$1,261 2Q 2024
2.0%
92.8% 2Q 2024
0 BASIS POINTS
1,602 [YTD: 2,876]
2,243 [YTD: 3,413]
The Indianapolis apartment market witnessed a surge in renter demand in the second quarter with the absorption of over 1,600 units—the third highest quarterly figure in the last decade.
Over the last four quarters, while the U.S. averaged a modest annual rent increase of less than 1.0%, Indianapolis has consistently registered over 2.0% annual rent growth. This strong performance has positioned Indianapolis among the top 20 in the 50 major U.S. markets during this period.
In the first half of 2024, the Indianapolis apartment market experienced a 20% increase in sales volume for single-asset trades of conventional multifamily properties, totaling $260 million across 16 transactions.
QUARTERLY DEMAND
QUARTERLY COMPLETIONS
The Indianapolis apartment market is witnessing a surge in renter demand, particularly robust in the second quarter with the absorption of 1,600 units—the third highest quarterly figure in the last decade. This heightened demand is predominantly concentrated in the northern and southern regions of Indianapolis, specifically in the Fishers/Noblesville, Carmel/Zionsville/Westfield, and Johnson County submarkets. Together, these areas have captured approximately 50% of the total renter demand over the past year.
In Q2 2024, the Indianapolis apartment market saw a significant expansion, with 2,243 new units introduced. This growth was predominantly concentrated in the Fishers/Noblesville submarket, which accounted for 24% of the new inventory. Additionally, Johnson County also captured a substantial portion of the pipeline, contributing approximately 13% to recent completions. This strategic emphasis on suburban development aligns with the ongoing demographic shift towards suburban areas, reflecting a clear trend in residential preferences.
While the overall occupancy rate in Indianapolis, including newly completed buildings, declined by 130 basis points, the average occupancy rate for stabilized multifamily assets remained steady year-over-year at 92.8%. Approximately half of Indianapolis’s 24 submarkets reported increases in occupancy rates during the most recent quarter, with any declines in the remaining submarkets being modest. Notably, submarkets such as Putnam and North Madison counties have thrived, with occupancy rates exceeding 98%. Conversely, Northeast Marion County experienced the lowest occupancy rate, recorded at 88.3%. This variability highlights the diverse dynamics across the market’s various regions.
In the second quarter of 2024, Indianapolis demonstrated healthy rental growth, continuing to defy broader national trends. Over the last four quarters, while the U.S. averaged a modest annual rent increase of less than 1.0%, Indianapolis has consistently registered over 2.0% annual rent growth. This strong performance has positioned Indianapolis among the top 20 in the 50 major U.S. markets during this period. Specifically, in Q2 2024, the city saw a 2.0% rise in rents, boosting the average new lease rate to $1,261 and sustaining its growth rate of approximately 2.0%.
Despite this general upswing, high-end submarkets like Carmel/Zionsville/Westfield and Downtown Indianapolis did not follow this trend, showing stagnant or lesser growth. In contrast, the most substantial increases were seen in more affordably priced areas. North Madison County and Anderson County led with remarkable year-over-year rent surges of 7.1% and 6.6%, respectively, highlighting a shift in growth dynamics within the region.
Average Monthly Mortgage Payment
Average Monthly Rent
In the first half of 2024, the Indianapolis apartment market experienced a robust 20% increase in sales volume for single-asset conventional multifamily trades, totaling $260 million. This performance not only marked an improvement over the same period in 2023 but also surpassed the pre-COVID five-year historical average for H1, which stood at $258.3 million. The number of property transactions climbed to 16, indicative of a vigorous market even amidst tighter capital conditions.
Indianapolis’s strong market fundamentals and a manageable construction pipeline continue to draw investor interest. The market’s appeal is particularly notable among private investors, who are generally more willing to accept higher risks, leading to an uptick in transaction activity. In contrast, institutional investors have become more cautious in recent years. Additionally, per unit pricing saw a 5.7% increase from the previous year, reaching $140,100, further underscoring the market’s robust health.
*Most Active Buyers and Sellers are based on the sale volume of apartment units.
* Trailing 4Q average PPU
* Preliminary Data from RCA – Individual transaction $2.5M +
|
Under 35 Years
|
35 to 44 Years
|
45 to 54 Years
|
55 to 64 Years
|
65 to 74 Years
|
75 to 84 Years
|
85 Years & over
|
|---|---|---|---|---|---|---|
|
0.3%
|
-0.3%
|
-0.4%
|
0.1%
|
1.0%
|
0.0%
|
-0.2%
|
The 65-74 age group is the fastest expanding renter demographic in the Indianapolis metro area, showing a 1.0% growth from pre-pandemic 2019 to 2022. This suggests an increasing demand for rental housing that caters to an aging population.
As 2024 progresses, the Indianapolis apartment market remains robust, supported by strong economic and job growth. Despite a slight dip in occupancy rates to 92.2%, demand for rental properties continues to be high. The influx of new units in burgeoning areas such as Carmel, Zionsville, Westfield, Fishers, and Noblesville reflects growing investor confidence and suggests potential for further market expansion. Indianapolis is bolstering its reputation as a top job market, thanks to local policies that attract new businesses and create diverse employment opportunities, particularly in manufacturing, financial activities, and the healthcare sector—a key driver of future apartment demand. In May 2024, Indianapolis-based drugmaker Eli Lilly revealed its plan to invest an additional $5.3 billion to build a massive manufacturing complex that will generate thousands of high-wage jobs over the next few years. Additionally, Indianapolis continues to outperform many of the nation’s largest apartment markets in terms of rental growth, highlighting its market strength. These factors collectively foster a positive outlook for the Indianapolis apartment market, emphasizing its resilience and potential for continued growth.
