The struggles in the capital markets that began to take hold during the second half of 2008 have put the brakes on much of the investment sales activity across all asset classes, but multifamily sales in Indianapolis have weathered the financial storm better than any other sector. Investment sales of multifamily housing in Indianapolis fared reasonably well when compared to other major Midwest cities. Last year, 19 major properties were sold in the Indianapolis area for just less than $200 million and at an average cap rate of 7.98 percent, according to Real Capital Analytics and Colliers Turley Martin Tucker. While the average U.S. cap rate for multifamily sales stood at 6.2 percent during the first three quarters of 2008, Indianapolis posted an average cap rate of 7.4 percent. The 12-month average price per unit for higher quality assets in Indianapolis is $61,022, compared to $100,792 for similar sales throughout the United States. Sales of properties categorized as Class B to non-performing assets have pushed the average unit price down and cap rates up into the 8.5-to-10 percent range. Multifamily properties that needed a total repositioning were trading in the 10-to-12 percent range based on pro-forma. In 2007, two major …
Indiana
What area is your expertise? Multi-housing properties (rental only) and Central Midwestern markets. However, my answers here apply only to the Indianapolis area. What trends do you see presently in multifamily development in your area? There has been a shift in development activity from the south side of Indianapolis to the north side. Approximately 3,000 units are slated for completion through 2009 along the 146th Street corridor and surrounding areas in Hamilton County. With the recent extension and opening of 146th Street, development activity has intensified along this critical corridor. Who are the active multifamily developers in your area? Currently active: Flaherty & Collins, Pedcor Investments, J.C. Hart, Welbourne Companies, Herman & Kittle Properties, Edward Rose of Indiana and Sheehan Development. Prepared to resume development activity: Paragus, Gene B. Glick Co., and Hearthview Residential. What trends do you see presently in multifamily development in your area? Roughly two-thirds of our buyer base is coming from the East Coast. We have historically had East Coast capital but not significant levels. The heightened interest from coastal investors is due to a widely recognized rental market recovery and stable employment growth. Please name one or two significant multifamily developments in your area. What …
What area is your expertise? Indianapolis and Central Indiana Industrial buildings sales and leasing and land sales. What trends do you see presently in industrial development in your area? The Indianapolis industrial market got off to a strong start this year with 2.5 million square feet (MSF) of positive net absorption recorded for the first quarter 2008. Completed deals during the quarter included Fastenal Company (435,000-SF purchase), National Distribution Centers (230,000-SF expansion), Firestone Building Products (221,000-SF lease), Adidas (162,000-SF lease) and Remy International (57,000-SF lease) to name a few. This increase in activity from year-end 2007 helped the overall industrial vacancy rate lower from 7.9 percent to 7.7 percent. Several move-ins by companies that signed deals late in 2007, such as CVS Indiana LLC. in Mount Comfort, as well as Gatorade’s occupancy of its mammoth 1.1 MSF build-to-suit (BTS) facility in Ameriplex also contributed to this vacancy reduction. Another factor enabling vacancy to lower was the slowdown of speculative construction, particularly in the bulk market after 7.5 MSF of mostly speculative, bulk construction occurred in 2007. In fact, no new construction of any kind was completed during the 1st quarter as developers took a step back to allow this new …
What area is your expertise? The CBRE Retail team represents landlords and brokers in central Indiana. What trends do you see presently in retail development in your area? Increase in Mixed-Use Developments Development of Lifestyle Center and/or redevelopment, which includes a lifestyle center-like addition What type of retail product is doing well in your area? Grocery anchored centers; Town Centers/Lifestyle Centers and Malls What retailers are new to your area? Squeeze; Moochie & Co; Garden Ridge; Harlem Furniture; Fogo de Chao: Embarq; Taste of Tango; Ridemakerz; Stir Crazy; Adobo Grill; Golfsmith; Jared Jewelers; Marmi; Strasburg Children; Z’s Oyster Grill; Granite City Brewery; Grand Traverse City Pie Company and BJ’s Brewhouse Who are the active retail developers in your area? Kite Realty; Mann Properties; Welbourne Development; Pine Tree; Buckingham Please name one or two significant retail developments in your area. What impact will these projects have on the market? Redevelopment of Glendale Town Center: Kite Realty has re-developed this mid-town retail enclosed mall to become a Target and Macy’s anchored, power center (with a town feel). B-shop buildings have been added to surround the existing Macy’s — new retailers include Squeeze, Lenscrafters, AT&T and Catherine’s. Target will open in late July. …
What area is your expertise? • I specialize in landlord representation, building sales and tenant representation in the Indianapolis and surrounding Central Indiana region. What trends do you see presently in office development in your area? • Medical space has developed at a very rapid pace, single-story garden office space has been prevalent and new Class A space with Interstate 465 frontage and signage has been very successful in new lease-up. Who are the active office developers in your area? • In addition to Duke Realty and Lauth Property Group, who have developed the most office product over the last 5 years, Shamrock Builders, Opus, Panattoni Development Co., J. Greg Allen Builder and Edgeworth Laskey Properties are all currently active. Please name new significant office developments in your area. What impact will these projects have on the market? • The Northwest submarket is undergoing growth with over 300,000 square feet of new construction underway which includes Duke Realty’s 154,000-square-foot Woodland Corporate Park VI and Lauth’s 151,000-square-foot Intech Three. The North/Carmel submarket currently has four multi-tenant projects underway totaling 200,000 square feet, including Panattoni’s 142,000-square-foot project at 1320 City Center Drive. Edgeworth Laskey Properties is currently building the 151,000-square-foot Lake Point …
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