Q4 2024 Indianapolis Office Market Report

In the fourth quarter of 2024, the Indianapolis office market demonstrated signs of stabilization amid broader economic improvements. The U.S. economy maintained steady conditions following a period of rising inflation and labor market unpredictability. The Federal Reserve’s decision to reduce interest rates is anticipated to further stimulate growth in 2025. Locally, sectors such as financial activities and professional/business services experienced job growth of 3.1% and 2.8% year-over-year, respectively. Traditionally, such employment gains would lead to increased office space demand and positive absorption; however, the prevalence of hybrid work models has altered this dynamic. Despite elevated leasing activity, the trend toward smaller tenant footprints contributed to an increase in the direct vacancy rate.