Indy Multifamily Market Getting Stronger

INDIANAPOLIS—Due to its central location and dense network of interstates, Indianapolis has become one of the nation's top logistics and distribution hubs. The region's rising economy has also lifted up its multifamily and retail sectors, according to a new report from DTZ.

The multifamily market registered 405 units of net absorption during the first quarter of 2015, the firm found. This was a 63% increase over the first-quarter absorption last year and continues “a streak of more than five years of uninterrupted occupancy gains in Central Indiana.”

“Despite new deliveries in the Indianapolis multifamily market, we forecast that strong underlying demand metrics and favorable demographics will be sufficient to hold vacancy rates steady and support the continuation of rent growth,” says Jason Tolliver, regional vice president of research in DTZ's Indianapolis office.

DTZ research also shows that in 2013 over 10,000 people migrated to the Indianapolis metro region. “This is one of the most important dynamics that Indianapolis has going for it,” Kevin Thorpe, chief economist for the Americas for DTZ, recently told a real estate conference here. “People drive demand, and people want to be in Indianapolis.”

Investors have begun to put down big money for communities in the region. As reported in GlobeSt.com, Steadfast Apartment REIT recently purchased Reveal on Cumberland in suburban Fishers, just 16 miles northeast of downtown, for $29.5 million. The 220-unit development was built in 2014. Steadfast also recently acquired the 277-unit Eagle Lake Landing Apartments in suburban Speedway, less than six miles from downtown, for $19.2 million.

The retail market in Indianapolis saw 145,125 square feet of positive absorption in the first quarter, DTZ found. Demand for retail space remains low, and with supply growth low, the amount of available retail space in Central Indiana has declined by more than 1.4 million square feet since 2011.

“The combination of limited new product and stronger deal velocity in the Indianapolis retail market has reduced the median time to lease available retail space while at the same time supporting rent growth, particularly in the class A segment,” says Tolliver.

DTZ forecasts show the population boosts will continue for at least the next several years. This “is going to drive healthy real estate dynamics in Indianapolis well into the foreseeable future.”