“Single-family home sales, along with flat job growth, have kept pressure on rents and vacancy,” says George Tikijian, senior vice president and apartment specialist with CB Richard Ellis’ Indianapolis office. More rental concessions were offered to tenants as increased insurance premiums, taxes and utilities upped operating costs, which were not offset by rent growth in most areas. In addition, multifamily vacancy rates have averaged about 10.4 percent.

On a positive note that mirrors other types of real estate, more equity capital flowed to multifamily properties and away from a weakened stock market. Properties that were properly priced and well located were in high demand. Additionally, demand for product, and available supply of debt and equity capital point to continued investment deal flow, says Steve LaMotte, a vice president in CB Richard Ellis’ Indianapolis office.

“The majority of apartment development is [currently] occurring on the north and south sides of Indianapolis,” Tikijian says. In the suburbs, additional development has and will continue to up the competition levels in the market. Most new projects are high-end apartments renting at rates between $0.85 to $1 per square foot.

“Downtown is one of the strongest submarkets in the metropolitan area,” Tikijian says. In 2002, residential development of both rental and condominium properties continued. New developments downtown include 110 East Washington, 25 units; Lockerbie Terrace, 45 units at 225 North New Jersey; and the Wm. H. Block Building, 160 units on the corner of Illinois and Market streets. There were also a number of condominium conversions and renovations such as Meridian Towers at 40th and Meridian streets, and Ladywood at 54th Street and Emerson Avenue.

Active developers in the market include AMLI Residential, The J.C. Hart Company, Buckingham Companies, Flaherty & Collins, Pedcor, AG Spanos and Sheehan Construction. “Most non-local developers have left the market,” Tikijian explains. “Except for AG Spanos and AMLI.”

“Keep an eye on downtown,” Tikijian says. “Local developers are attempting to find sites and projects in the area due to the strength of the rental market.” The multifamily market’s growth will be slow until the employment rate increases and the sale of single-family properties slows down.

George Tikijian III is senior vice president, and Steve LaMotteis vice president of CB Richard Ellis.

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