Market Trends


Investment Sales

December 21, 2022

Indianapolis multifamily market is hot – and not predicted to slow down anytime soon

Indianapolis multifamily market is hot – and not predicted to slow down anytime soon

Overlooked market for multifamily investments 

The multifamily investment world has been privy to the “Gold Rush” that’s been the Smile States/Sun Belt since the onset of COVID. Cheap debt coupled with increasing demand for housing and a bottlenecked supply in warm climates screamed returns for family offices, developers, private REITs, and everyone else in between. While the spotlight remains on many of these Smile States, the Midwest Investment Sales team at Walker & Dunlop continues to posit that secondary market like Indianapolis (and others) are potentially an overlooked opportunity for firms of varying AUM sizes and investment strategies. We continue to notice that many of these smaller markets across the Midwest emulate many aspects of these larger, warmer markets, namely: the presence of thriving, incredibly diverse economies, and growing populations. As a result of COVID, the previously dreaded suburban-living is now very desirable to many, with affordability and privacy being the name of the game. This growing appreciation for smaller, affordable, but still bustling cities has been a strong driver of demand in many Midwest cities. These secondary markets have something that the larger markets don’t: a larger potential for future growth. 

Geographically, Indianapolis has almost always had a unique advantage due to its location. Since 1937, Indiana has been known as The Crossroads of America, and, unofficially today, Indianapolis has now coined the name due to its central location at the junction of four major interstate highways. In four hours or less (mostly less), you can be in several of the largest Midwest cities like Columbus, Cincinnati, Fort Wayne, St. Louis, Louisville, or Chicago. 

Indianapolis has a highly diverse economy, making itself better protected against volatility in the market. Given its nickname, it is no surprise that there is a large concentration of logistics companies that specialize in transportation and distribution activities. Thanks to major employers like Salesforce, Indianapolis has a strong niche in marketing technology. Indianapolis is home to almost half of the state’s information technology workforce, according to research done by TechPoint. 

So, let’s talk about some of the many favorable CRE figures in the Indianapolis market. 

Rent growth is attributed to the surge in demand for apartments. This growth, which accelerated significantly through mid-2022 and is now slowing, has widened the margin over the U.S.  National Average. Rents for one-bedroom units are currently 24 percent above pre-pandemic levels, compared to 17 percent for the U.S. Over the past year, the vacancy rates in the Indianapolis multifamily market have decreased at an exponential rate, as they have been on a downward trend over the past 10-years.

Absorption, Net Deliveries, & Vacancy
Source: CoStar

Compared to the national average, cap rates in the Indianapolis market are currently a full percentage point higher. These higher cap rates could indicate that there is much greater risk, unfavorable economic conditions, decreasing population growth, and other potentially discouraging market conditions, but, as discussed above, this is not the case. The combination of a diverse economy and healthy multifamily market makes the Indianapolis landscape a great development with a strong potential for future growth. 

Market Cap Rate
Source: CoStar

Interested in learning more? Reach out to Ryan Pena at and Grace Cameron at

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