Indiana Apartment Market Overview

2Indiana0Apartment
1 4 Market Overview
25
years
Multihousing Investment Advisors
Economic Overview
2014 Key Topics
National Rental Fundamentals – Historic Strong Occupancy and Rent Growth
National occupancy stood at 95.8% at the end of the third quarter, up from 95.7% last year, according to Reis research
firm. Current occupancy is well above the 94.5% average occupancy for the last fifteen years. The increase comes in
spite of robust new apartment construction in the past twelve month period. High occupancies have continued to result
in healthy rent growth. Third quarter rents nationally were up 3.3% from this time last year and are up 15.2% since
the end of the recession in 2009. The strong rental market is largely the result of (i) a lackluster home buying market
due to stricter mortgage loan underwriting and (ii) a general shift in lifestyle preference to renting and the flexibility and
freedom renting provides.
Millennials Continue (and Will Continue) to Fuel Rental Demand
The Millennial Impact
Number of Births by Year (1953-2013)
5,000,000
Millennials
4,500,000
4,000,000
3,500,000
3,000,000
2013
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
1967
1965
1963
1961
1959
1957
2,000,000
1955
2,500,000
1953
According to the most recent Freddie Mac Economic
and Housing Outlook, over the past four quarters the
growth in net household formations has occurred
primarily among renters and the decline in the
homeownership rate is primarily concentrated among
younger households. For those 35 years and younger
(a prime rental demographic) the homeownership
rate has fallen from 43.6% to 35.9% over the past
decade. According to the report, there will be 8.3
million new Millennial households formed between
now and the end of 2018 and most of these new
households will be renters. The number of Millennials
(those born between 1980-2000) is approximately 80
million strong.
Source: US Census
Another Active Year in Development for Indianapolis Class A Properties
Because of strong rental fundamentals and rising sale prices, apartment construction is burgeoning. Except for
Section 42 tax credit properties, development is occurring almost exclusively in Class A luxury apartments, including
amenity-filled student properties. The cost of new construction is too high to justify market rate properties that won’t
command premium rents. One consequence of the construction cost increase is that developers may have to forego
developments in areas which cannot justify the required higher rents. The result may be additional development in
the same affluent areas (downtown and the northside) and little new development in other submarkets. 2014 may
represent the peak of development with more than 4,200 units delivered in the Indianapolis metropolitan area, the
most in this millennium.
Easing Concern Regarding Increased Interest Rates
For some time after the spike in interest rates that occurred in the summer of 2013 (following the Fed’s hint of a
potential tapering of its bond purchases), the risk of higher interest rates was a major concern for apartment investors.
However, after the ten-year U.S. Treasury reached a high of almost 3.0% in August 2013, rates have fallen back and
moved in a somewhat narrow range between 2.4% and 2.7%. There is now noticeably less angst regarding higher
rates in 2015. The cause for this easing concern is the strong flow of capital to the United States due to (i) a general
2
Multihousing Investment Advisors
Economic Overview
2014 Key Topics
anticipation of slowing global growth and (ii) a
significant amount of turmoil abroad, ranging
from the rise of ISIS/ISIL terrorism to Russian
aggression in Eastern Europe to the Ebola
virus outbreak in western Africa. In sum, the
United States continues to offer the world’s
safest investment environment and this fact
should serve to temper any increases in the
long treasury rate throughout 2015.
Declining Foreclosures and Distress Sales
Another concern overhanging the real estate
market for several years has been the vast
amount of loans, particularly CMBS loans,
maturing between 2013 and 2018. The concern has been that owners will be unable to find satisfactory refinancing
options, resulting in a flood of defaults. So far; those fears for multifamily properties have simply not materialized
due primarily to continued low interest rates and strong rental fundamentals which have allowed owners threatened
with maturity defaults to either refinance or sell their property at or above the loan amount. It now seems as though
multifamily defaults are more the result of owner distress (inadequate capitalization or poor management) as opposed
to financing issues.
Looking Forward
In the coming twelve months we foresee: (i) another healthy year for development due to demand, readily available
capital, and good performance of new high-end product (we project 3,900 units to be delivered in 2015); (ii) a solid
year for rents and occupancies, but with increasing pressure as a result of the substantial new deliveries; and (iii)
another year in which demand will exceed supply for the acquisition of multifamily assets, keeping prices high and cap
rates at historic lows, even if interest rates increase moderately.
Please visit www.TAmultihousing.com for more information
3
Job Growth
Economic Overview
State of Indiana
Indiana Economy
100,000
80,000
•
•
•
•
Huntington County - Wisconsin Breakfast Food Producer
Plans New $20M Processing Facility – Will Create 100 jobs
(9/11/14)
•
4
Change in Employment
2006
2007
2008
2009
2010
2011
2012
2013
(28,700)
2014
(T-12)
(60,000)
(80,000)
(180,000)
(169,800)
Total Establishment Employment Indiana 8/14= 3,005,000
Source: Bureau of Labor Statistics
Unemployment Rate
Indiana & Indianapolis MSA
12.0%
11.0%
10.4%
10.1%
10.0%
9.0%
9.0%
8.7%
8.0%
7.0%
6.0%
5.3%
5.3%
5.4%
5.0%
4.0%
4.8%
4.7%
4.8%
2004
2005
9.1%
8.4%
8.4%
7.5%
7.8%
5.9%
5.0%
6.9%
5.1%
4.4%
3.0%
5.5%
4.6%
5.1%
4.1%
2.0%
1.0%
0.0%
2003
2006
2007
Indiana
2008
2009
2010
2011
2012
2013
2014
(Aug)
Indianapolis MSA
Source: Bureau of Labor Statistics
Job Growth
Indianapolis MSA
50,000
40,000
30,000
Change in Employment
Like the state, economic activity in Indianapolis was vibrant in
2014. The city added 18,900 jobs in the trailing twelve months
ended in August 2014. Indianapolis’ unemployment rate in
August was 5.1%, down from 6.9% the same period last year
- the lowest since prior to the recession. Indianapolis-area
business developments announced in 2014 include:
•
2005
(160,000)
Indianapolis Economy
Cummins to Spend $30M on New Division Headquarters in
Downtown Indy (3/28/14)
2004
(5,600)
(40,000) (32,500)
32,300 36,400
9,700
(140,000)
Elkhart County - Boat Manufacturer Adding 100 Jobs
(10/1/14)
•
2003
12,300
53,000
(120,000)
LaPorte – Alcoa Aerospace Division, To Invest $100M and
Add 300+ New Jobs (5/29/14)
Tippecanoe County - British Agribusiness Investing $90+
Million in New Plant (7/15/14)
2002
18,900
(100,000)
Ft. Wayne - Shared Services Center to Add 320 Jobs in
Fort Wayne (8/7/14)
•
•
0
(20,000)
Princeton - Toyota Investing $100M, Adding 300 Jobs to
Build More Highlanders (8/22/14)
Jamestown - Japanese Auto Parts Supplier to Locate New
Operations Here – Create 195 Jobs (9/12/14)
45,300
26,600
20,000
Lafayette - GE Aviation to build $100 Million, 200 Employee
Jet Engine Assembly Factory (3/26/14)
•
•
40,000
Unemployment Rate
•
38,400
60,000
Indiana continued to experience solid economic growth in 2014.
An estimated 34,600 jobs were added in the state in the trailing
twelve months through August and the unemployment rate has
dropped to 5.5%, the lowest since 2008. Indiana continues
to receive high marks for its business climate. In 2014 the
state was named best in the Midwest and the seventh best
nationwide according to Area Development’s “Top States for
Doing Business” survey. This business-friendly atmosphere has
resulted in numerous planned new economic developments
in every corner of the state. Below are but a few of the many
projects announced in the last few months.
