Metro Indy's office vacancy rate rises
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Office vacancy rates across the U.S. are higher than they've ever been, and Indy's is even higher.
The big picture: Though the return to office push has picked up momentum, plenty of workers are still in hybrid or remote setups, and employers don't quite need as much office space as before 2020, writes Axios' Emily Peck.
Why it matters: Despite statistics showing that nearly a quarter of the Indianapolis area's offices are sitting unused, local experts say 2024 provided plenty of wins that set the region up for a resurgence in 2025.
Driving the news: Average office vacancy rates across the Indy metro grew to 21.4% last year, exceeding the 20.4% average across the country's top metro areas, per Moody's latest tally.
- The national average is the highest since at least 1979, when the data analytics firm began tracking.
Yes, but: Mike Cagna, senior research manager for JLL, says while Indy experienced occupancy loss, it was the lowest amount in five years.
- He adds that new leasing activity reached its highest level in three years and accounted for nearly 60% of 2024 transactions, signaling a boost in tenant confidence.
- "Look for the market to remain tenant-favorable in the near term as companies continue to refine their space needs," he said. "Economic headwinds may impact expansion plans, but Indianapolis' diverse economy positions it well for steady demand."
Zoom in: Sales activity picked up in Q4 with four major sales closing in the last 90 days, per JLL.
- In October, The Ghoman Group and KennMar acquired Capital Center North and South downtown.
- In November, Interamar purchased Keystone at the Crossing from DRA Advisors LLC.
- December saw two deals closed in Parkwood Crossing — One Parkwood and Seven Parkwood sold to Performance Services and Cornerstone Companies, respectively.
Zoom out: Maggie Tillotson, senior research analyst for Cushman & Wakefield, said the region's largest occupancy gains of 2024 were in Fishers, with the suburb logging more than 263,000 square feet of overall net absorption during the year.
- Occupancy losses were highest in the Northwest area, which recorded negative 206,000 square feet of overall net absorption.
- The North/Carmel area led in new leasing activity in 2024, with 559,000 square feet of deals inked.
Between the lines: Moody's suggests two adjustments that could reduce vacancies nationwide.
- One is converting offices into residential properties.
- The other is knocking down office buildings. The idea is to get rid of older, cubicle-era offices that firms aren't interested in, and CoStar data finds that office demolitions have been ticking up since 2022.
What to watch: Newer buildings near transport hubs with more coworking space and fitness centers — purposefully designed for a Zoom era — are actually in high demand right now, as the Wall Street Journal recently wrote.
Go deeper: These major companies want workers back in the office