With approximately 1,200 units delivered so far this year, and more than 4,400 units under construction, according to Yardi Matrix data, Indianapolis’ development scene is picking up steam. Job growth, particularly in the health-care and tech sectors, is driving housing demand, as the city added more than 23,000 jobs over the past year.
J.C. Hart Co., one of the top multifamily developers in Indianapolis, has upwards of 500 units underway in the metro area. The firm also manages 5,207 units and recently invested in a 102-unit community in the suburb of Fishers. President John Hart speaks about the current development and investment trends in Indianapolis, and how changes in resident demands have influenced the city’s development landscape.
Given J.C. Hart’s strong history in the market, how would you characterize Indianapolis’ multifamily development sector?
Hart: Market occupancies remained stable from 2017 through to 2018, and year-over-year rent growth is positive at a moderate level. The market overall remains strong, although some product or submarkets are showing some concessions and/or oversupply.
How have multifamily assets in the Indianapolis market performed in the past 12 months compared with the year before?
Hart: Year-over-year rent growth for our portfolio has been just under 2 percent over the last 12 months. Same-store occupancies have also remained the same during that period.
In what ways have shifts in renter demand impacted development trends across the metro?
Hart: (There have been) shifts to infill sites with walkable live-work-play types of locations. Downtown, Broad Ripple, Carmel and other submarkets see this trend.
Tell me about one of your current multifamily developments. How does it stand out compared to similar product?
Hart: Penrose on Mass has 236 units, 40,000 square feet of retail and a 359-space underground public and reserved parking garage catering to young professionals and aging Baby Boomers. The building spans over a triangular half-city block in one of the trendiest areas of Indianapolis. The integrated garage and retail along the triangular site make it one of the most unique sites in the city.
Which of Indianapolis’ submarkets do you anticipate will be the hottest in terms of investment and development over the next year?
Hart: Downtown Indianapolis (and near downtown) remains attractive, but also suburban downtown/walkable locations on the north side in Carmel, Zionsville, Noblesville and Fishers.
What challenges and opportunities do you foresee in Indianapolis over the next year?
Hart: The steady supply of new product in downtown, Carmel and Fishers potentially creating an oversupply situation could be a challenge. While demand has kept pace, job growth will be important to help with the absorption of new product.
How have rising construction costs affected future development plans?
Hart: It’s more challenging to see the feasibility of all opportunities available. It will narrow our vision of sites that are best for achieving higher rent levels and absorption.
Image courtesy of the J.C. Hart Co.