25,400
20,000
10,000
0
(10,000)
13,100
7,900
2002 2003
(3,300)
2004
10,600
2005
2006
2007
18,000 18,900
16,400
14,800 14,200
2008
(1,500)
2009
2010 2011
(1,400)
2012
2013
2014
(T-12)
(20,000)
(30,000)
(40,000)
(41,200)
(50,000)
Source: Bureau of Labor Statistics
Total Establishment Employment Indianapolis MSA 8/14= 966,000
•
Lowe’s Selects Indiana for New 1,000 Employee Customer
Support Center
Health Management Company Expands Indy
Headquarters, to Add Hundreds of Jobs across State
(5/28/14)
•
Stonegate Mortgage Grows Indianapolis Headquarters,
Adds 400 New Jobs (3/4/14)
Email Application Developer Launches in Indianapolis.
Plans 150 Employee Operation (2/27/14)
•
National Beauty Retailer Locating Fulfillment Center
in Greenwood, Adding 500+ New Jobs (4/10/14)
Hat World Unveils Major Expansion in Zionsville, Adding
750+ New Jobs (1/10/14)
Multihousing Investment Advisors
2014 Indiana Cities
Indiana Rental Market Statistics
Market Performance
Market
Rent Growth
Avg.
Rent/
S.F.
Anderson
0.0%
$0.63
$580
91.3%
Bloomington
2.4%
$0.98
$893
94.2%
City
Avg. Rent/
Unit
Market
Occupancy
Columbus
0.6%
$0.91
$821
95.4%
Evansville
1.6%
$0.74
$637
93.3%
Fort Wayne
0.7%
$0.72
$603
93.2%
Indianapolis
1.2%
$0.82
$738
92.0%
Kokomo
2.0%
$0.68
$574
94.4%
Lafayette / W. Lafayette
2.5%
$0.89
$789
93.3%
Muncie
2.6%
$0.81
$741
95.6%
Green type represents an increase from 2013, black represents
South Bend / Mishawaka
3.5%
$0.81
$673
91.7%
no change and red represents a decrease from 2013
Average Rent
Average Rent / Sq. Ft.
Avg. Rent
Avg. $ / SF
Studio
Avg. Sq. Ft.
Total Units
Avg. Rent
Avg. $ / SF
1 Bedroom
Avg. Sq. Ft.
Total Units
Avg. Rent
2 Bedroom/ Avg. $ / SF
1 Bath
Avg. Sq. Ft.
Total Units
Avg. Rent
2 Bedroom/ Avg. $ / SF
2 Bath
Avg. Sq. Ft.
Total Units
Avg. Rent
Avg. $ / SF
3 Bedroom
Avg. Sq. Ft.
Total Units
Avg. Rent
Avg. $ / SF
4 Bedroom
Avg. Sq. Ft.
Total Units
20
2,934
95.4%
0.6%
$821
$.91
$509
$1.62
314
74
$747
$1.06
705
871
$788
$.86
921
883
$914
$.90
1,013
676
$955
$.80
1,200
383
$873
$.64
1,361
47
64
10,881
93.3%
1.6%
$637
$.74
$441
$.98
451
129
$548
$.80
687
4,761
$645
$.71
910
3,991
$818
$.71
1,146
1,286
$902
$.73
1,234
672
$840
$.59
1,414
42
72
17,408
93.2%
0.7%
$603
$.72
$452
$.98
462
639
$524
$.79
663
7,357
$595
$.65
914
4,671
$719
$.70
1,033
3,430
$845
$.67
1,264
1,267
$741
$.57
1,293
44
21
3,018
94.4%
2.0%
$574
$.68
$404
$.88
459
133
$493
$.75
653
829
$569
$.64
888
1,317
$651
$.68
958
414
$768
$.64
1,209
319
$790
$.51
1,553
6
en
d
22
2,646
95.6%
2.6%
$741
$.81
$482
$1.38
350
37
$574
$.90
635
651
$645
$.72
902
973
$709
$.73
968
244
$882
$.77
1,145
515
$1,388
$1.05
1,318
226
th
B
65
10,885
93.3%
2.5%
$789
$.89
$569
$1.36
419
525
$603
$.92
655
3,508
$706
$.81
872
3,735
$868
$.85
1,017
1,238
$1,089
$.83
1,312
1,159
$1,588
$1.03
1,545
663
So
u
ko
mo
Ko
Wa
yn
e
Ft.
Ev
an
sv
ille
us
lum
b
Co
om
ing
ton
78
10,425
94.2%
2.4%
$894
$.99
$545
$1.53
355
382
$716
$1.06
675
3,103
$717
$.84
854
2,872
$1,056
$1.03
1,024
2,188
$1,178
$.91
1,298
1,433
$1,862
$1.23
1,509
447
Mu
nc
ie
Overall Rent Growth (2013 - 2014)
20
2,115
91.3%
0.0%
$580
$.63
$384
$.93
411
19
$514
$.74
693
499
$570
$.62
914
1,086
$663
$.71
933
148
$672
$.55
1,223
345
$722
$.47
1,539
18
La
fay
ett
e
Total Properties
Total Units
Occupancy Rate
Blo
An
de
rso
n
Source: Tikijian Associates
32
10,599
91.7%
3.5%
$673
$.81
$464
$1.03
451
119
$586
$.85
688
4,935
$689
$.76
910
3,231
$816
$.81
1,008
1,612
$1,037
$.81
1,277
472
$579
$.43
1,337
28
Average Occupancy by City
100%
98%
96%
94%
92%
90%
88%
86%
84%
82%
2010
2011
2012
2013
2014
Source: Tikijian Associates
Please visit www.TAmultihousing.com for more information
5
Indiana Average Rent and Occupancy
(Avg Rent / Avg Rent per sq ft / Avg Occupancy)
80
Indiana led
94
ELKHART
MISHAWAKA
MICHIGAN CITY
$585 / $0.73 / 91.8%
PORTAGE
SOUTH BEND
$736 / $0.83 / 96.2%
the nation in
$690 / $0.81 / 91.5%
MERRILLVILLE
$872 / $0.95 / 89.1%
CROWN POINT
$880 / $1.01 / 93.6%
manufacturing
FT. WAYNE
469
$603 / $0.72 / 93.2%
31
job growth over
65
69
the past year
and is poised
$614 / $0.72 / 94.5%
$680 / $0.83 / 92.1%
37
MARION
WEST LAFAYETTE
$932 / $0.96 / 92.2%
$519 / $0.61 / 91.2%
KOKOMO
$574 / $0.68 / 94.4%
LAFAYETTE
$652 / $0.80 / 94.3%
MUNCIE
to prosper
74
$741 / $0.81 / 95.6%
ANDERSON
$580 / $0.63 / 91.3%
as American
INDIANAPOLIS
465
70
RICHMOND
$738 / $0.82 / 92.0%
manufacturing
$545 / $0.64 / 92.1%
70
TERRE HAUTE
becomes more
$644 / $0.74 / 96.8%
74
competitive
COLUMBUS
BLOOMINGTON
$821 / $0.91/ 95.4%
$894 / $0.99 / 94.2%
internationally.
65
37
31
CLARKSVILLE
$615 / $0.67 / 94.3%
JEFFERSONVILLE
$661 / $0.73 / 94.5%
NEW ALBANY
$648 / $0.62 / 95.2%
64
164
EVANSVILLE
$637 / $0.74 / 93.3%
6
Multihousing Investment Advisors
Indianapolis Rental Market Statistics
For the first time in five years, occupancy in the Indianapolis
Metro area did not increase in 2014, dipping just a tick to 92.0%
from 92.1% last year. Among submarkets, Downtown again led
the city (for the fourth consecutive year) at 95.2%, although that
represented a slight drop from last year’s 95.4%. The North
submarket was again second in occupancy at 93.5%, unchanged
from last year. The solid performance of these two high-occupancy
submarkets, in spite of the delivery of a significant number of new
units within those markets, is proof that increased development
has to-date had little, if any, impact on occupancy.
