Indianapolis Apartment Construction Starts Plunge
After several years of elevated construction activity, apartment construction starts in Indianapolis fell notably in 2024.
Only about 1,300 or so units started construction in Indianapolis in the year-ending 3rd quarter, according to data from RealPage Market Analytics. That was the smallest volume of apartments to get off the ground in a single year since 1st quarter 2020.
Annual starts in Indianapolis started to increase in 2021, getting as high as 6,000 units in 2022 and 2023. But in fact, starts have been elevated in much of the past ten years or so, averaging at about 3,090 units annually. In the decade before that (2004 to 2014), annual starts were milder, averaging closer to the 1,600-unit mark. Thus, starts of 1,300 units in the past year seems to be a return to more historical trends.
Out of 13 Indianapolis submarkets, only two saw apartment stock get off the ground in the year-ending 3rd quarter. Roughly 976 units started in the large northern submarket of Carmel/Hamilton County, while starts totaled 325 units in the small Downtown Indianapolis submarket. In contrast, just a year ago, starts were much more spread out, with eight submarkets getting underway on at least some units.
With its low cost of living and high quality of life, Indianapolis has seen solid population and employment growth in recent years. Demand for apartments has also been strong, despite competition from a relatively affordable single-family housing market.
It’s not surprising, then, that supply has been elevated in Indianapolis. Nor is it surprising that demand is catching up quickly to those record volumes.
New supply in Indianapolis totaled about 5,760 units in the year-ending 3rd quarter. That was the highest level since RealPage Market Analytics began tracking the market nearly 25 years ago.
About 5,600 apartments were absorbed during the year-ending 3rd quarter, which was a notable improvement over a year ago, when net move-outs were the norm in Indianapolis.
Carmel/Hamilton County has been the market leader of late for both supply and demand. Greenwood/Johnson County and Northeast Indianapolis have also been strong on both of those fronts. In each of those submarkets, supply volumes have increased notably in the past few years, as has absorption.
