Of all the newly constructed apartment buildings downtown, ever wonder why none even comes close to rivaling the height of, say, the 30-story Riley Towers?
Downtown in recent years has experienced a residential rejuvenation, with more than 3,200 units built since 2000, according to Indianapolis Downtown Inc.
The organization doesn’t track how many of the 3,200 are new construction and how many are refurbishments. What’s clear, though, is that the units built within the past 12 years all are part of low-slung apartment projects.
What worked in 1963, when Riley Towers was built, doesn’t work today largely because stricter building codes make the cost of high-rise residential developments nearly impossible to justify.
“I can build two four-story buildings on two different sites [for] less than I can build one eight-story building on one site,” said Scott Travis, senior development executive at locally based Buckingham Cos. “In most Midwest markets, that’s the case.”
Buckingham is developing the $155 million mixed-use project at Delaware and South streets known as CityWay, which will include 250 apartment units on four levels above street-level retail space.
Five-story mixed-use developments are the most popular in Buckingham’s portfolio because projects in Indianapolis become more expensive just by adding an additional level of apartments.
Most apartment projects built in the downtown core include street-level office or retail space to meet Indianapolis’ guidelines meant to preserve the city’s character.
The Department of Code Enforcement oversees state building codes, which closely resemble international building codes. They permit basic wood framing for projects with up to four stories of residential use. Developments rising above that level become more expensive due to the stricter building codes, hence the abundance of five-story apartment projects downtown, with first-floor retail.
“You’re only allowed to go so far with combustible materials, even if you’re putting in a sprinkler system,” said Jason Larrison, an administrator within the Department of Code Enforcement.
Building codes require the use of fire-retardant wood for projects involving five stories of residential use, which can add about 10 percent to the total cost. But the expenses really start to stack up for projects involving six stories or more of residential use.
At that level, a metal, steel or concrete frame replaces traditional wood framing, and every beam, column or load-bearing wall needs to be sturdy enough to withstand a fire for up to two hours.
A light-gauge metal frame can add up to 25 percent to a project’s cost, with steel or concrete being even more expensive, making the decision to build low to the ground a simple one, Travis said.
“Anytime we would do a project in downtown Indianapolis, we would certainly do four stories and, in most cases, four over one, with retail on the first floor,” he said. “It’s certainly one we use effectively.”
Most developers prefer four stories of residential use for another reason that has nothing to do with building codes and everything to do with cost.
Five levels of apartment units typically translate into enough residents to warrant additional parking, which can add substantial cost to a project, said David Leazenby, a principal of locally based Milhaus Development.
Milhaus is leading a $45 million downtown mixed-use conversion of the two-story former Bank One Operations Center at the northwest corner of Washington and East streets into a five-story apartment building with office or retail space on the first floor.
Milhaus plans to add a three-story wood frame to the existing two-story building because residents will have access to 600 spaces in a nearby parking garage as part of the agreement Milhaus signed with the city to redevelop the site.
“At five stories, you’re looking at additional parking costs because you just added another layer to the project,” Leazenby said. “We have enough parking at the Market Street garage, so it’s worth the additional expense [to go five stories].”
But perhaps the most important factor keeping developers from building high-rise apartment towers is the fairly affordable rents the downtown market commands, making it difficult for developers to recoup the cost of an expensive project.
Downtown rents range from roughly $1.35 to $1.70 per square foot.
That’s why most low-slung apartment buildings feature street-level retail or office space, even without the city’s urban guidelines that call for it.
“You would pay a premium not to live on the sidewalk,” Travis at Buckingham said, “but your retail [tenants] would pay a premium to be on the sidewalk.”
Even so, a Valparaiso developer is testing the limits of the downtown residential market with its plans to build a $60 million, 10-story apartment building along the Central Canal.
Investment Property Advisors is designing the 319-unit tower for college students. A three-level parking garage would accompany the project.
The project is set to be built on two adjoining parcels along Ninth Street between Senate Avenue and the canal: a 1.2-acre property that includes the offices and warehouse of B.B. Kirkbride Bible Co., and a 0.26-acre canal-front sliver of land that the city in August agreed to sell to the developer. Kirkbride is set to leave its property.•