Total Apartment Base (units)
Number of Communities (all)
Number of Communities (> 200 units)
Average Community Size (units)
Average Occupancy Rate (2014)
Median Occupancy Rate (2014)
Rent Growth Rate (2013 to 2014)
Annual Rent Growth (2009 to 2014)
"Same Store" Annual Rent Growth (2009 to 2014)
"Same Store" Annual Rent Growth (2004 to 2014)
140,700
747
314
190
92.0%
95.0%
2.8%
1.9%
1.0%
1.5%
Total Apartment Base in units (140,700) and communities (747) equals all
properties in the metro area, including properties still under construction, fully
subsidized properties, and smaller properties not part of the Tikijian Associates
Annual Rent Survey. The total units (129,449) and properties (655) shown in
the Occupancy and Rent chart below are properties included in the Annual
Rent Survey.
Occupancy in other submarkets moved in different directions,
with the East submarket climbing to 87.8% from 87.3% last year;
the West submarket remaining unchanged at 91.0% and the
South dipping to 92.4%
from 93.0% last year.
Indpls Dwntwn North South
East West
Indy
Indy
The improvement in the
Metro Indpls Metro Metro Metro Metro Class Class
East submarket is largely
Area
Area
Area
Area
Area
Area
"A"
"B"
driven by rehabs and
Total Properties
655
110
179
126
108
132
119
298
management
changes
Total Units 129,449
9,116 45,858 25,054 16,828 32,593 30,026 60,297
of a number of large
Occupancy Rate
92.0% 95.2% 93.5% 92.4% 87.8% 91.0% 94.3% 94.0%
distressed properties. The
Overall Rent Growth (2013 - 2014)
2.8%
3.8% 3.2% 2.4% 1.8% 1.7% 4.6% 2.8%
South submarket’s slight
Average Rent
$738
$951
$813
$696
$610
$672
$992
$703
occupancy decline (in spite
Average
Rent
/
Sq.
Ft.
$.82
$1.19
$.86
$.79
$.69
$.77
$1.02
$.78
of no new construction)
Avg.
Rent
$516
$594
$541
$478
$435
$458
$872
$526
is believed to be due to
Avg. $ / SF
$1.19
$1.27 $1.19 $1.25 $1.11 $1.09 $1.56 $1.13
a greater propensity of
Studio
Avg. Sq. Ft.
434
466
456
383
392
420
561
467
South side residents to buy
Total Units
4,011
1,073 1,099
476
531
832
303 1,459
homes.
Avg. Rent
$656
$831
$716
$618
$539
$577
$867
$616
Indy
Class
"C"
238
39,126
87.2%
3.3%
$598
$.72
$462
$1.17
396
2,249
$544
$.82
663
14,480
$607
$.67
909
15,800
$682
$.67
1,019
3,143
$795
$.63
1,271
3,338
$849
$.56
1,508
116
Avg. $ / SF
$.94
$1.20
$.98
$.89
$.81
$.85 $1.14
$.89
Average gross rent for
1 Bedroom
Avg.
Sq.
Ft.
701
693
732
697
667
678
759
694
the Indianapolis Metro
Total
Units
48,556
4,891
17,508
8,796
5,101
12,260
11,937
22,139
area grew at a 2.8%
Avg. Rent
$671
$845
$741
$666
$600
$646
$895
$699
rate between 2013 and
Avg.
$
/
SF
$.73
$.93
$.77
$.74
$.65
$.73
$.96
$.76
2
Bedroom/
2014. Downtown led all
1 Bath
Avg. Sq. Ft.
917
908
959
897
922
888
932
922
submarkets in rent growth
Total Units 35,177
810 9,367 8,139 7,509 9,352 2,324 17,053
with a 3.8% increase.
Avg. Rent
$899 $1,342
$936
$815
$718
$803 $1,064
$793
Downtown rents now
Avg. $ / SF
$.83
$1.23
$.84
$.77
$.71
$.77
$.96
$.74
2 Bedroom/
average $1.19 per square
2 Bath
Avg. Sq. Ft.
1,083
1,093 1,120 1,058 1,018 1,042 1,106 1,077
foot, a record high. All
Total Units 29,004
1,983 13,632 5,111 1,738 6,540 12,647 13,214
submarkets saw higher
Avg. Rent
$925 $1,211 $1,044
$878
$776
$878 $1,219
$868
rents this year. Class A
Avg. $ / SF
$.72
$.93
$.76
$.71
$.62
$.70
$.92
$.67
3 Bedroom
properties achieved the
Avg. Sq. Ft.
1,294
1,307 1,378 1,231 1,246 1,260 1,321 1,295
highest rent growth among
Total Units 11,774
182 4,103 2,336 1,756 3,397 2,625 5,811
property classes with an
Avg. Rent $1,149 $2,243 $1,152
$775
$839
$863 $2,344
$840
increase of 4.6% over
Avg. $ / SF
$.80
$1.50
$.73
$.57
$.60
$.61 $1.52
$.60
4 Bedroom
last year. Class B and
Avg. Sq. Ft.
1,440
1,497 1,571 1,363 1,400 1,408 1,538 1,398
Class C properties saw
Total Units
927
177
149
196
193
212
190
621
2.8% and 3.3% increases
respectively. It should be noted that rent growth for Class B properties is impacted by the fact that our survey classifies all new Section
42 tax credit properties within the B Class. Many of those properties offer comparatively lower rents than properties without the rent and
resident income restrictions of tax credit properties.
Please visit www.TAmultihousing.com for more information
7
Indianapolis Rental Market Statistics
2014 marked the first year in which Class A rents for the entire Metro area topped $1.00 per square foot, reaching $1.02, up from $.98
per square foot in 2013. The increase is attributable to the new luxury apartments downtown and on the far north side with the highest
rents now exceeding $1.50 per square foot. Class B properties saw average rents increase by two cents to $.78 per sq. ft. and Class C
rents grew by a penny to $.72 per sq. ft.
Average Rent per Square Foot
Historical Average Rent
$0.75
$0.72
$0.70
$0.74 $0.73
$0.65
2010's 2000's 1990's 1980's 1970's 1960's Prior to
1960's
$0.60
Class "A"
Class "B"
Class "C"
$738
$718
$703
$686
$668
$663
$657
$638
$627
$619
$616
$613
$606
$596
$577
$563
$545
$536
$524
$0.78
$0.75
$0.80
$0.70
$0.80
$496
$0.85
$482
$0.86
$464
$0.86
$452
$0.87
$444
$0.85
$0.90
$428
$0.90
$0.95
$393
$0.95
$1.00
$376
$1.05
$0.90
$1.02
$1.00
$372
$1.05
$1.08
Average Rent
$1.10
By Class
$1.10
$1.15
$356
By Year Built
$1.20
$800
$775
$750
$725
$700
$675
$650
$625
$600
$575
$550
$525
$500
$475
$450
$425
$400
$375
$350
$325
$300
$411
Indianapolis Metro Area
by Year Built & by Class – Indianapolis Metro Area
Includes
some
downtown
rehabs
Source: Tikijian Associates
Source: Tikijian Associates
Same Store Rent Growth
Indianapolis Metro Area
3.0%
Indianapolis Metro Area
7.0%
6.0%
5.0%
5.6%
4.5%
4.5% 4.6%
4.1%
4.0%
3.9%
3.7%
3.3%
3.3%
3.0%
3.0%
2.7%
2.0%
1.8%
1.0%
1.1%
2.7%
2.9%
2.5%
2.3%
1.7%
1.7%
1.8%
1.2%
0.5%
2.1%
1.3%
0.5%
0.9%
2.8%
2.5%
0.8%
2.0%
2.0%
Source: Tikijian Associates
1.5%
1.5%
0.5%
Historical Average Rent Growth Rate
0.0%
2.5%
1.0%
The graph above illustrates a 30 year unbroken string of rent
increases in the Indianapolis Metro area. These rents reflect
gross rents. In the early 2000’s when the rental market
was experiencing softness due to home buying, there were
years in which “effective rents” (rents after concessions)
actually declined. Now, as more owners employ revenue
management software, concessions are used less often.
