The Indianapolis apartment market rebounded last year as the expiration of the federal homebuyers’ tax credit and stricter mortgage standards led more people to rent.
Occupancy in the entire metropolitan area grew nearly 1.7 percent to 90.8 percent in 2010, according to the latest annual apartment market overview compiled by local apartment brokerage Tikijian Associates.
“It’s really a good time for the apartment market,” said George Tikijian, a firm principal. “All of this is somewhat mitigated by the fact that if you don’t have a job, you can’t pay for an apartment. It could be stronger if you see sustained job growth.”
The downtown apartment market performed particularly well last year. The downtown occupancy rate grew 1.6 percent to 91.7 percent and average monthly rent increased 3.3 percent to $805.
Tikijian attributed the downtown growth to increasing enrollment at IUPUI and more students choosing to live close to campus.
Among the new apartment complexes in the area is Cosmopolitan on the Canal, and more are scheduled to be built. A $30 million, 253-unit student housing project at 1201 Indiana Ave. is under construction by West Lafayette-based Trinitas Ventures. In addition, locally based Buckingham Cos. is set to start construction this year on The Avenue, a 210-unit complex at 10th Street and Indiana Avenue.
New downtown units are leasing at monthly rates between $1.30 and $1.40 per square foot, about 30 percent to 40 percent higher than their suburban counterparts.
And older units in the metro area constructed before the 1960s—a category that includes downtown rehab projects—are just as expensive as those built the past 20 years.
“Downtown is definitely the strongest market occupancy-wise and rent-wise,” Tikijian said.
Overall occupancy in the metropolitan area managed to grow even though the local market absorbed 4,200 new units, which is well above normal, the report said.
Still, in a city with 130,000 units, the number of new apartments that came on the market last year is not a “huge” amount, Tikijian insisted, given the lack of demand for apartment living in recent years.
“It’s not like we’ve overbuilt,” he said. “It’s that everybody and their brother was buying a home. It really sucked a lot of the demand out of the market.”
Home-buying was buttressed earlier this year by a federal law providing an $8,000 tax credit for first-time buyers of homes purchased or under contract through April 30. It also created a $6,500 tax break for existing homeowners who had lived in their current residence for at least five years and bought another home.
Weak economic conditions affected the apartment market somewhat, however. While occupancy rates in Indianapolis increased, overall rent in the metro area slipped 0.4 percent to $668.
The weakest market was the east side. Occupancy rates there slipped 0.6 percent to 84.8 percent, and rent rates dropped 1.4 percent to $570.
The north side boasted the highest occupancy rate—92.7 percent.