Indianapolis apartment gains improve this year, may taper off in 2013

Apartment market improvements occurred in Indianapolis.

Commercial property managers in Indianapolis may see a slowdown in the multifamily market's progress next year, as this year's improvements may be too strong, according to a report from Tikijian Associates.

Nearly 2,900 multifamily units were completed this year, which should remain higher than next year, as there is approximately 2,600 new units that will be finished during that period. However, the lack of gains may not be negative, as this year's figure was the highest total since 1999, the Indianapolis Business Journal reported, citing the report.

This year experienced a rental jump of 2.2 percent. Specific areas also had significant rent growth, as the downtown area had a 4.7 percent rise, the report explained. The north area of the city eclipsed 2 percent growth, as well.

Occupancy levels reached the highest point in several years, as the city had an occupancy rate of nearly 92 percent, the report noted. The downtown area approached an occupancy rate of 96 percent.

"The dynamics that have driven apartments are still strong," George Tikijian, principal of Tikijian Associates, told the news source. "In all likelihood, there'll be a little more competition from single-family buying, and more new apartments delivered – enough to slow down growth a bit."

Other areas of the Hoosier state experienced an improved apartment situation this year. The report noted that Bloomington had an occupancy rate of 96 percent, with the average rental price reaching approximately $870. Additionally, Lafayette and West Lafayette had the most elevated rent growth in Indiana, rising above 4 percent during this year.

Rents, occupancy may still increase in 2013
Looking at next year, there should be an occupancy rate of more than 92 percent in the city's multifamily market, the report said. However, there may not be a significant level of completed property developments throughout the city next year, as current major projects are not slated for completion until early 2014.

Total rent growth for the city in 2013 should improve by as little as 1.5 percent or as much as 2 percent. There also may be spikes in rent in some luxury properties to approximately 3 percent, according to Tikijian Associates.

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