Average Rent Growth Rate
As would be expected, new properties command higher rents
than older properties and Class A rents are higher than lower
classes. What is surprising, however, is how much higher the
rents are in newer Class A properties than in slightly older
Class A and B properties (more than $.20 per square foot).
This significant difference is primarily because (i) the newest
properties have been built in locations with high (and increasing)
land costs (ii) the newest properties offer exceptionally high-end
amenities and unit interiors and (iii) construction costs have risen
significantly recently, forcing owners to charge higher prices.
To date, these new higher end properties are being readily
accepted by renters and absorbed at a high rate due to the
shift toward renting as a lifestyle preference and an improving
employment environment providing more young renters with
the means to afford higher rents.
1.4%
1.0%
1-Year
Annual
Growth
5-Year
Annual
Growth
10-Year
Annual
Growth
20-Year
Annual
Growth
0.0%
1-Year
5-Year
10-Year
Rent, including the highest rents offered at brand new
properties, grew at an overall 2.8% rate in 2014, up from the
2.1% growth in 2013. The growth in 2014 was the strongest
since prior to the great recession.
20-Year
Source: Tikijian Associates
“Same Store Rent Growth” is the rent growth of properties
that have been in existence during an entire respective
survey period. Properties built during a respective study
period are not included in that period.
8
Multihousing Investment Advisors
Indianapolis Rental Market Statistics
Overall Market Vacancy Rate
Occupancy Rate by Class
Indianapolis Metro Area
Indianapolis Metro Area
14%
100%
13%
98%
12%
Vacancy Rate
96%
94%
92%
11%
10%
9%
8%
90%
7%
88%
6%
86%
5%
84%
Class "A"
2008
Class "B"
2009
2010
2011
Class "C"
2012
2013
2014
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Proj.
• 2015 vacancy rate forecast assumes 3,800 units absorbed as compared to 3,800 units actually absorbed in 2014.
We are assuming higher absorption (vs. 3,500 projected units in 2014) due to macro trends favoring renting.
• We are projecting 3,700 units will be delivered in 2015, hence the projected vacancy declines to 7.6%
** Average annual absorption has been 3,300 units since 2010
Source: Tikijian Associates
Source: Tikijian Associates
Class A occupancy dipped slightly in 2014, from 94.8% to 94.3%.
Class B occupancy however, increased to 94.0% from 93.2%
in 2013. Occupancy at Class C properties dropped to 87.2% in
2014, down from 87.8% last year. It should be noted that the C
properties generally include a number of distressed communities,
negatively impacting both occupancy and rent.
Metro Indianapolis apartment occupancy was 92.0% in
2014, down slightly from 92.1% in 2013. It must be noted,
however, that occupancy in both 2013 and 2014 are the
highest since 1997. Occupancy is fueled by high demand
from Millennials who (i) are unable to buy homes due to
student debt and/or tight lender standards for home buying
or (ii) simply prefer to rent as a lifestyle choice.
Annual Rental Revenue Growth
New Apartment Units (% of Base)
vs. Market Vacancy Rate
30 Property Sample – Class A & B - Well Managed
Indianapolis Metro Area
6.0%
5.0%
4.1%
4.0%
3.0%
3.5%
2.9%
13%
5 Year
4.9%
Average
3.2%
10% 9.7%
3.4%
-1.0%
6%
1.0%
8.9%
8.1%
8%
7%
1.5%
9.4%
8.8%
9%
2.7%
1.0%
0.0%
11.2%
11%
2.7%
2.0%
12.0%
12%
7.1%
7.7%
7.1%
8.1%
9.2%
10.7%
11.0% 10.4%
10.4%
9.2%
9.9%
9.3%
9.2%
8.3%
8.6%
8.0%
7.9%
6.8%
6.2%
5%
9.2%
12.2%
6.4%
4%
3%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
-1.4%
-2.0%
In 2014:
properties with rent revenue growth = 22
Properties with rent revenue declines = 8
Source: Tikijian Associates
The chart above illustrates rent growth of a sample of 30
well-managed class A and B properties. The rent decline
in 2009 was the result of stagnant rents and increased
concessions during the recession. This year’s rent growth
for such properties was the smallest since 2010. The reason
rent growth is lower among this sample of 30 properties
than the rent growth for the larger market is that the larger
market includes the very high rents commanded by the
newest properties and the sample does not include any
new properties (the newest property in this sample was built
in 2003). The revenue growth is effectively “same store”
revenue growth.
Please visit www.TAmultihousing.com for more information
2%
1%
0%
New units as a % of base
Vacancy Rate
Source: Tikijian Associates
This chart shows the number of new apartment units
completed in a given year as a percentage of the overall
inventory. The total market vacancy rate is also shown to
contrast unit additions against the overall market vacancy.
2014 vacancy rate remained near a 15 year low in spite
of the large number of new units delivered. 2014 saw the
largest amount of new units as a percent of the base since
the mid 1980’s.
9
New Construction
Total Residential Building Permits
Total Residential Building Permits
Indianapolis Metro Area
20,000
40,000
18,000
35,000
16,000
30,000
14,000
Single Family (1 - 4 units)
Multi-family (5+ units)
Trailing
12
Months
thru 8/14
Source: US Census Bureau, Residential Construction Branch
0
5,191
4,987
4,144
4,088
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Single Family (1 - 4 units)
Multi-family (5+ units)
Trailing
12
Months
thru 8/14
Source: US Census Bureau, Residential Construction Branch
A total of 12,564 single family residential building permits
were issued in the state in the trailing twelve months through
August 2014, basically unchanged from the same period last
year (which was the most since 2007). Multifamily permits
(5+ units) were issued for 5,674 units in the trailing 12
months, up from 3,577 units in the same period in 2013. The
multifamily permits are above the trailing 5-year average but
below the trailing 10-year average.
Permits for 4,987 single family homes were issued in
Indianapolis in the trailing 12 months through August
compared with 5,191 units in the same period in 2013.
Multifamily units permitted totaled 3,136, up from 2,880 in
2013. As was the case with state permits, the trailing 12
month permit number was above the trailing 5-year average
but lower than the trailing 10-year average.
Ironworks
Monon Place
10
3,777
2,000
7,554
13,232
13,025
5 yr. Avg.
4,561
4,000
13,235
6,000
10 yr. Avg.
13,990
8,000
15,620
10,000
9,992
12,639
12,564
11,089
9,835
10,550
12,304
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
12,000
3,732
0
10,039
26,037
34,369
33,838
5,000
5 yr. Avg.
20,492
10,000
34,175
15,000
33,946
20,000
32,679
10 yr. Avg.
