In Louisville, the pace of net absorption not only accelerated throughout 2023 but also matched the rate of new developments, leading to a stable vacancy rate currently at 6.6%, which is notably lower than the national average of 7.7%. The market’s demand for housing has surpassed its historical norms, with the 12-month net absorption exceeding 1,800 units, marking a 28% increase from the average of the three years pre-pandemic. This heightened demand is primarily concentrated in regions welcoming new developments, especially in suburban areas. Notably, the Southern Indiana Submarket accounts for nearly a third of the yearly demand. The presence of numerous higher education institutions lends a degree of market stability, buoyed by consistent housing demand from students and faculty. Furthermore, significant investments by leading companies, including Toyota and other advanced manufacturing firms, are generating new employment opportunities, thereby bolstering housing needs as new employees settle in the region. The market’s relative affordability also positions it as an attractive option for renters seeking alternatives to higher-cost living areas.
Lexington stands out as an exception in the national context, where escalating deliveries typically drive up vacancy rates. Here, robust demand has contributed to a decline in vacancy rates, supported by the market’s overall affordability. This is particularly evident in the strong absorption rates seen in lower-rated properties. The city’s appeal is further enhanced by the presence of several Fortune 500 companies, such as Xerox, Lockheed Martin, Lexmark International, and IBM, underscoring Lexington’s strategic location, competitive business costs, skilled workforce, and high living standards as key factors attracting business growth and expansion.
Clarksville’s multifamily market has shown notable improvement compared to last year, with the vacancy rate decreasing to 8.5%, which is a 140-basis improvement from the previous year. This positive trend is supported by a healthy balance of 1,200 units of positive absorption against 1,000 units of net deliveries over the past year. The Clarksville economy, known for its diverse industrial base and strong military presence, continues to drive growth and stability in the housing market. This economic vibrancy, coupled with ongoing developments, is instrumental in shaping the local real estate landscape and contributing to the gradual reduction in vacancy rates
