Developer plans $24M second phase for Cosmopolitan

February 11, 2011
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Cosmopolitan on the CanalThe developer Flaherty & Collins is finalizing plans for a second phase of Cosmopolitan on the Canal that calls for 162 more apartments, a 180-space parking garage and a small amount of retail space at a cost of about $24 million. The new section is proposed for a triangle-shaped parcel bordered by Michigan and Senate streets and Indiana Avenue, just south of the existing building.

The first apartment phase of Cosmopolitan is 100 percent leased, which suggests Flaherty could have demanded higher rents, said Jim Crossin, the company's vice president of development. Flaherty plans to bump up rent rates, which range from $1,000 up to $2,500, as terms expire, and charge more initially for the new units. "It's now clear to us we can build more residential units like Cosmopolitan and be able to lease them up," Crossin said.

The commercial space in Cosmopolitan is another story. About 12,000 square feet remain on the first floor after Flaherty last week landed its first tenant: The branding and advertising firm Three-Sixty Group has agreed to take about 5,000 square feet and move from its current home in the Century Building. The firm is taking space along Michigan Street.

Flaherty, which bought the land for Cosmopolitan from OneAmerica, hopes to secure a city incentive deal and begin construction on the second phase by early 2012. No rendering was available, but Crossin says it will have a similar design to the first building, standing about 70-feet tall at the corner.

(Courtesy photo / Carl Van Rooy Photography)

  • Thank God
    Finally One America let go of that lot. It's not even proximate to their tower. Glad F&C snatched it up and will continue the residential boom on the NW quadrant.

    If we're lucky, this will produce a chain reaction where all the One America surface lots are eventually condensed down to one (unavoidable) parking garage on the NW corner of Illinois and New York.
    • Great!
      Congrats on weathering a fire to get this project finished, stabilized and succesful.

      However, 100% occupancy and premium rents should mean that the city is done with subsidies. If the deal can't stand on its own, it shouldn't be done.
    • A few points

      The first phase of Cosmopolitan won a 10-year tax abatement worth about $2.7 million, so the project owes its success at least in part to an incentive deal. It also came together before credit markets froze up. The developers expect they will need a richer incentive deal for the second phase.

      Another issue to consider: North of South is primarily an apartment development, and theoretically would be competing with a new phase of Cosmopolitan, and it is getting the majority of its financing from the city. (Even Buckingham's equity contribution to the project is actually just a waiver of its customary development fees.)

      The bottom line, according to several developers, is the economics of these types of projects (ones that include parking garages and rise more than a few stories) still do not work here without some city assistance.
    • Economics
      I'm not buying that the abatement had anything to do with the initial development's success. It had everything to do with latent housing demand from ever-increasing enrollment at IUPUI and essentially zero student housing construction since IUPUI completed the river apartments in 2004. It should have been obvious to anyone who looked at the waiting lists for apartment complexes around IUPUI that the Cosmo was going to fill up immediately.

      I'll also point out that a $2.7M abatement for 10 years for 218 apartments is about $100/mo / apartment. If they're talking about increasing rent for the new units, that pretty much nullifies the argument for an abatement.

      If I were the city, I'd balk at the abatement request and dare F&C to walk away.
    • 2 more cents
      It's very nice to see REAL developers acquiring property to build market rate apartment's because of the lease up and demand from existing projects they took risk on. Kudos to JC Hart and Flaherty & Collins! They have both taken risk on manageable projects and succeeded. They deserve to reap the rewards.

      Cory-Nice follow up; however...Let's not confuse minimal tax abatement (added it's over 10 years and equal to roughly 10% of the developers investment) with guaranteeing over $98mm in a corporate welfare scheme concocted by insider political cronies. Dollars invested/abated/guaranteed by the city for apartments, retail, or hotels adds NO VALUE what so ever to

      The city should be guaranteeing best of class jobs and education. Not the "fluff" apartments and retail proposed in Buckingham's ill plan.

      Investment in Education and Jobs/Businesses has the absolute highest return to a community and tax coffers.

      I hope to see more REAL DEVELOPERS, EMPLOYERS, and EDUCATORS continue to take risk and progress the development of strategic, strong nodes in our city; and for the city to continue to offer carrots such as reasonable tax abatements to help in the initial "risk" period of lease-up/start-up.
    • Design
      Let's not forget the impact that good design played here. I doubt the Cosmopolitan would have realized this level of success had Flaherty & Collins simply utilized its former design/cost models. There are some students there, but it's definitely not student-oriented housing by any stretch. This place has "presence" and the tenant's I've spoken with are willing to pay for it.