13,418
25,000
Number of Permits
45,000
32,086
Number of Permits
State of Indiana
The Hamilton
Stadium Lofts & Flats
Multihousing Investment Advisors
New Construction
Single & Multifamily Building Permits
Multifamily Building Permits
Indianapolis MSA
as a % of Total Housing Permits
40%
800
31%
29%
30%
25%
25%
20% 18% 19%
18%
17%
15%
14% 15%
13%
12%
12% 12%
11%
16%
15%
10%
29%
23%
23%
20%
18%
36%
34% 34%
33%
32%
30%
28%
32%
20%
14%
23%
21%
19%
15%
14%
700
600
Number of Permits
35%
20%
14%
9%
5%
0%
500
400
300
200
100
2002
2003
2004
2005
2006
2007
Indy MSA
2008
2009
Indiana
2010
2011
2012
2013
National
0
2014
Trailing
12
Months
thru 8/14
Single Family
Source: US Census Bureau, Residential Construction Branch
New Apartment Development
0
4,200
3,136
2,880
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
est. proj.
Placed in Service (Tikijian Associates)
1,800
1,600
1,400
1,200
1,000
800
600
0
Total Residential Permits
Source: US Census Bureau, Residential Construction Branch
These two graphs display the total housing permits and the
breakdown of permits between multifamily and single family
building permits on a monthly basis.
800
1,752
1,482
1,736
1,939
2,926
2,526
1,868
2,484
2,421
1,099
946
744
1,349
2,377
2,387
1,099
500
1,917
2,330
3,000
2,261
2,549
Number of Units
3,500
Trailing
12 Mos.
8/14
3,900
4,000
1,000
2,000
200
4,500
1,500
Indianapolis MSA
400
Indianapolis Metro Area
2,000
Monthly Total Residential Building Permits
Number of Permits
Multifamily building permits issued in Indiana in the trailing
12 months through August represented 30% of the total
housing units permitted. In Indianapolis multifamily permits
were 32% of the total. These percentages compare to 36%
nationally. The percentages illustrate the growing popularity
of apartments. Until a few years ago, the percentage of
multifamily permits as a portion of total permits was in the
teens.
2,500
Multifamily
Source: US Census Bureau, Residential Construction Branch
9 on Canal
Building Permits (US Government)
Source: Tikijian Associates survey of developers & US Census Bureau, Residential Construction Branch
By the end of the year an additional 4,200 new units will have
been added in 2014 to the apartment stock of Indianapolis,
the most since the beginning of this millennium. We project
an additional 3,900 units will be delivered in 2015. The vast
majority of these new deliveries are Downtown, which saw
1,412 units delivered in 2014, and the northern suburbs
(including Indianapolis’ far north side and Carmel, Fishers,
Noblesville, Westfield and Zionsville) in which 2,112 new
units came on line. The new development map on the
following page illustrates the continuing trend toward
development of very high end luxury properties in these
same affluent high growth markets.
Please visit www.TAmultihousing.com for more information
11
2014 Indianapolis Apartment Development
WOODBERRY RIDGE
31
(136 - MR)
CASEY ACRES
WESTFIELD
421
(237 - MR)
HIGHPOINTE ON MERIDAN
(235 - MR)
(124 - MR)
146TH ST
THE DISTRICT
(275 - MR)
37
THE BRIDGEWATER
CUMBERLAND POINTE II
(75 - MR)
NOBLE WEST
(320 - MR)
WOODLAND TRACE OF CARMEL
(87- IL)
OLIVIA ON MAIN
THE NASH 131ST ST
(204 - MR)
132
(130 - MR)
(240 - MR)
LEGACY TOWNS II
TEMPLETON RIDGE
32
REDWOOD AT ANDOVER ROAD
(97- MR)
THE HAMPTONS
CUMBERLAND RD
SPRING MILL RD
(240 - MR)
NOBLESVILLE
UNION CHAPEL RD
HARMONY
UNION STREET FLATS
AT GRAND JUNCTION
GRAY RD
(252 - MR)
32
32
38
HAZEL DELL RD
LEBANON
(136 - MR)
38
FLATS AT 146
(368 - MR)
13
FLATS AT FISHERS MARKETPLACE
69
(306 - MR)
BEACHSIDE AT SAXONY
126TH ST
(31- MR) THE DEPOT AT
(80 - MR)
FISHERS
THE MEZZ ON THE MONON
WATERMARK
CARMEL NICKEL PLATE
(44- MR)
ON CUMBERLAND
QUAIL RUN II
116TH ST (242 - MR)
238
(220- MR)
L
AKESIDE
C
ARMEL
(132
MR)
THE BRIDGES
OAK ST
(283- MR) THE LINKS ON 96TH
(300 - MR)
106TH ST THE FLATS
T
HE
H
AMILTON
ZIONSVILLE
(444 - MR)
THE FARM AT ZIONSVILLE
AT SWITCH
VILLAS AT WATERMARK
(233 - MR)
(250 - MR)
(102 - MR)
(266 - MR)
CRG BUTLER SITE
431 96TH ST
THE SEASONS OF CARMEL
(235 - MR)
(256 - MR)
PRESERVE AT WILLOW SPRINGS
BELLA
VISTA
ST
82 FLATS AT THE CROSSING 86TH(180
(90 - MR)
- MR)
86TH ST
36
(232 - MR)
SOPHIA AT THE CROSSING
(240 - MR)
ST CROSSING SITE
KEYSTONE R79TH
IVER
79TH ST
SOLANA AT THE CROSSING
(180 - MR)
79TH ST
MOORE RD
(384 - MR)
IRONWORKS AT KEYSTONE
71ST ST
465
THE WOODLANDS
(93- MR)
39
RD
ILLE
ONV
BL
VD
ALLIS
RD
FO
56TH ST
(50 - TC)
LAWRENCE SENIOR APARTMENTS
FIELDS AT FRANKLIN RD
38TH ST
MERIDIAN ST
(60 - TC)
46TH ST
(142 - MR)
POST RD
(50 - TC)
9
BIN
COLLEGE AVE
(59 - TC)
ILLINOIS PLACE
OLIO RD
D
CLIFTON SQUARE
(57 - TC)
10TH ST
(74 - MR)
SEE DOWNTOWN
DEVELOPMENT MAP
36
134
(252- MR)
N
GTO
IN
(240 - MR)
70
RAYMOND ST
INDIANAPOLIS
INDIANAPOLIS
INT’L AIRPORT
40
EMERSON AVE
H
WAS
DOUBLE CREEK FLATS
ST
40
ARLINGTON AVE
RESIDENCES ON
RONALD REAGAN
RD
37
LE
VIL
ES
OR
(224 - MR)
MO
70
ARBORWOOD AT
MANN RD
267
N RD
DEVELOPMENT STAGE
EL
BY
VI
LL
E
74
PLANNED
UNDER CONSTRUCTION
RECENTLY COMPLETED
RD
SUBSTANTIAL REHAB
SENIOR HOUSING
31
135
MAN
MOORESVILLE
SH
STOP 11 RD
CO. LINE RD
(260 - MR)
(112 - MR)
SOUTHPORT RD
SOUTHERN DUNES
W 200 S
(64 - TC)
5700 MADISON AVE
EDGEWOOD AVE
(44 - IL)
FRANKLIN COVE II
FRANKLIN RD
67
REFLECTIONS II
52
THOMPSON AVE
PLAINFIELD
GREENFIELD
21ST ST
16TH ST
LINDEN SQUARE II
70
30TH ST
GERMAN CHURCH RD
AVON
AN R
DANVILLE
OVERLOOK AT THE FAIRGROUNDS
(117 - MR)
FALLCREEK VIEW
THE POINTE ON FALL CREEK
136
DAN JONES RD
(73 - MR)
(136 - MR)
(49 - TC)
(126 - MR)
(240 - MR)
(122 - MR)
46TH ST
74
ELMWOOD
LACABREAH
WHITE LICK CREEK
HIG
BROWNSBURG
KESSLER BLVD
MONON PLACE PH II
56TH ST
(66 - IL)
CANAL POINTE
62ND ST
HAGUE RD
D
BAILEY PARK
BROWNSBURG
OF
MIC
ER
65
KEYSTONE AVE
TT
ZIONSVILLE RD
E
FAY
LA
267
(123) NUMBER OF UNITS
TROTTER’S POINTE PH.IV
