Indianapolis has shown up in headlines lately, as it is the site of a job-saving measure that will keep more than 1,000 jobs in the city at Carrier, which had previously announced the relocation of 2,100 jobs to Mexico. But there’s a lot more going on in Indianapolis outside of gas furnace manufacturing. Salesforce continues to grow its presence in the city, and announced earlier this year its intention to invest $40 million in the next decade and add 800 employees over the next five years. Even their new office, Chase Tower, is being renamed Salesforce Tower Indianapolis. Another Indianapolis tech giant has not seen a good year in Indy however, as Angie’s List has laid off almost 10% of its labor force in November, after ditching a planned $40 million expansion that would have brought 1,000 jobs with it. This news was balanced, however, by the announcement of 170 new jobs at a competitor, HomeAdvisor, in the next year. Rolls-Royce is still working at its blockbuster expansion announced last year, which will see a $600 million investment in facilities and research.
Of the markets covered in our Rust Belt redux, Indianapolis leads in regards to the number of jobs it has recaptured from its pre-recession employment peak. When you compare Indianapolis to Pittsburgh, Cleveland, Milwaukee or Grand Rapids, it’s easy to see that the recession didn’t hit employment quite as hard as some metros. Of those cities, only Pittsburgh saw a smaller relative decrease in total employment when you compare the pre-recessionary employment peaks to the troughs they hit in the Great Financial Crisis.
This could be due, in part, to the how the structure of employment diverges from some of Indy’s Rust Belt neighbors.
After Pittsburgh, Indianapolis had the lowest concentration of manufacturing sector jobs out of metros previously covered in this series. This fact served it well, in terms of weathering the Great Financial Crisis. This can be further illustrated by breaking out job growth in the area by supersector. Goods-producing and government jobs simply have not supplied many jobs to the metro in this economic cycle. After cooling temporarily, employment numbers picked up in 3rd quarter 2016.
Indianapolis simply didn’t tumble quite as hard as some of its Rust Belt neighbors, and its GMP ($ 2009, Bil. SAAR) reveals a similar story.
While the area’s gross metro product did stumble, the impacts of the financial crisis didn’t hit the city to the same extent that it did in Cleveland or Grand Rapids. Growth has not, however, matched the progress made in Pittsburgh during that time. Indianapolis has, by many measures, a relatively stable and consistent economy.
After solidly outpacing the broader U.S. economy from 2013 to mid-2014, the Indianapolis economy began to slow, turning slightly negative on a seasonally-adjusted annualized rate basis. However, this effect didn’t surface immediately in the broader business and consumer economic health indicator of bankruptcy filings.
The consistent economic health enjoyed by Indianapolis across a variety of metrics could be what keeps the city appealing to new residents. Indianapolis has not seen net negative migration since the mid-80s, making it a standout among its Rust Belt peers.
With such a stable inflow of new residents, how has Indianapolis’ multifamily sector dealt with the influx? Looking to multifamily starts and permits, you could say that the local market tends to operate in fits and starts.
2016 has proven to be a weaker year for permits and starts, a trend that has impacted the multifamily market.
Occupancy has grown consistently in Indianapolis over 2016, as demand has outstripped supply every quarter so far. After being range-bound around 93% for almost two years, occupancy in the metro has jumped to nearly 95%. This is a strong figure by historical standards. If the trend continues, rents could see more pressure to climb in Indy.
It seems that “slow and steady wins the race” in Indianapolis. The result is a stable market with limited upside potential, but a dependable low-growth environment that doesn’t falter often. For those living in Indianapolis, this translates to an area with a reasonable cost of living, which in itself serves to attract attention from corporations looking to relocate. We don’t expect a boom in Indianapolis by any means, but Indy’s persistent (but slow) growth make it a standout in the Rust Belt.