      F&C deserve kudos for taking the risk known as Architecture with a capital "A". I'll leave the subsidies debate to the wiser voices in this forum.
    • Reconnecting Our Communities to our City
      Downtown sites can be redeveloped with enough density and make the numbers work, with fewer subsidies, because they can go up, if we can continue to absorb the occupancy rates. It is the Midtown districts, our corridors that have been left behind and need subsides to rebuild Transportation Oriented Mixed Use Development, reducing the over expenditures for the Suburban Growth, & all the Cost of not creating efficiency. The costs are seen via our massive State and Federal Subsidies for out growth and directly with our National Deficit. Now we need to stabilize our MidTown Districts and clean them up comprehensively, so that we can reconnect our existing communities back to our downtown and then grow our down towns with further market rate product. This is an Imperative Sustainable Tipping Point and can only happen with fiscally responsible City & State Leaders doing what all the Studies say we need to do; assist with back able financing packages with in our Midtowns, designed to clean our corridors the arteries of our neighborhoods that feed our Downtown.
    • Design
      MDB...I think you are being a little too generous here with your statements regarding the design. While I appreciate the massing of the project...the design is not architecture with a capital "A". It's fairly traditional and lacks any sort of groundbreaking ideas. The materials are generic as well. It's great to see these vacant lots developed...but my concern is aesthetics here. They claim the new development will have a similar aesthetic...that doesn't sound like a good thing to me. I would push for something with a completely different aesthetic to establish more variation along the street. A lot of these developments lately seems to have this same kind of brick and tan aesthetic...of which I am not a fan.
    • (unavoidable)
      One (unavoidable) parking garage on the NW corner of Illinois and New York with one (unavoidable) sign containing messages written by someone who also pens knock knock joke books.
    • Great!
      This corridor is really starting to gain some momentum. 1201, The Avenue and now a new Cosmo development. While I agree that the design of the current Cosmo is on the high end of average, I think these developers genuinly care about their product. Perhaps a glass building would make quite a statement.
    • Who is paying the rent?
      I would like to know how many folks living there are full-time students (undergrad or grad, doesn't really matter) either getting some of their college costs paid for via scholarship or living on student loans.

      If the bulk of the occupants are students, of course you can jack rent. Universities have been jacking tuition to the stratosphere over the last 15 years. Of course this is just another example of why a four year degree will end up costing as much as $100,000 in the near future. I feel sorry for the kids mostly. They get to carry another $100-$150 (or more) a month debt load.

      Along a similar line of thinking, even if these aren't students, who are they? I'm seeing college students with tens of thousands of dollars in college debt and the thought process of some are "I'm gonna live large, because I'm already a debt slave." It is unfortunate that people can't have affordable housing in a downtown urban environment. Of course these will be the same people demanding something be done about their debt load when they hit their 30s and realize they will never have a dime to their name.

      I don't think one should have to make $70K+ just to be able to live downtown and also have the ability to save some money for the future.
    • Canal Residents
      Johnathan Doe - the residents of the Cosmo, and the canal in general, are not undergrads. At most they might comprise 10%. For the most part, it's graduate students (law, med, science/engineering) and young professionals, particularly med residents. I highly doubt any of my neighbors make anywhere near $70k (med residents make high $40k's).

      When I moved into the Gardens of Canal Court 6 years ago, I was put on a waiting list for 5 months before I got an apartment. Regardless who's living there, the demand is enormous.
    • Rent Rates
      The low end of that price range is still about $200 more than my mortgage payment in Irvington. I'd love to live downtown, but the cost of even "student" housing is out of many people's price range. Maybe we just have different ideas of what affordable housing means.
    • Affordable
      Affordable housing is generally defined as <30% of a person's gross (pre-tax) income. This is the number typically used by apartment leasing offices.

      That means someone who makes $40k a year can "affordably" pay roughly $1000/mo in housing costs. Most (but not all) 1BR apartments are cheaper than that in downtown. Even down to $30k income -- $750/mo -- there are lots of 1BR options. Two $30k earners in a 2BR can afford most apartments in downtown.

      For the record, the Cosmo's price point is not a good benchmark for affordability. Indy apartments really don't get any more expensive.

      And remember that a mortgage payment is not directly comparable to a rent payment. Rent includes insurance, maintenance, amenities (e.g. exercise room, pool), some utilities (usually water), etc.
    • Borders Closing
      Borders is Closing, will this make way for a Best Buy!!!! Our only other option for large scale retail (best buy, target, etc) in downtown is this location or the North of South project. Hope someone is on this :)

    • MSA site!
      The sad part is the lack of any movement at the old Bank One processing building on Washington Street and the nearby empty MSA location.

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