GREENWOOD
(24 - TC)
(TC) TAX CREDIT
(MR) MARKET RATE
(IL) INDEPENDENT LIVING (SENIOR)
144
Downtown Apartment Development
Indy North, Carmel, Fishers, Noblesville, Westfield & Zionsville
Indianapolis Downtown
2,000
New Units Delivered
1,800
1,412
Number of Units
1,207
1,200
1,044
1,000
800
717
600
452
400
200
0
124
88
133 163
236
83
68
0
90
Source: Tikijian Associates survey of developers
335
165
715
516
Number of Units
1,600
1,400
Northside Apartment Development
WHITELAND RD
3,000
2,800
2,600
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
New Units Delivered
2,475
2,112 2,112
1,096
768
424
735
656
760
856
572
337
184
Indy North
1,021
935
878
Carmel
344 400
Fishers
Noblesville
Westfield
Zionsville
Source: Tikijian Associates survey of developers
12
Multihousing Investment Advisors
2014 Indianapolis Downtown Development
30TH ST
22ND ST
STADIUM FLATS
(144 - MR)
IN
DI
AN
A
800 N CAPITAL
(111 - MR)
POINT AT BLOCK 400
(160 - MR)
CENTRAL STATE MANSION
(67UNITS/138BEDS - MR)
RETREAT ON WASHINGTON
CIRCA I & II
(265 - MR)
MILLIKAN ON MASS I & II
(125 - MR/TC)
FIRE HOUSE
SITE
PENN STREET TOWER
(98 - MR)
CITY WAY PH II
(270 - MR)
E
AV
TS
ET
S
HU
AC
SS
A
M
70
747 COLLAGE
(42 - MR)
MICHIGAN ST
LOCKERBIE NORTH
(215 - MR)
MARKET SQUARE TOWER
OHIO ST
(300 - MR)
ARTISTRY
(258 - MR)
40
MENTOR/MUSE
(242 - MR)
THE VUE
(240 - MR)
31
COLLEGE AVE
Indianapolis Metro Area Construction Starts - 2014
ENGLEWOOD LOFTS
(24 - TC)
VE
AA
NI
GI
VIR
(62 - TC)
333 PENN
(78 - MR)
AXIS
(336 - MR)
40
16TH ST
DI RIMINI
(31 - MR)
LOFTS AT PULLIAM SQUARE
(145 - MR)
WASHINGTON ST
S HARDING ST
(180 - MR)
NEW YORK ST
10TH ST
PENNSYLVANIA ST
MICHIGAN ST
CENTRAL GREENS
9 ON CANAL
(304 - MR)
WEST ST
BELMONT AVE
LINCOLN
(75 - TC)
AV
E
CAPITOL AVE
10TH ST
PENN PLACE
(38 - TC)
31
MERIDIAN ST
STADIUM LOFTS
(138 - MR)
SENATE AVE
65
E RIVERSIDE DR
RD
TE
ET
AY
LAF
2131 NORTH
(31 - MR)
70
OXFORD PLACE
(30 - TC)
421
EAST ST
Units
DELAWARE ST
SLATE Units
2014 Starts
2015 Expected Starts
Units
20
(68 - MR)
Market Rate
Market Rate
Ta
65
306
Flats at 146 - Domo Development
368
Links on 96th - Herman &DKittle
Fra
EVELOPMENT STAGE 444
304
Carmel Lakeside
- J.C. Hart
283
Market Square Tower - Flaherty & Collins
300
Re
ALEXIA
252
Villas at Watermark
- Watermark Res.
266
The District - Edward RosePofLANNED
Indiana
275
Cli
(175 - MR)
242
Arborwood on Mann Road - Herman & Kittle
260
CityWay II - Buckingham UNDER CONSTRUCTION 270
En
FORTE
Seasons of Carmel - Barrett & Stokely & Pittman
256
240
Vue - Herman & Kittle
240
Tro
(64 The
- MR)
RECENTLY COMPLETED 240
235
Casey Acres - Herman & Kittle
252
Harmony - J.C. Hart
Me
Mentor & Muse - Milhaus Development
242
To
CRG Butler Site - CRG Residential
Watermark on Cumberland - Watermark Residential
220
SUBSTANTIAL REHAB 235
Indianapolis Metro Area Construction Starts - 2014
Bella Vista - Edward Rose of Indiana
186
Southern Dunes - Sheehan
242
Olivia on Main - Keystone Development
204
SENIOR
HOUSING
La Cabreah - Domo Development
240
20
River
Crossing site
- Glick/PK
2013Stadium
Starts Flats - Core Redevelopment
Units 144
2014 Starts
Units
2015Keystone
Expected
Starts
Units 180
2013 S
Double Creek Flats - Domo Development
240
Ta
Central
Development
180
Cumberland
Pointe II - Barrett & Stokely
136
(123)
NUMBER OF UNITS
Market
Rate
Market Rate
Market
RateGreens - TWG
Tax-Cr
Alexia - TWG Development
175
5700 Madison - Jackson Development
112
HighPointe on Meridian - J.C. Hart
235
La
Flats at Fishers Marketplace - Ackermann
306
Flats at 146 - Domo Development
368
Links on 96th - Herman &(TC)
KittleTAX CREDIT
444
Frankli
Lockerbie North - TWG Development
215
Pointe at Block 400 - Flaherty & Collins
162
Fa
800 Capital - TWG Development
111
9 on Canal - IPA
304
Carmel Lakeside - J.C. Hart
283
Market Square Tower - Flaherty & Collins
300
Retrea
Ironworks on Keystone - Hendricks Commercial
105
Lofts at Pulliam Square - TWG Development
145
Fields at Franklin Road
- Becovic
142
Pe
(MR)
MARKET RATE
Residence on Ronald Reagan - Samaritan
252
Villas at Watermark - Watermark Res.
266
The District - Edward Rose
of Indiana
275
Clifton
Quail Run II - Buckingham
132
To
Woodberry Ridge - Redwood Living
136
Preserve at Willow Springs - Becovic
90
Depot at Nickel Plate - Flaherty & Collins
242
Arborwood on Mann Road - Herman & Kittle
260
CityWay II - Buckingham (IL) INDEPENDENT LIVING270
Englew
(SENIOR)
Legacy Towns & Flats II - J.C. Hart
77
The Hamptons - Redwood Living
Templeton Ridge - Redwood Living
124
Seasons of Carmel - Barrett & Stokely & Pittman
256 130
The Vue - Herman & Kittle
240
Trotter'
The Bridgewater - Justus
240
20
White Lick Creek - Redwood Living
73
Flats at Switch - Loftus/Robinson & TWG
102
Forte - Von Deylen
64
Circa - Milhaus Development
235
Casey Acres - Herman & Kittle
252
Harmony - J.C. Hart
240
Merici V
Ta
Central State Mansion - Reverie Estates
67
Penn
Street- Tower
- TWG
Development
2131 North
47
Mentor
& Muse
Milhaus
Development
242 98
Totals
Watermark on Cumberland - Watermark Residential
220
CRG Butler Site - CRG Residential
235
Center
- Pedcor
Redwood
at Andover
- Redwood Living
747 N. College - Milhaus
42
Illin
BellaNash
Vistaat- City
Edward
Rose
of Indiana
186 31
Southern
Dunes
- Sheehan
242 97
Olivia on Main - Keystone Development
204
2,931
3,460
Totals - market rate
Totals - market rate
The Woodlands
- Redwood Living
La Cabreah
- Domo Development
240 93
2014Ov
S
Keystone River Crossing site - Glick/PK
180
Stadium Flats - Core Redevelopment
144
3,183
3,602
Totals - all 2013
Totals - all 2015
Elmwod
- Redwood
Living
Ox
Double
Creek
Flats - Domo
Development Units 240 90 2013
Tax-Cr
2014 Cumberland
Starts
2015 Expected
Starts
Starts
Units
Central
Greens - TWG Development
180
Pointe II - Barrett & Stokely Units 136
To
Beachside
at
Saxony
J.C.
