Indianapolis continues to evolve as a dynamic commercial real estate hub in the Midwest. Whether you’re an experienced investor, developer, or business owner, understanding what’s driving the market in 2025 can help you make informed, profitable decisions.
At Annie Scott Realty Group LLC, I keep a close eye on the data, developments, and opportunities shaping Indiana’s commercial landscape. Here are the key trends you need to know.
1. Industrial Leasing Is Holding Strong—But Development Is Cooling
Industrial real estate remains one of the most active sectors. In Q1 2025 alone, Indianapolis saw over 5.6 million square feet of industrial space leased—the highest since early 2022. Most of this demand is coming from companies expanding their logistics and distribution operations.
However, new construction is slowing down. Current building activity is at its lowest point since 2016, which may lead to tighter supply and rising rents in 2026 and beyond. Demand remains focused on large, modern distribution facilities near key interstates and the airport.
Investor Insight: Target well-located, existing industrial properties or land with future development potential.
2. Office Market Is Shifting—Downtown Struggles, Suburbs Show Resilience
Downtown Indianapolis is facing record-high vacancy rates, approaching 24 percent. Older Class B and C office buildings are becoming harder to lease as companies embrace remote or hybrid models. Many tenants are downsizing or leaving the urban core in favor of suburban locations.
However, Class A office space in places like Carmel, Fishers, and Noblesville is performing well. Tenants are seeking modern amenities, flexible layouts, and locations closer to their workforce.
Investor Insight: Focus on well-positioned suburban office properties and consider value-add strategies for outdated buildings.
3. Adaptive Reuse and Office-to-Residential Conversions Are Accelerating
With high vacancy in older office towers, developers are increasingly turning to adaptive reuse. Converting outdated downtown offices into multifamily or hospitality uses is gaining traction—particularly in walkable areas with access to amenities.
Projects like the proposed residential redevelopment of the AT&T tower are early indicators of this shift. Zoning flexibility and local incentives are helping make these conversions financially viable.
Investor Insight: Watch for underutilized buildings in the urban core with strong architectural bones and redevelopment potential.
4. Suburban Multifamily Remains a Standout Performer
Multifamily continues to show strong fundamentals in Indianapolis. Rent growth is steady at 2–2.3% year over year, and occupancy rates remain high at 92–93 percent. While new development has slowed by nearly 60 percent in 2025, demand in suburban areas remains elevated.
Submarkets like Fishers, Westfield, and Greenwood are absorbing new units faster than urban counterparts. These areas offer strong schools, walkability, and quality of life—making them ideal for young professionals and families.
Investor Insight: Existing suburban multifamily properties or land zoned for residential development offer promising returns.
5. Infrastructure Improvements Are Catalyzing Growth
Major infrastructure projects across central Indiana are directly impacting commercial development:
- I-69 expansion is improving connectivity between Indianapolis and southern Indiana.
- Indianapolis International Airport is planning a new on-site hotel and expanding capacity.
- Transit investments like bus rapid transit lines are creating new development corridors.
These upgrades are increasing access and visibility for industrial, retail, and mixed-use developments—especially near highways, airports, and logistics hubs.
Investor Insight: Properties near expanding infrastructure corridors are poised for long-term appreciation and strong demand.
Final Thoughts
The Indianapolis commercial real estate market in 2025 presents a mixed but promising landscape. Industrial and suburban multifamily remain strongholds, while the office market is being reshaped by new expectations. Creative redevelopment and location-driven strategies will separate average returns from exceptional ones.
At Annie Scott Realty Group LLC, I specialize in identifying these kinds of opportunities—before they hit everyone’s radar. Whether you’re looking to expand your portfolio, reposition an asset, or explore development options, I’ll provide local insight backed by strategic guidance.
Let’s connect and talk about how to align your investment goals with where Indianapolis is headed next.
Sources:
- Axios Indianapolis, January 2025
- Indiana Commercial Board of Realtors
- Cushman & Wakefield MarketBeat Reports
- CBRE Research – Midwest Multifamily Outlook
- Indiana Department of Transportation
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