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Condo sales lag in hot downtown apartment market

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New apartment projects carrying premium rents are popping up all over downtown, but the strong demand for urban living isn't providing much of a boost for the condo market.

Downtown condominium sales remain slow, and only a handful of new units are on the drawing board thanks to low demand and still-difficult financing, market watchers say. Even the conversion into apartments of large condo projects including The Maxwell and 707 E. North St. hasn't provided much of a boost to the remaining for-sale inventory.

In Center Township's northeast quadrant, where most downtown condos are situated, only six condos sold in February out of 142 offered for sale—the equivalent of a 23-month supply, said F.C. Tucker Co. President Jim Litten. The average price was about $305,000.

Even that was an improvement over January, when only three condos sold out of an inventory of 133—a 44-month supply. Both months were down by at least half from the same periods in 2010, a drop Litten blamed on the expiration of homebuyer tax credits.

In the city's northwest quadrant, which has about 20 condos on the market, one condo sold in January and one sold in February, F.C. Tucker numbers show.

One reason for slow sales is that downtown condos have a more limited set of potential buyers than suburban homes, Litten said. And young professionals or corporate executives are more likely to opt for rentals in an uncertain market. The cost of building new units or converting old buildings also is higher in the city, leaving less wiggle room on price.

"Demand should return," Litten said. "It's only a matter of time."

Meantime, developers are launching several new apartment projects, encouraged by high occupancy levels and growing rents.

Buckingham's North of South project is poised to add more than 300 apartments, Flaherty & Collins Properties is planning 160 more units for the wildly successful Cosmopolitan on the Canal project, and Milhaus Development and Gene B. Glick Co. are preparing to build 250 units at The Residences at 451 E. Market St.

One of the few downtown condo projects under construction is The Shelton at 825 N. Delaware St., where the first move-ins are scheduled for late April or early May.

Developer Klaus Wittern has sold seven of 15 units—a result he sees as disappointing. Units range from one-bedrooms for $139,000 to penthouses for about $220,000. Every unit can be customized for no extra charge, an option that's rare for condos in that price range.

"We have had a lot of people ask us what the 'real price' is, and we tell them 'it is what it is,'" said Wittern, who is investing about $3 million in the rehab project. "We didn't start high, then scale back."

The experience of getting low-ball offers is familiar to Todd Maurer, whose Halakar Properties is a partner in the 3Mass condo project. The building has been about 60 percent sold for more than a year.

The developers of 3Mass are building out two units that recently sold and plan to finish three more in the hope of taking advantage of buyers who need to move in immediately.

"I feel very good about our project, and when the market turns we'll be well positioned," Maurer said.

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  • Yuppies Aren't the Only Ones Eyeing Downtown
    There is another market that's considering moving away from houses in the 'burbs: Middle-aged marrieds. My husband and I have no kids, love the varied attractions downtown has to offer and have had quite enough of yardwork. We have never been invested in IPS and would like to live somewhere where we can park the car and walk.

    Seems the real estate specialists could start looking over our ways...to the MAPPIES (middle-aged, progressive professionals--and I'll take that service mark, F.C. Tucker!).

    YOu heard it here first.
  • NO TITLE
    I think the new condos and continual downtown development is what will draw young professionals such as myself back to the city (now living in ATL). What the city lacks is a true urban feel where you don�t need a car. (i.e. Broadripple). Atlanta is much more spread out than Indy but still has plenty of densely packed urban areas such as Buckhead, Midtown, Downtown, Virginia Highlands, etc. Sure if your 60 then living in the city may not be your first choice but young folks need things to do.
  • WOW.....
    These comments are way off target.

    1. The downtown Indy market is extremely affordable. Sure the ammenities aren't on the same level as NYC or Chicago, but there is plenty to do and see and for a great price. If you can obtain a quality home, 1500-2,000 sq ft for $200,000 in the heart of the city, then you are doing fine. The housing market in NYC is unlike anything in the rest of the country. My cousing rents a 400 sq ft apartment in midtown(not the best area) for $2200 a month and he talked the landlord down to that price!

    2. Downtown Indy is the best investment in the metro area. It has huge potential and has made large strides towards a true upper tier city status. The activities that occur downtown combined with constant investment and efforts for urban living have made it a wonderful place. Those who believe a home in the burbs is the best, check the recent housing bubble. true urban centers saw more stable prices than their suburban counterparts. Your home out there is cheap because it is built poorly with poor materials, shotty worksmanship, assembly line production and economies of scale. You get a new house now, but in 20 years it is as bad as any house you passed up. I know the state of housing, I inspect houses weekly and find vacancies galore. By the time you add commuting for anything by car, lawn and home care and a gym membership to your $170,000 house you realize you substituted cheap housing and land for transportation costs. Aren't you the guy who complained about gas prices recently?

