Deliveries Outpace Demand
An outsize supply, an economy treading water and a seasonal slowdown led to a few months of rent declines across most major U.S. metros, but markets are showing signs of recovery. Indianapolis rents were up 0.1% on a trailing three-month basis through February, 20 basis points ahead of the U.S., to an average of $1,245, according to the latest Yardi Matrix Indianapolis multifamily market report. Nationally, strong deliveries resulted in occupancy sliding 60 basis points in 12 months, as detailed in the latest U.S. multifamily market report. Meanwhile, in Indianapolis, the rate dropped 120 basis points, to 93.5%.
Indianapolis unemployment reached 2.5% in December, 120 basis points below the U.S. figure, according to preliminary data from the Bureau of Labor Statistics. The metro’s employment gains surpassed the national pace throughout 2023, with 37,300 jobs added last year, for a 2.5% expansion rate. Meanwhile, the U.S. labor pool grew by 2.0%. Education and health services led growth in the metro, with 9,700 jobs gained or a 5.0% rise. The sector will probably continue to perform well, especially with projects such as the $4.3 billion IU Health hospital taking shape downtown.
Last year, Indianapolis added 3,314 rental units to its inventory, marking a decade-high. The risk of short-term oversupply remains, as the metro had an additional 10,494 units under construction, as well as another 24,000 apartments in the planning and permitting stages as of February 2024.
Read the full Yardi Matrix Indianapolis Multifamily Market Report: October 2023
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