State of Downtown Indy: Billions in development, increased residency, office vacancies

President and CEO of Downtown Indy, Inc. Taylor Shaffer cited increased downtown residency and billions of dollars in downtown development as part of a bright future for Indianapolis’ city center at the 2023 State of Downtown Indy address Thursday.

City, business and tourism officials gathered at the Regions Tower downtown to listen to what lies ahead for Indianapolis’ downtown and to celebrate Downtown Indy, Inc.’s 30th anniversary.

“Downtown is our city’s first neighborhood, a neighborhood for us all,” Schaffer said. “It’s where we celebrate our city’s highest achievements and mourn our communal losses.”

Here are some key takeaways from the presentation and Downtown Indy, Inc.’s 2023 Community Report:

More people are moving downtown

The population of downtown Indianapolis has increased by 46% since 2010, the report said.

Nearly 29,000 people live in downtown Indianapolis, up from over 25,000 in 2021. The downtown apartment occupancy rate was down just slightly from 2021, at 95.3% as compared to 96.9% the year before.

In the last five years alone, downtown Indianapolis has added over 3,000 apartments. However, with more demand also comes higher costs. The average monthly rent for a downtown apartment last year was $1,594, as compared to $1,435 the year before.

The median sales price of a home downtown was slightly down from 2021, at $415,000 compared to $431,000, though that sales price increased for condos, from $317,500 to $339,500 in 2022.

State of Downtown Indy 2022: Homes are booming but office vacancies remain high

Billions of dollars in new development

There’s over $9 billion of new development in the pipeline for downtown Indianapolis in the next five years, including:

Other sites being poised for redevelopment downtown are the struggling Circle Centre Mall and the former Marion County Jail 1 office on Alabama Street.

Some employees returning to office, but vacancies remain high

Even though more people are coming to work downtown, many office floors are still sitting vacant.

There were nearly 14 million downtown office visits in 2023 so far, a 25% increase as of this time last year and a 67% increase compared to 2021.

But the report cites the 2022 downtown office vacancy rate at 9.4%, up from 8.3% in 2021, according to data from real estate data company Costar cited in the report.

That vacancy number takes into account about 27 million square feet of office space downtown, according to a Downtown Indy, Inc. spokesperson. The organization previously used commercial real estate firm Cushman & Wakefield to measure downtown office space.

That firm clocked downtown office vacancies at 21.7% in the second quarter of 2023, according to a quarterly report.

With increased flexibility, developers are rethinking how to best use empty downtown offices, redeveloping vacant buildings into apartments, hotels and retail.

Downtown poised for big events in 2024

Indianapolis downtown hotels continue to rebound from pre-pandemic levels.

The downtown hotel occupancy rate was 62%, according to the 2023 report, up significantly from 47.1% in 2021. The average nightly price for a downtown hotel room last year was $185.79, higher than the national average of $147.13.

Indy tourism 2023: Visit Indy touts bright future for Indianapolis tourism, conventions

Both occupancy and the average nightly price have the potential to grow as Indianapolis tourism officials gear up for a big year in 2024.

Landmark events coming to Indianapolis in 2024 include the NBA All-Star game in February, the USA Swimming Olympic trials in June, NCAA March Madness games and Taylor Swift’s three-night Eras Tour stop in November.

Contact business reporter Claire Rafford at 317-617-3402 or email crafford@gannett.com.