Hart
80
Alexia - TWG
175
Market
Rate
MarketHighPointe
Rate
Tax-Credit
/ T-EDevelopment
Bonds
5700
Madison - Jackson Development
112
on Meridian - J.C. Hart
235
Lawren
nits
2015 Expected Starts
Units
2013 Square
Starts II - J.C. Hart
Units
Linden
74
Lockerbie
North - &
TWG
PointeCove
at Block
400 - Flaherty & Collins
162
Fall Cre
Capital
- TWG
Development
64
Flats 800
at 146
- Domo
Development
368 111
Links on
96th - Herman
KittleDevelopment
444 215
Franklin
II - Pedcor
Market Rate
Tax-Credit
/ T-E Bonds
Slate
- Von Deylen
68
Ironworks
on- Keystone
at Pulliam
- TWG
Development300 145
Fieldson
atWashington
Franklin Road
- Becovic
142
Penn P
Carmel
Lakeside
J.C. Hart - Hendricks Commercial
283 105
MarketLofts
Square
Tower -Square
Flaherty
& Collins
Retreat
- Pedcor
62
368
Links on 96th - Herman & Kittle
444
Franklin
Cove
II - Pedcor - Whitmore
of Brownsburg
6664
QuailBailey
IIPark
- Buckingham
Totals
at Willow
Springs -Res.
Becovic
Woodberry
136
SquareRidge
- BWI - Redwood Living
57
VillasPreserve
at Watermark
- Watermark
266 90
The District
-Run
Edward
Rose of Indiana
275 132
Clifton
283
Market Square Tower - Flaherty & Collins
300
Retreat
Washington
- Pedcor
Millikan
onon
Mass
II - Insight
/ Flaherty & Collins
6462
LegacyonTowns
Flats- IIHerman
- J.C. Hart
The
- Redwood Living
Templeton
Ridge
- RedwoodDevelopment
Living
124
Arborwood
Mann &Road
& Kittle
260 77
CityWay
II Hamptons
- Buckingham
270 130
Englewood
Lofts
- Englewood
24
266
The District - Edward Rose of Indiana
275
Clifton Square
Lawrence
Senior -- BWI
TWG Development
6057
E
Seasons
of Carmel
- Barrett
& Stokely
& Pittman
256 73
White
Lick Creek
- Redwood
Living
Flats
at Switch
- Loftus/Robinson & TWG 240 102
Forte -Pointe
Von Deylen
The Vue
- Herman
& Kittle
Trotter's
IV - Pedcor
2464
2014 2015
done
260
CityWay II - Buckingham
270
Englewood
Lofts - Englewood
Development
Solana
at the Crossing
II - Milhaus
Dev.
4824
Tax-Cr
Mansion
- Reverie Estates
Penn
Street
Tower - TWG Development
98
2131Village
North - TWG Dev. / MAH
CaseyCentral
Acres State
- Herman
& Kittle
252 67
Harmony
- J.C.
Hart
240
Merici
21 47
256
The Vue - Herman & Kittle
240
Trotter's
Pointe
IV -- AndersonBirkla
Pedcor
Mezz
on the
Monon
4424 Totals - tax-credit
25242
Mentor
& Muse
- Milhaus
242 31
Nash
at City
Center -Development
Pedcor
Redwood
Andover
- Redwood Living
97
747 N. College - Milhaus
Illinois
CRG Butler
Site at
- CRG
Residential
235
252
Harmony - J.C. Hart
240
Merici Village
- TWG Dev.
/ MAH
Reflections
at Bluestone
II - Whitmore
4421 Totals - market rate
3,460
Totals
- market
rate
Southern
Dunes
- Sheehan
2422,931
TheMain
Woodlands
- Redwood
Living
93
Overloo
Olivia on
- Keystone
Development
204
Totals
- tax-credit
252
242
CRG Butler Site - CRG Residential
235
Circa
II
Milhaus
Development
30
3,602
Totals - Domo
all 2013
Totals
- all 2015
2014
Starts
Units
La Cabreah
Development
2403,183
Elmwod
Redwoodsite
Living
90
Oxford
Keystone
River- Crossing
- Glick/PK
180
242
4,564
Olivia on Main - Keystone Development
204
Totals - market rate
Totals
Tax-Credit / T-E Bonds
Double Creek Flats - Domo Development
240
at Saxony
- J.C. Hart
80
CentralBeachside
Greens - TWG
Development
180
240
2014 -Starts
Units
4,712
Keystone River Crossing site - Glick/PK
180
Totals
all 2014
Alexia Linden
- TWG Square
Development
175
II - J.C. Hart
74
HighPointe on Meridian - J.C. Hart
235
Lawrence Seniors - TWG Development
60
Tax-Credit / T-E Bonds
240
Central Greens - TWG Development
180
- Von
Deylen
68
Lockerbie North - TWG Development
215
PointeSlate
at Block
400
- Flaherty & Collins
162
Fall Creek View - TWG Dev. / PIHDC
50
Alexia - TWG Development
175
Lawrence Seniors - TWG Development
60
235
ParkRoad
of Brownsburg
66
Lofts at Pulliam Square - TWG Development
145
Fields Bailey
at Franklin
- Becovic - Whitmore
142
Penn Place - BWI
38
215
Pointe at Block 400 - Flaherty & Collins
162
Fall Creek View - TWG Dev. / PIHDC
50
Totals - tax-credit
148
Quail Run II - Buckingham
132
Millikan
on Mass
II - Insight
/ Flaherty & Collins
64
Woodberry
Ridge
- Redwood
Living
136
145
Fields at Franklin Road - Becovic
142
Penn Place - BWI
38
Lawrence
- TWG
Development
60
The Hamptons - Redwood Living
130
Templeton
RidgeSenior
- Redwood
Living
124
2014 done
Totals - tax-credit
148
132
Woodberry Ridge - Redwood Living
136
2015 Expected Starts
Units
at the Crossing II - Milhaus Dev.
