than those found
in other gateway metros.
• The delivery and stabilization of new units will garner
interest from REITs and other institutional investors.
• Private capital buyers will remain both engaged and
focused upon Class A/B/C multi-family properties.
2014
Overall Vacancy Rate
Sources: Pierce-Eislen, REIS, Cassidy Turley Research
Source: Pierce-Eislen, REIS, Cassidy Turley Research
Construction activity by submarket
58%
CONSTRUCTiON
iS iNAND
FiSHeRS
AND
DOWNTOWN
iNDiANAPOliS
58%
OF OF
CONSTRUCTION
58% OFISCONSTRUCTION
IN FISHERS
IS DOWNTOWN
IN FISHERS
AND
INDIANAPOLIS
DOWNTOWN INDIANAPOLIS
Outlook
• Absorption is forecast to continue at a historically
impressive clip, and occupancy will remain stable over the
balance of 2014.
2013
Downtown
Downtown
Fishers
Fishers
North
North
Zionsville
Zionsville
Southeast
Southeast
Northeast
Northeast
Carmel
Carmel
Southwest
Southwest
West
West
Sources: Pierce-Eislen,
Sources:
CassidyCassidy
Pierce-Eislen,
Turley Research
Cassidy
Turley Research
Source:
Pierce-Eislen,
Turley
Research
new supply
GROWTH IS FORECAST TO TRACK WELL ABOVE HISTORICAL AVERAGE.
gROWTH iS FOReCAST TO TRACK Well ABOVe HiSTORiCAl AVeRAge
4000
3000
2000
Historic Average = 977 units
1000
0
-1000
-2000
02 03 04 05 06 07 08 09 10
11
12 13 14
15
16
17
Sources:
Pierce-Eislen, REIS,REIS,
Cassidy Cassidy
Turley Research
Source:
Pierce-Eislen,
Turley Research
www.cassidyturley.com | 2
Indianapolis
Multi-Family Market Snapshot
Second Quarter • 2014
SURVEYED
PROPERTIES
SURVEYED
UNITS
High
ACTUAL RENTS
Low
Average
YOY %
CHG
CLASS A
AVG RENT
CLASS B
AVG RENT
$3,818
$399
$1,152
4.0%
$1,384
$1,194
CLASS C
AVG RENT
UNITS UNDER
CONSTRUCTION
Submarket
Downtown
36
4,920
$706
1,251
East
43
7,215
$940
$385
$606
3.1%
n/a
$695
$619
0
Southeast
11
2,851
$1,260
$429
$789
5.8%
$863
$700
$599
262
South
35
7,675
$1,404
$400
$648
0.9%
n/a
$734
$610
0
Southwest
West
7
1,477
$1,200
$463
$718
4.4%
n/a
$798
$620
64
56
16,515
$2,499
$323
$624
0.8%
$929
$745
$538
62
Northwest
38
10,569
$1,460
$390
$667
1.1%
$987
$753
$532
0
North
86
21,088
$1,800
$340
$748
1.1%
$1,139
$787
$581
643
Northeast
42
11,577
$1,420
$375
$661
1.1%
$968
$698
$545
200
Zionsville
Carmel
Fishers
Greenwood
6
1,308
$1,599
$740
$1,018
1.7%
$988
$943
n/a
266
21
4,853
$3,306
$594
$1,034
5.0%
$1,140
$848
$720
77
9
3,696
$1,799
$670
$950
6.7%
$922
$867
n/a
961
25
5,610
$1,174
$475
$753
0.7%
$943
$772
$601
0
INDIANAPOLIS Market ToTals
Class A
39
10,225
$3,818
$700
$1,102
3.5%
Class B
195
52,484
$3,018
$410
$837
3.2%
Class C
181
36,645
$1,580
$323
$613
1.3%
415
99,354
$3,818
$323
$851
2.7%
TOTAL
Key Sale Transactions YTD
PROPERTY
UNITS
ADDRESS / CITY
BUYER / SELLER
SUBMARKET
Waterside at Castleton
400
8380 Whipporwill Drive / Indianapolis
Wilkinson JV BRT Realty Trust / JVM Realty
Northeast
Harrison Place
307
5812 Beatle Drive / Indianapolis
Steadfast Apartment REIT / Jcap Management JV
Northeast
Madison Park Village & Southgreen Apartments
223
4725 Madison Avenue / Indianapolis
Cross Road Holdings / Madison Park Indiana
South
Inverness Apartments
220
5810 Sebring Court / Indianapolis
The Brauser Group / Ocwen Financial Services
Northwest
Villa Paree
209
6111 Allisonville Road / Indianapolis
EMK Property Investors / Muesing Mgmt.
