MARKET SNAPSHOT
$1,285 3Q 2024
92.7% 3Q 2024
1,186 [YTD: 4,202]
2.3% 3Q 2024
+40 BASIS POINTS
1,141 [YTD: 4,800]
While the national average rental rate increased by just 1.0% annually, Indianapolis recorded a 2.2% annual growth rate, ranking it among the top 20 of 50 major U.S. markets for rent growth.
Indianapolis’ strong rent growth is driven by its diverse economic base and relative affordability. While household incomes align with the national average, rents are approximately 25% lower than the national average.
In August 2024, the Indianapolis metro area recorded solid economic growth, adding 30,500 jobs—a 2.6% year-over-year increase.
Heading into the fall of 2024, the Indianapolis apartment market continues to grow in inventory, with steady demand helping to offset the effects of oversupply. During the peak summer leasing season, 1,186 units were absorbed on a net basis, slightly outpacing the 1,141 units delivered. While renter demand has been strongest in the luxury tier, which accounted for just over two thirds of new deliveries, this has limited the ability of owners and operators to push rents, leading many to prioritize concessions to stabilize assets. Demand has been particularly robust in the northern and southern regions, with the Fishers/Noblesville, Carmel/Zionsville/Westfield, and Johnson County submarkets capturing over 51% of total renter demand over the past year.
Indianapolis has maintained an active development pipeline, with a steady but manageable stream of deliveries. In Q3 2024, the pace of expansion slowed, with 1,141 new units delivered, about half the number from the previous quarter. Over the past 12 months, 6,400 units have been delivered, comprising 4,100 luxury units and 2,300 mid-range units. Currently, 4,600 units are under construction, representing 2.7% of the area’s inventory, not alarmingly high, but also not insignificant. Traditional development hubs, such as the Carmel/Zionsville/Westfield submarket, continue to see strong activity.
While average occupancy continues to decline across much of the country, Indianapolis defied this trend in Q3 2024. Stabilized multifamily assets experienced a 40-basis-point increase in occupancy, reaching 92.7% by the end of September. Although absorption was strongest among luxury properties, increased demand in 2024 also benefited lower and mid-tier properties, which account for a significant portion of Indianapolis’ apartment inventory.
Half of the metro’s 24 submarkets reported occupancy gains, with most declines in the remaining areas being modest. Notably, more than half of the submarkets recorded occupancy rates above 94.0%, led by Putnam, which exceeded 98%. In contrast, Northeast Marion County posted the lowest occupancy at 87.9%, reflecting the diverse dynamics within the market.
In Q3 2024, Indianapolis outpaced the national trend with above-average rent growth. While the national rental growth rate was just 1.0%, Indianapolis recorded rent growth of over 2.2%, ranking it among the top 20 of 50 major U.S. markets. This outperformance is driven by a diverse economic base and the region’s relative affordability. Although household incomes are in line with the national average, rents run at a 25% discount to the national average. In the most recent quarter, the market saw a 2.3% year-over-year increase, raising the average new lease rate to $1,285 per unit.
Impressively, 22 of 24 submarkets reported annual rent gains, with previously underperforming areas like Carmel/Zionsville/Westfield and Downtown Indianapolis returning to positive growth. Affordable submarkets led the way, with North Madison County and Anderson County posting significant year-over-year rent increases of 7.9% and 5.5%, respectively, indicating a strong shift in renter demand toward more affordable options.
In August 2024, the Indianapolis metro area, recorded solid economic growth, adding 30,500 jobs—a 2.6% year-over-year increase, according to the Bureau of Labor Statistics (BLS). The Education and Health Services sector led job creation, adding 6,400 positions, reflecting a 3.5% increase. The Leisure and Hospitality sector followed closely, expanding by 5.3% with 6,100 new jobs. Meanwhile, the metro unemployment rate remained steady at 4.0%, 20 basis points below the national average. This sustained job growth, particularly in key industries, reinforces the market’s strong economic fundamentals.
August 2024 ANNUAL JOBS CREATED
AUGUST 2024 EMPLOYMENT GROWTH
AUGUST 2024 Unemployment rate
4.2% us August rate
Nominal Change
from August 2023
to August 2024: 6,400
Percent Change: 3.5%
Nominal Change
from August 2023
to August 2024: 6,100
Percent Change: 5.3%
Nominal Change
from August 2023
to August 2024: 4,500
Percent Change: 6.9%
Nominal Change
from August 2023
to August 2024: 4,100
Percent Change: 2.9%
Nominal Change
from August 2023
to August 2024: 3,400
Percent Change: 1.8%
| Sector | Nominal Change from August 2023 to August 2024 | Percent Change |
|---|---|---|
| Education and Health Services | 6,400 | 3.5% |
| Leisure and Hospitality | 6,100 | 5.3% |
| Mining, Logging, and Construction | 4,500 | 6.9% |
| Government | 4,100 | 2.9% |
| Professional and Business Services | 3,400 | 1.8% |
| Financial Activities | 3,200 | 4.3% |
| Other Services | 2,200 | 4.8% |
| Manufacturing | 1,600 | 1.6% |
| Trade, Transportation, and Utilities | -200 | -0.1% |
| Information | -700 | -5.7% |
Construction of the Indiana Convention Center is underway in Indianapolis which will feature the 10th largest convention center ballroom in the U.S., as well as 90k SF of flexible meeting space.
Pharmaceutical manufacturer Eli Lilly is strengthening its presence in Indiana with the construction of two new manufacturing sites at the LEAP Lebanon Innovation and Research District in Boone County, north of Indianapolis.
Animal health company Elanco will build its new global headquarters in West Indianapolis. The new facility will occupy 45 acres and feature a six-story office building and adjoining labs.
The Indianapolis apartment market ranks among the stronger multifamily markets in 2024, supported by diversified economic growth and healthy household formation. Investor confidence is reflected in the continued development of new multifamily projects across high-growth areas such as Carmel, Zionsville, Westfield, Fishers, and Noblesville, where occupancy rates consistently exceed 94%. Local policies promoting business expansion and a diverse employment base—particularly in manufacturing, finance, and healthcare—are key drivers of sustained job growth and demand for housing.
Eli Lilly’s $5.3 billion investment in a new manufacturing complex is set to create hundreds of high-wage jobs, while the Indiana Convention Center expansion, expected to open in 2026, is projected to generate over $1.3 billion in annual economic output. As Indianapolis continues to outperform many peer apartment markets in rent growth, these factors underscore the region’s resilience and point to sustained market expansion through 2025 and 2026.
Sources: Costar; ESRI; U.S. Census Bureau; Yardi Matrix; U.S. Bureau of Labor Statistics