    3. finally, there are quality schools in the city center. The reason IPS gets a bad review is because people disinvested and then slander its name. Have you truly investigated the teachers? Have you witnessed the effort a student at IPS gives? You will find many who aspire to achieve. There are also charter schools downtown and award winning private schools. The only way we will improve our schools is to inject money back into them.

    Downtown Indy is great and on its way up. The reason condos don't sell is because it truly is a lifestyle shift not seen in most of Indiana. You learn to appreciate culture, community and engagement. The price is higher per sq ft, but can be offset with reduced transportation costs, healthier people and improved social, environmental, and physical well being. I live downtown and wouldn't have it anyother way!
  • Schools
    Another underlying problem is the lack of decent schools. After the young apartment dwellers get married, they look for a place to raise a family. You can't do that in downtown Indy without trucking your kids out to private school every morning. That kind of defeats the purpose of living close to work, when you have to drive the kids to school.

    So the natural effect is a lack of 30+ year old folks, who just might fill that $250k condo buying market.
  • Urban Dweller and CAW
    What I was meaning to say by the $200,000 is that although most condos are $400k and higher in those cities, you're trying to charge half of that in Indianapolis. The amenities are lacking in downtown to even consider those prices. There aren't viable grocery stores (Kroger on 16th and Marsh) aren't really the best options. Quite frankly, the city needs to stop discouraging development, if my memory serves me correctly, you're spending money on North of South, but MSA has been vacant forever and Penn Centre would have been great across Conseco. What I'm getting at here is the lack of progression the city has. The cultural trail is a nice idea, but when people don't live downtown, its one big glorified sidewalk. Invest more downtown and then maybe you can get away with charging those prices. When you have alot of ammenities then charge those, but when the 'burbs are more vibrant than downtown you know you have the issue you have now... lack of occupany dt other than apartments.
  • in my opinion!
    so... then... where do you live?

    Indpls is beautiful! Our condo buyer market is scarce due to a)the major banker/brokers who used to finance... But due to hand slapping of hud; b)the fallout of the tax assessments; & c)buyers having a false sense off 'buyer market' which never existed in our marketplace'... Banks have become overly conservative to say the least thus scaing buyers due to appraisers so afraid to lose their license they are pretty much forced to lowball appraised values.... Sbowball effect? Yes! Risk? No! We always bounce back! Indianapolis is beautiful!!!
  • for midwest cowboys
    Why would you buy a condo when you can get a house with a yard in the middle of nowhere? Because some people don't want to live in the middle of nowhere where all the cardboard houses look the same.

    Downtown market is fine. It could be better, but at least is growing.
  • Embrace it
    If there is a young professional apartment culture building up in Indy then embrace it. The article is focusing on the negative condo market but neglects to state that downtown Indy is at nearly 100% apartment occupancy. As some of these people grow older and build their income then they will be able to fill in the condo void since they MAY better appreciate all their amenities being in close proximity than a backyard.
  • Really?
    When I read these comments it never ceases to amaze me how ignorance permeates our society. I mean no disrespect (because "ignorance" just means lack of knowledge)but please, people, stop writing about that which you do not know! $200,000 condos in Chicago, New York, etc.? I've lived in both places and you couldn't get a bathroom in either one for $200,000. Please, people, stop speaking about that which you do not know. Really.
  • 200,000 Condo
    Dear Ramz,

    Please advise where i can get one of those 200K
    Condo's in NYC> I will take two !
  • Affordable...
    All I want is quality, affordable apartments inside the inner loop. Is this too much to ask for?
  • Silly
    When you can have a great house with a yard in a fairly nice neighborhood for only $170,000, why would anyone in their right mind spend 250 grand on a "glorified apartment" in downtown Indy? I've never seen any condo as a good investment and finally more and more people are seeing it as the bad investment it truly is.
  • If you want people to buy downtown...
    then YOU developers have to take on some low ball offers. There's no way someone would pay $200k+ for condos in downtown Indianapolis. They would spend that much in Chicago, New York, California, or the south (TX, FL) b/c there are alot to offer in those cities and states. Indy needs to offer a lot more and quit going by status quo all the time, be progressive for once!

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