Key Highlights:
- The relatively low cost of living compared with many gateway and Sunbelt markets, as well as job opportunities across a broad swath of industries, attracted new residents to the region.
- The average rent increased by 3.6% year-over-year as of November 2024, more than triple the national average of 1.1%. Growth was strongest in the suburbs surrounding the central business district, as well as in Warren Township and Greenfield to the east.
- Operating metrics improved most for Class A apartments despite an increase in new construction in this segment, indicating strong tenant demand for new, luxury apartment units. The strong preference for these types of units stabilized the apartment market during 2024.
- Notably, new completions likely peaked in 2024 at an estimated 6,400 units. If tenant demand remains robust as new construction eases, operating conditions could strengthen further.
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Additional Insights:
Elevated tenant demand stabilized the Indianapolis apartment market in 2024. Sustained, positive net migration, a strong labor market, and a decrease in single-family housing affordability all increased the need for apartments. These factors offset the continued surge of new construction during the past year and steadied operating metrics. Looking ahead, new deliveries should have peaked in 2024 and are expected to slow in the upcoming years. In combination with existing demographic trends, this dynamic should lead to strong apartment performance in Indianapolis relative to other major markets.