North
Eagle Creek
188
4061 Eagles Roost Drive / Indianapolis
Pedcor Companies / Buckingham Co.
Northwest
Quail Run
166
1380 Saylor Drive / Zionsville
Buckingham Co. / Silver Co. JV McCann Realty
Zionsville
Arrowwoods
153
7135 Warrior Trail / Indianapolis
Term Security Corp. / Blue Valley Apartments
West
Suncrest
140
1135 Suncress Circle / Indianapolis
Hilltop Realty Advisors / JVM Realty
West
Arbor Manor
108
206 Churchill Drive / Mooresville
Weichert Financial Relations / Neff Rentals
Outlying
Shadeland Court Apartments
100
3900 N Shadeland Avenue / Indianapolis
L&J Investment Properties / Silver Property
Northeast
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IndIanapOlIs
Multi-Family Market Snapshot
421
38
31
second Quarter
Lebanon
•
32
2014
38
32
32
Noblesville
38
Pe
Multi-Family submarkets
65
Indianapolis
69
31
ZIONSVILLE
39
52
Zionsville
865
Carmel
CARMEL
52
74
465
136
9
37
31
465
234
NORTHEAST
Meridian
Hills
37
NORTHWEST
Brownsburg
67
69
421
465
65
36
13
FISHERS
Fishers
421
267
Lawrence
NORTH
31
67
36
52
74
65
Indianapolis
70
36
267
9
IMS
465
anville
67
19
Avon
Speedway
74
36
70
EAST
DOWNTOWN
WEST
465
40
65
70
52
421
267
40
40
SOUTH
SOUTHWEST
Indianapolis
International
Airport
Plainfield
G
40
74
52
70
267
465
Beech Grove 40
74
52
67
31
36
9
SOUTHEAST
67
Southport
31
37
65
135
39
Mooresville
GREENWOOD
Greenwood
74
Fairland
42
about Cassidy turley
144
Jason W. tolliver, J.d.
Cassidy Turley is a leading commercial real estate services provider with more than 4,000 professionals
in more than 60 offices nationwide. With headquarters in Washington, DC, the company represents a
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wide range of clients—from small businesses to Fortune 500144companies, from local non-profi
ts to major
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institutions. The 67
firm completed transactions valued at $25.8 billion in 2013, manages approximately
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400 million square feet on behalf of institutional,
corporate and private clients and supports more than
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24,000 domestic corporate services locations. Cassidy Turley serves owners, investors and tenants with
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a full spectrum of integrated commercial real estate services—including capital markets, tenant
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representation, corporate services, project leasing, property management,
project and development
services, and research and consulting. Cassidy Turley enhances its global service delivery outside North
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America through a partnership with GVA, giving clients access to commercial
real estate professionals in
Bud
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65 international markets. Please visit www.cassidyturley.com
for more information about Cassidy Turley.
Regional Vice President
Cassidy Turley
One American Square, Suite 1300
Indianapolis, IN 46282
Shelbyville
Tel: 317.639.0549
Fax: 317.639.0504
Email: [email protected]
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The information contained within this report is
gathered from multiple sources considered to be
reliable. The information may contain errors or
omissions and is presented without any warranty
or representations as to its accuracy.
Copyright © 2014 Cassidy Turley.
All rights reserved.
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