Apartment Finance Today

REGIONAL MARKETS

MIDWEST

Midwest At-A-Glance

APARTMENT FINANCE TODAY • June 2008

Minneapolis & St. Paul

Twin Cities cool off. After three years of limited construction, the Minneapolis-St. Paul area is expected to add 1,050 units in 2008, the largest addition in four years. The new units will stunt an already cooling market, as vacancies are expected to rise 70 basis points to end the year at 4.8 percent, according to Marcus & Millichap. Construction continues along the Hiawatha light-rail line, where Klodt, Inc., recently broke ground on a 61-unit second phase of Hiawatha Flats after opening 163 units in the first phase last summer. The company, which also developed the transit-oriented Oaks Hiawatha Apartments in the area, said it has acquired more land along the light-rail line for future multifamily development.

Toledo, Ohio

Toledo a no-go. Toledo’s apartment market has hit hard times, as the downtown market struggles to absorb excess units resulting from a construction boom that began 10 years ago. Downtown vacancy rates are averaging about 11 percent, and two of the largest apartment developments in Toledo’s downtown area are in serious trouble. The 156-unit Commodore building may be put on the sheriff’s auction block later this year, and the 106-unit Hillcrest is facing imminent foreclosure. The city has lost about 15,000 people since 2000, and its unemployment rate reached 7.2 percent in March, according to market research firm Reis, Inc.

Omaha, Neb.

In-town renaissance. Cranes are poised over Omaha’s midtown and north downtown areas, where several multifamily buildings are rising. The Wall Street Tower Omaha, a 32-story condominium project developed by Townsend, Inc., in the north downtown area recently broke ground. And work continues on two big projects in the midtown area, the 565-unit Midtown Crossing and the 600-unit Aksarben Village. All of this recent activity speaks to the city’s bright prospects and steady economy. Omaha, home to five Fortune 500 companies, is expected to add 4,000 new jobs in 2008. Meanwhile, supply has been constrained. Just 315 units were delivered in 2007, helping to send effective rents up 3.5 percent to reach $668 per month by year-end, according to market research firm Marcus & Millichap.

Indianapolis

Investors eye Indy. Out-ofstate investors are flocking to Indianapolis, lured by its strong and diverse local economy, relatively inexpensive prices, and slow but steady increases in property values. East Coast investors made up 76 percent of the total multifamily sales volume in CB Richard Ellis’ Indianapolis office in 2007. The brokerage firm processed about $235 million in multifamily sales in 2007, more than doubling the previous year’s total of $95 million. And cap rates are expected to average in the mid- to high-7 percent range through the year, numbers which are likely to continue to draw out-of-state investors to the area, reports brokerage firm Marcus & Millichap.