When the economy runs hot, the stability of the Midwest often takes a backseat to flashier growth markets. But when uncertainty creeps in—like now—it’s the Midwest that starts to shine. Amid slowing economies and a supply glut dragging down Sunbelt performance, Indianapolis is emerging as a standout market for multifamily investors. Let’s dive into multifamily investment Indianapolis.
Sales and Rent Growth Tell the Story
In 2023, Indiana recorded the sixth highest multifamily sales volume in the U.S., according to Cushman & Wakefield. That’s no fluke. Rent growth in Indianapolis has consistently outpaced trendier metros, signaling solid fundamentals and opportunity that many are just beginning to recognize.
Since February 2020, Indianapolis expanded its employment base by over 6%, outpacing Phoenix, Houston, and even San Diego. That kind of job growth typically fuels housing demand—and it’s a big reason more investors are turning their attention to markets like Indy.
Multifamily Investment Indianapolis: Minimal New Supply = Strong Rent Growth
While Austin and Nashville saw waves of new development, Indianapolis stayed relatively quiet on the construction front. Allowing the Hoosier City to benefit. Since 2019, multifamily inventory here has grown just 5.3%, well below the national 8.1% average. That restraint helped stabilize the market: vacancies have stayed more than 30 basis points below the national average for over a decade.
That out-performance is likely to continue, as Indianapolis has a much smaller construction pipeline than the broader U.S. average and even some other Midwest markets like Columbus and Milwaukee.
The stability is translating into results. In 2023, asking rents in Indianapolis rose 6.5%, the strongest growth among metros with more than 80,000 units. Since 2019, rents are up 27%—well above the national average.
Some metros may have larger loss-to-lease figures than Indianapolis due to stellar rent growth; however, the performance since the start of the pandemic has been remarkable and under-discussed at a national level.
Even during the second half of 2022, when rents dropped across the country, Indianapolis remained flat, then bounced back quickly in early 2023. The city’s affordability plays a big role: it boasts the sixth lowest rent-to-income ratio nationwide, making continued rent growth more sustainable.
Stable Cap Rates and Clearer Value-Add Strategies
Indianapolis has long avoided the extreme boom-and-bust cycles of the Sunbelt. Historically, it’s also carried higher cap rates, reflecting more moderate growth assumptions. This makes value add investment plans in the Midwest much more straightforward than identical strategies in markets like Phoenix and Houston.
But that’s changing.
Today, cap rates in Indianapolis remain stable, while job growth is climbing and new supply remains limited. The growing trend of on-shoring and re-shoring are clearly creating higher rates of job growth in markets like Indianapolis, Cincinnati, Columbus, and even Dayton, Ohio.
The result? More predictable underwriting and value-add plans that don’t rely on aggressive rent premiums or risky exit strategies.
At a time when places like Phoenix are seeing rising vacancies and declining rents, Indianapolis stands in stark contrast. We’re still seeing 50%–60% rent increases on rehabbed units in key neighborhoods—without the compressed yields or frothy valuations elsewhere.
Most important, we purchased these assets at a significant discount to where these assets would trade in a market like Phoenix, where job growth is weakening at the same time that record new supply is coming online and rents are weakening. This is leading to negative YOY rent growth in Phoenix, at least for the time being.
Multifamily Investment Indianapolis: Final Takeaway
The fundamentals behind multifamily investment Indianapolis are strong—and only getting stronger. From sustained job growth and limited supply to outperforming rent growth and stable yields, the market checks the right boxes for investors seeking long-term returns without excessive risk.
Would you rather be invested in Phoenix or in Indianapolis? We think the answer is clear, and we’ve been putting our money where our mouth is since 2006.
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