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Navigating Opportunities in Indianapolis Despite Economic Uncertainty

Presented by: Chris Bruzas, Managing Director

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Chris Bruzas

Indianapolis is one of the most economical multifamily markets in the Midwest. However, over the last year, much like other areas across the U.S., we’ve experienced market uncertainty due to factors like increased inflation and rumors of a recession. While these challenges arose, the region’s resilience and adaptability allowed us to provide great returns for our clients and ensure high list-to-close ratios. Despite the volatile market conditions, Berkadia Indianapolis has had an 86 percent list-to-close ratio over the past 24 months.

The Midwest has seen a healthy increase in new apartment construction and supply over recent years. In fact, there is a projected record high volume of new supply in the area, at 5,921 units, which will lead to a 10-basis point dip in the average occupancy rate according to Berkadia’s 2024 Forecast. At 93.5% in the fourth quarter of 2024, occupancy will be higher than the average during the economic growth cycle from 2010 to 2019.

Job Growth Within the Region

According to data from a RentCafe report, the Midwest is one of the top regions for renters to watch in 2024. The city’s diverse economy, with links to industries such as manufacturing, healthcare, finance, education, and technology in addition to job opportunities and transformational projects are appealing to renters, helping attract new residents to the region. Specifically, Indianapolis is a unique market following the pandemic, which caused a resurgence of suburb popularity as residents craved more space and a shift in lifestyle, priming areas like the Midwest for growth.

Aiding in the popularity of the city and region, is the fact that the average effective rent in the fourth quarter of 2023 sat 10.2% lower on average than 10 of the nearest large metropolitan markets in Wisconsin, Kentucky, Ohio, Missouri, and Michigan. The market’s relative affordability will underpin the projected 3.3% annual increase in the average effective rent in the fourth quarter of 2024. This increase still works in renters’ favor as those in Greater Indianapolis will still carry less of a burden than renters would in comparable nearby markets, with the average effective rent comprising just 18.9% of the wallet share.

Trusted Partners for 2024

Moving into 2024, investor confidence is slowly increasing as many return to the market and explore various opportunities. While there is still uncertainty and a volatile market, the region will continue to offer investors consistent appreciation, rising popularity and steady job growth. Berkadia works alongside their clients as trusted advisors, helping them stay informed, and find long-term solutions to meet their business plans and goals. The firm’s primary commitment is to deliver valuable guidance, prioritizing clients’ interests over all else. Berkadia maintains deep relationships across local and national markets to ensure that we deliver best-in-class services for each of our clients.