Developers are still busy building new apartment communities throughout the Indianapolis area. But the pace at which they are delivering new units has slowed. This is good news for multifamily owners, as apartment rents in this market continue to rise and vacancies keep falling.
That’s the takeaway from the second quarter Indianapolis multifamily report recently released from Marcus & Millichap.
Marcus & Millichap reported that multifamily vacancies are on pace to fall 30 basis points this year to 5.3 percent. That follows an even bigger drop of 130 basis points recorded last year.
At the same time, the average apartment rent in the Indianapolis market is on pace to jump 4.2 percent this year to $840 a month, Marcus & Millichap said.
Several factors are behind these strong numbers. First, employers are expected to add 18,000 jobs this year in the Indianapolis market, according to Marcus & Millichap. Much of these new jobs will be concentrated in the tech and retail sectors, including significant expansions by third-party logitistics firm Spot Freight and cloud-computing company Salesforce.
Marcus & Millichap reported that the new jobs will increase incomes and quicken the pace of household formation here. This, in turn, will increase the demand for rentals.
Developers are expected to add 2,900 new apartment units to the Indianapolis market. This is a slight increase from 2016, when developers brought 2,500 new multifamily units to the market, but is a drop from two years earlier. Much of the new rentals will pop up in downtown Indianapolis and Hamilton County.
