Executive Summary

Community Economic Summary - Employment in the Knox area is concentrated in the healthcare, public administration, food services, retail, manufacturing, and the scientific and technology services industries. The large share of healthcare is notable as this industry is historically extremely stable. Relatively low compared to the overall nation, the Knox area features comparatively more stable employment in healthcare and education industries.

Location Summary - Most necessary services and amenities are located in the community of Knox compared to the surrounding communities. The community of Knox is located in the north eastern section of Indiana on Highway 35.

Community Demographics Summary - The Knox area has demonstrated a population decrease by a small amount from 2010 but in expected to grow in projections. It is the opinion of HCA that a small amount of growth should be expected to increase through 2030 due to efforts in place to grow the economy locally. As population grows, the need for good quality market rate multi-family housing is also expected to increase.

Supply Summary - The vacancy rates among the stabilized market rate competitive set is 2.7% over the trending 12 months. The vacancy rate among the overall market of the closest Submarket Data shows a vacancy rate of .5% 4 and 5 Star properties, 3 Star properties is 1.6% and 1 and 2 Star properties was 1.5%. This averages 1.4% vacancy in the overall Submarket. Overall, the low vacancy rates among all star category market rate properties, suggests that the market is strong with demand for additional units.

HCA estimates, there is a potential demand for 70 to 90 new, market rate rental units available to the proposed location. Taking into consideration of the information in the report as well as the fact that there has been no new development in the Knox, IN market, the overall Market and Median Rental Rates and the occupancy rate we feel the 78 units in Knox, Indiana will make good business sense.

Using a conservative rent to income ratio of four to one, renter households need a household income of close to $38,832 to qualify for the current, 12 month average rent of $809 (previous 12 month average rent was $740) in the market of Knox. Using a the industry standard rent to income ratio of a three to one, renter households need a household income of close to $29,124 to qualify for the current, 12 month average rent. The average income for households in the market, however, is over $62,745 within five miles of the proposed location in 2022. That means that the average household in the market can afford rents of closer to $1,307 per month conservatively at 25% of total income. In a typical ratio of three to one or 33%, over half the market could afford more than $1,725 per month.

One, two, and three bedroom units should be featured. We advise the one-bedroom floor plans offer between 700 and 850 square feet. We advise two-bedroom floor plans offer between 900 and 1100 square feet. We advise three-bedroom floor plans offer between 1100 and 1300 square feet. Monthly rents should be between $950 and $1,050 for the one-bedroom units, $1,200 and $1,275 for the two-bedroom units, and $1,400 to $1,500 for three-bedroom units per month. If the product is successfully developed at these rents and units sizes, and the site is fully marketed, the proposed 70 to 90 units will lease up in less than 18 months.

This conclusion is based on the current and local supply, demand, operating costs, and development costs. The conclusion is also based on the potential units being financed, developed, and operated/managed in a fiscally responsible manner.