Indianapolis real estate investments are on the rise

Affordability, quality of life, and a resilient economy put Indianapolis on the map for investment properties

As we recover from the pandemic, investors and owners across the globe play a crucial role in reinvigorating city centers and boosting the energy and mindset around office space for tenants to return to work. Indianapolis has a reputation as a favorable, long-term healthy office market, and this rings true as investors continue to purchase properties in the city.

Office sales and leasing activity are on the rise in Indianapolis. Large employers throughout the state are planning on bringing their employees back around May of 2022. We believe the office will remain the center of the work ecosystem, providing a link to that sought-after connectivity and culture.

Demand has now exceeded pre-COVID levels. In Indianapolis, office sales have shown no signs of slowing down – over 20 properties have sold in Indianapolis since 2020, and there is another 20+ currently on the market. Properties that have recently sold include Salesforce Tower (2021), Penn on Parkway (2022) and the Pyramids (2022).

So, what is it about Indianapolis that’s driving investors to invest in real estate here?

Buy versus Build

Buying right now is more economical than new construction and provides an opportunity for better returns and less risk.

According to Levelset, a mid-rise office building in the United States costs an average of $562 per square-foot to construct. This is four times the amount of what it would take to purchase an existing office property in Indianapolis. JLL’s US Construction Outlook also notes that several major sources of uncertainty amid high demand are likely to keep construction costs growing at a rapid pace over the course of 2022. The net effect will be yet another above-average year of total construction cost growth, forecast to increase 8 to 12 percent over the next 12 months.

With rising construction costs, purchasing an existing property and planning thoughtful renovations can save money and time. Renovations in existing properties are a cost-effective way to add value to attract and retain key tenants. A property that was recently acquired by KennMar, the Pyramids, will be undergoing renovations to update the property’s exterior, outdoor spaces, lobby, and other amenities. We anticipate to attract and retain tenants who are looking for upgraded amenities, high visibility, and ample parking in their workplace.

Why invest in Indianapolis?

Indianapolis’ low cost of living and high quality of life attributes have attracted people, companies, and capital.

Investing in property and space in Indianapolis comes at a fraction of a cost of larger cities. Albeit smaller than Chicago or New York, Indianapolis offers a vibrant live-work-play atmosphere in several submarkets around the city. Developments like The Bottleworks District on the tip of Mass Ave has put Indianapolis on Time’s 100 World’s Greatest Places 2021 list. Eli Lilly and Co., Cummins, and Anthem are just a few of the Fortune 500 companies headquartered in Indianapolis.

A resilient economy

The city’s economy showed significant business development and expansion in 2021. There has been over $570 million new investments in the state and thousands of jobs created. Indiana also offers a competitive business tax structure and several tax incentives and credits for companies creating new jobs and investing in the state.

#16 largest cities – World Population Review - 2022 #4 cost of doing business – CNBC - 2019 #10 cost of living - 2021
#3 Fishers, IN as best places to live in the U.S. - - 2019 #2 Carmel, IN as best places to live in the U.S. - - 2021 #4 best states for infrastructure - CNBC - 2021

As leasing activity continues to gain momentum and tenants return to the workplace, we expect to see increased activity in office investments around the city. Quality space is in demand—and Indianapolis properties on the market offer a unique opportunity for investment and renovation to create an enticing space for tenants as they rethink their workplace strategy.