Downtown Indy's empty offices
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Illustration: Sarah Grillo/Axios
As the Indianapolis metro celebrates another office vacancy win, progress downtown is trending in the opposite direction.
Why it matters: The vacancy rates are a sign that conditions post-COVID haven't returned to "normal" in the heart of the city.
- Meanwhile, an uptick in mixed-use developments and office-to-apartment conversions suggests that downtown's new normal is something that embraces play the way it once embraced work.
State of play: Downtown office vacancy rates as tracked by the Downtown Indy Alliance in its annual community report have climbed steadily since the pandemic, going from 7.8% in 2020 to 12.1% in 2025.
- The jump from 11.2% in 2024 to the current rate is the second-largest annual increase of the last five years. The biggest was when it went from 8.6% to 9.7% between 2021 and 2022.
What they're saying: "Though vacancies have risen from 7.8% in 2020, the trend mirrors national shifts. Ongoing investments in office, residential, retail and cultural spaces are necessary to keep downtown vibrant and positioned for long-term, sustainable growth," the Downtown Indy Alliance report states.
- "With a 12.1% vacancy rate — lower than peer cities like Columbus and Charlotte — and competitive rents averaging $23.51 per square foot, the city remains an affordable and attractive market."
Yes, but: It's a different story for the Indianapolis metropolitan area, which includes the fast-growing suburbs.
Zoom in: According to a recent JLL analysis, total vacancy in the Indy metro area dropped to 22.5% in the third quarter of 2025.
- That's down from 23.4% in Q1 when JLL said the area experienced its first occupancy growth since 2018.
Between the lines: Mike Cagna, senior research manager for JLL, said more occupancy gains are expected across the region next quarter as fully-leased construction projects come online.
- "Merchants Bank is scheduled to move into a second headquarters building totaling 111,000 square feet in the North Meridian/Carmel submarket," he said in a statement. "Meanwhile, in downtown Indianapolis, Indiana Members Credit Union and Ernst & Young will take occupancy of the latest addition to the Bottleworks District ... which totals 85,000 square feet."
- As a result, Cagna said 2025 is expected to be the first year with overall occupancy growth for the metro since the pandemic.
What's next: JLL's senior managing director Matt Waggoner told WRTV that while downtown leasing is stagnant, the outlook is positive with big projects like the redevelopment of Circle Centre Mall and the Signia Hotel poised to generate momentum.