48
Flats at Switch - Loftus/Robinson & TWG
102
Forte -Solana
Von Deylen
64
130
Templeton Ridge - Redwood Living
124
Tax-Credit / T-E Bonds
Mezz on the Monon - AndersonBirkla
44
Penn Street Tower - TWG Development
98
2131 North
47
2015 Expected Starts
Units
102
Forte - Von Deylen
64
at Bluestone II - Whitmore
44
Redwood at Andover - Redwood Living
97
747 N.Reflections
College - Milhaus
42
Illinois St Seniors - TWG Development
63
Tax-Credit / T-E Bonds
98
2131 North
47
3,460
TotalsCirca
- market
rate Development
II - Milhaus
30
The Woodlands - Redwood Living
93
Overlook at the Fairgrounds - BWI
49
97
747 N. College - Milhaus
42
Illinois St Seniors - TWG Development
63
3,602 4,564
- market rate
TotalsTotals
- all 2015
Elmwod - Redwood Living
90
Oxford Place - TWG Development
30
3,460
Totals - market rate
93
Overlook at the Fairgrounds - BWI
49
4,712
Totals - all 2014
Totals - tax-credit
142
Beachside at Saxony - J.C. Hart
80
3,602
Totals - all 2015
90
Oxford Place - TWG Development
30
Linden Square II - J.C. Hart
74
Totals - tax-credit
142
80
Slate
- Vonvisit
Deylen
13
Please
www.TAmultihousing.com for more68information
74
Bailey Park of Brownsburg - Whitmore
66
2013 Starts
Market Rate
Flats at Fishers Marketplace - Ackermann
9 on Canal - IPA
70
Residence on Ronald Reagan - Samaritan
Depot at Nickel Plate - Flaherty & Collins
The Bridgewater - Justus
Circa - Milhaus Development
Sales Activity
Apartment Sales Transactions
All Indianapolis Metro Properties
18,000
Transaction Volume
Distressed Sales vs. Non-Distressed Sales
Indy Metro Area (by total units)
7,000
Total Units
6,000
5,000
4,000
3,000
2,000
1,000
2009
2010
2011
Distressed
2012
9,0009,200
6,100
6,000
4,800
4,700
4,600
$400
5,900 $300
$200
4,000
$100
2,000
0
Millions of Dollars
6,000
$500
9,800
8,900
7,700
7,200
8,000
$600
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
$0
10
Months
Units Sold
Total Consideration (millions)
Source: Tikijian Associates
Average Price per Unit
Class B or better, Over 100 Units
Indianapolis Metro Area
$100,000
$97
$92
$90,000
Price per Unit
$80,000
$75,000
$65,500
$65,000
$50,000
$45,000
$54,200 $53,000
$48,900
$52
$51
$64
$70
$64
$65
$58,500
$56
$60
$55,800
$55
$49
$53
$56
$45,800
$50
$44,900
$45
$40,600
$40,000
$40
$41
$35,000
$30,000
$75
$77
$70,000
$55,000
$80
$77,100
$35
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Price per Unit
Price per Square Foot
$85
$85,000
$60,000
$100
$93,200 $95
$88,600
$90
$95,000
$30
10
Months
Price per Sq. Ft.
Source: Tikijian Associates
Average Sale Cap Rates
Indianapolis Metro Area - Class “B” or better
11%
10.2%
10%
9.6%
9.2%
9%
8%
8.9%
8.4% 8.5%
8.0%
8.6%
7.7%
7%
8.8%
8.6%
7.6%
6.7%
6.5%
7.0% 6.9%
6.6%
7.2%
6.7%
6.0% 5.9%
6%
5%
8.6%
8.2%
8.4%
7.2% 7.2%
6.6% 6.5%
6.3%
6.2%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Actual Cap Rate
Forecast Cap Rate
10
Months
Source: Tikijian Associates
8,000
0
10,400
10,000
Cap Rate
As a continuation of what was seen in 2013, there have been very few
distressed or lender owned properties marketed for sale as the recovery
from the great recession has progressed. In the Indianapolis metro area,
only about 10% of the sales in the first three quarters of 2014 involved
lender-owned properties.
13,100
12,000
Indianapolis followed the same trend, as 2014 average actual Class
A and B (combined) cap rates declined to 6.2%, down from 6.5% in
the previous year. Cap rates based on buyer forecasted net operating
income decreased almost 100 basis points, dropping to 6.3% from
7.2% last year. This drop illustrates a willingness among buyers to
accept a lower going-in yield since such risk adjusted yields are still
better than alternative investments. Sale prices of Class B or better
properties in the Indianapolis metro area showed a 5% increase over
2013 sales to reach a record average price per unit of $93,200.
The decrease in the inventory of properties for sale also resulted in
fewer sales transactions in 2014 than in the recent past. The total
number of multifamily units sold in 2014 is down 35% from 2013. There
are several reasons why fewer properties hit the market this year. First,
more developers and owners are comfortable holding their properties
with floating rate loans in place based on a reduced fear of interest
rate increases since such rates have been low and stable for so long.
Other owners have taken advantage of readily available permanent
financing. In addition, some “would-be” sellers have struggled to find
a suitable replacement property to complete a 1031 exchange, and
these owners have opted to simply hold on to their properties to avoid
paying capital gains tax on sale. Finally, some owners are holding with
the expectation of improved property performance resulting in higher
NOI and value creation. This hold strategy has been strengthened by
the fact that the majority of multifamily properties are performing quite
well. By contrast, those owners who are sellers believe that long term
rates will eventually rise and have determined that now is an optimal
time to sell to take advantage of the tremendous demand for product.
$700
14,000
Number of Units
2014 marked a year of very high demand for investment in multifamily
properties and an inadequate supply of properties available to
purchase, creating an increase in prices. Nationally, 2014 cap rates
for multifamily sales averaged 6.0%, down 20 basis points from 2013
according to Real Capital Markets.
$800
16,800
16,000
2013
2014
The most active buyers in Indiana have historically been private equity
investors and syndicated groups of high net worth individuals. However,
2014 sales continued the return of institutional investors to Indiana.
The term “institutional capital” has evolved to include Private REITS,
Hedge Funds and Family Office investors. These institutional and
quasi-institutional buyers are generally seeking assets with stabilized
in-place yields. So far the buyers of value-add opportunities are still
primarily entrepreneurial and private equity groups.
Non-Distressed
Source: Tikijian Associates
14
Multihousing Investment Advisors
Selected 2014 Indiana Apartment Sales
Bluestone
Lauth Property Group
208 Units
Greenfield
Woodridge
Shamrock Communities
576 Units
Indianapolis
Waterside at Castleton
Wilkinson Corporation
Prairie Lakes
JVM Realty
402 Units
Noblesville
Solana
Inland Real Estate
384 Units
Indianapolis
Brooklyn Place
Mount Auburn Capital Group
The Avenue
Campus Advantage
142 Units
Indianapolis
Port O Call
James Management Group
Knobs Pointe
BRG Realty Group
Oak Crossing
Steadfast
384 Units
New Albany
222 Units
Fort Wayne
Please visit www.TAmultihousing.com for more information
Creekbay at Meridian Woods
Muesing Management
208 Units
Indianapolis
400 Units
Indianapolis
204 Units
Evansville
604 Units
Indianapolis
Avery Park
Beech Grove
Regency Club
Ashton Farms
Buckingham Portfolio
Various
682 Total Units
Kokomo, Jeffersonville,
Mishawaka & Evansville
15
Multihousing Investment Advisors
unparalleled. team. expertise. service.
Tikijian Associates is a boutique brokerage firm specializing exclusively in the representation of owners
of multihousing communities in Indiana and Kentucky. The company was formed in early 2005 by George
Tikijian, one of Indiana’s most respected real estate brokers. Tikijian Associates was founded with the
specific goal of offering the highest achievable level of client service in the evaluation, marketing and
sale of apartment communities.
Tikijian Associates has established itself as a major presence in the brokering of Midwest multi-family
properties. Through broad marketing efforts, Tikijian Associates has received national reception and
recognition beyond expectations. This exposure is believed to be one of the key ingredients to success
as local investors are being joined by those coming from the coasts and various national markets.
With over 80 years of combined experience in commercial real estate, Tikijian Associates’ greatest asset
is its team of unparalleled, skilled and dedicated professionals. In addition, the firm is committed to the
maintenance and improvement of its state-of-the-art information technology, graphic design, and webbased/social media capabilities. This combination of talent and technology places Tikijian Associates at
the forefront of the multihousing brokerage industry.
George Tikijian III, CCIM
Hannah Ott, CCIM
Duke Hardy
Senior Managing Director
[email protected]
Senior Managing Director
[email protected]
Senior Managing Director
[email protected]
Kimberly Fetzer
Christine Nealis
Colin Babbitt
Managing Director
[email protected]
Marketing Director
[email protected]
Associate
[email protected]
www.TAmultihousing.com
3755 E. 82nd St., Suite 265, Indianapolis, IN 46240 - P(317) 578-0088 - F(317) 570-3677
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