The Indianapolis metro had a very healthy quarter, exceeded absorption, occupancy and rent growth quarterly projections.
According to RealPage projections, the Indianapolis market was forecast to see a 0.6% effective rent change during the first quarter of 2022. Meanwhile, the metro’s effective rent increased 2.1% from the previous quarter and 14.8% year-over-year. The steadily growing effective rent is caused by the persistently high demand.
The Indianapolis metro’s absorption reached over 950 net units. With the market’s business-friendly and affordable urban lifestyle, the single-family housing market is very competitive due to lack of supply, leading more residents to look at multifamily housing options.
The Carmel/Hamilton County and Downtown Indianapolis submarkets had the highest leasing activity in the market, representing 47.9% of the total net absorptions in the metro.
The Carmel/Hamilton County submarket is north of Downtown and is a sought-after suburban area in the metro. In the first quarter of 2022, leasing activity totaled 258 net move-ins. With having the highest increase in supply, the submarket’s occupancy dipped 10 basis points from the previous quarter. Yet, occupancy remained at an average rate of 97.9% in 1Q22, representing an annual 210 basis point increase. The high demand and occupancy is partially from the lack of single-family housing options and the rising cost of what is for sale. The city of Carmel has a reputation of being a safe neighborhood, accompanied with first-rate education, shopping and entertainment centers, making it one of the more desirable suburbs to live in in Indianapolis.
In contrast, the Downtown Indianapolis submarket is the market’s urban hub. Nearly 200 net units were absorbed in the first quarter of 2022 as occupancy rose 160 basis points from year-end 2021 and 710 basis points annually. The main attraction to Downtown Indianapolis is its growing economy and comparative affordability. The economy continues to grow with companies such as Salesforce, Apria, Republic Airways and Corteva expanding into the market. Downtown Indianapolis is also more affordable compared to other Midwest metros like Chicago and Minneapolis, yet still has similar urban amenities. Downtown Indianapolis is home to 300 restaurants and bars and has two professional sports teams: the NFL Indianapolis Colts and NBA Indiana Pacers.
-Berkadia Research