With the uncertainty of the new year’s economic forecast it’s always nice to see some good news. The multifamily sector has enjoyed increased demand, rents, and construction in recent years, especially in the Midwest. We look at a recent Winter 2019 report by Yardi Matrix for Indianapolis and surrounding areas, and how this part of the Midwest is performing in today’s BAM Blog…
Better Than National Average
According to the Yardi Matrix report, Indianapolis and surrounding areas saw rent rate increases that were higher than the national average. Workforce housing (always in demand and a prime investment of BAM) saw rents increase by 3.5% up to $800 while by-choice (or lifestyle) rent increased by 3.2% to an average $1,160. Yardi credits the rent increases to local demand, driven in part by factors like population growth and employment gain. They note that of the 15 fastest-growing Indiana cities, 12 of those are suburbs of Indianapolis.
Snapshot of Indianapolis-area Rent Increase/Rates
Rent increases were highest in suburban areas, with Yardi putting up the following numbers:
Shelbyville: 8.2% increase to $743
Moorseville: 7.3% increase to $717
Bloomington (West): 6.1% increase to $1,027
Greenwood (West): 5.8% increase to $952
Yardi has the highest Indianapolis-area rents as follows:
Indy downtown: 1.4% increase to $1,412
Carmel: 4.2% increase to $1,165
Zionsville: 3.2% increase to $1,148
Fishers: 3.1% increase to $1,085
Indiana Economy Growing
According to the Yardi report, Indy added 23,000 jobs for a 1.6% year-over-year increase, only slightly below the 2% national average. Unemployment was at 3.5%, again slightly below the 3.9% national average. Yardi recorded jobs added in the following sectors:
Education & Health Services: 5,700 jobs
Mining, Logging, Construction: 5,300 jobs
Trade, Transportation, Utilities: 4,900 jobs
Professional, Business Services: 4,700 jobs
Look at Multifamily Inventory
As of October, Yardi cites multifamily development as having delivered 1,177 units, with another 15,350 units in the planning and permit stages. The Yardi report states that demand is expected to keep up with inventory, and is being given a boost by economic factors like population growth and employment gains in lucrative fields like tech and healthcare. The Yardi report notes that developers are focusing on Indy-adjacent cities like Plainfield, Brownsburg, and Avon, as well as Carmel, Fishers, and Noblesville, but also including the downtown city and central city areas. The areas west of Indy (Plainfield/Brownsburg/Avon) have a reported 1,054 units under development as of October. Only northern Carmel came close, with 716 units. All other areas had under 500 units underway.