Chris Carmen  /   February 19, 2024

The Indianapolis office market, mirroring national trends, is navigating through a period of adjustment. With a vacancy rate that has climbed to 9.4%, surpassing the long-term average of 8%, and tenant demand seeing a downturn of -750,000 SF over the past year, the local landscape is emblematic of the broader shifts affecting commercial real estate nationwide. Yet, within these challenges lie opportunities for strategic adaptation and growth. CARMEN Commercial Real Estate is at the forefront, offering expertise to navigate this evolving market.

Assessing the Market Dynamics

Recent data reveals a nuanced picture of the Indianapolis office market. The vacancy rate’s increase by approximately 40 basis points over the past 12 months has pushed vacancies above longer-term averages, indicating a significant shift in market dynamics. Particularly hard-hit have been 4- & 5-Star communities, experiencing the most substantial move-outs, totaling -470,000 SF.

Despite this, the construction pipeline remains active, with 1.4 million SF underway, representing about 1.3% of the area’s inventory. This ongoing development amid economic uncertainty and adjustments to per-worker space requirements presents both challenges and opportunities for market participants.

Navigating Decreases in Property Value

The softening of asking rent growth, with projections edging into negative territory by mid-2024, alongside the slowing pace of transactions, underscores the need for a strategic approach. For tenants, this environment offers leverage in renegotiating lease terms under more favorable conditions. For investors, the market conditions suggest a careful reassessment of asset portfolios, focusing on identifying properties with potential for value-add strategies.

Leveraging CARMEN’s Expertise

CARMEN Commercial Real Estate’s deep understanding of these market dynamics positions us to guide our clients through these turbulent times. Our strategies include:

  • Market Analysis: We provide in-depth analysis, highlighting areas of opportunity even in a market characterized by rising vacancies and softening rents. Our insights into sublease availabilities, particularly in the Meridian Corridor and Keystone Crossing submarkets, inform our approach to advising clients on strategic positioning.
  • Strategic Lease Negotiation: In a market where effective rents reflect a softer trend due to increased concessions, our negotiation expertise becomes invaluable. We help tenants capitalize on the current market conditions to secure advantageous lease terms.
  • Identifying Value-Add Opportunities: The construction pipeline and the trend of negative absorption in premium spaces signal a need for reevaluation. We assist investors in identifying underperforming assets that, with strategic improvements, can enhance their marketability and value.

Embracing Long-Term Strategies

The Indianapolis office market’s diverse tenant base, including sectors like agribusiness, logistics, manufacturing, IT, life sciences, and sports, provides a solid foundation for resilience. With office employment showing a promising increase of about 2.1%, or 5,600 jobs over the past year, there are signs of underlying strength in the market.


The Indianapolis office market is at a critical juncture, facing headwinds but also poised for strategic opportunities. In navigating the decline in property values, the role of informed, strategic decision-making cannot be overstated. CARMEN Commercial Real Estate is dedicated to guiding our clients through these changes, leveraging our market expertise to identify opportunities for resilience and growth. The path forward involves a nuanced understanding of market conditions, strategic planning, and adaptability – qualities that define our approach to commercial real estate in Indianapolis.

For a deeper dive into how we can support your real estate strategy in this evolving market, contact CARMEN Commercial Real Estate today.

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