Indianapolis Office Market Report

Smaller-format needs shape net absorption. Several submarkets will receive new supply in 2026, with most of it concentrated in the northern areas near Noblesville, Carmel, and Fishers, where much of the incoming space is already accounted for. Recent strength in suburban demand points to relative outperformance in these areas, with vacancy potentially undercutting downtown for the first time in several years. Meanwhile, a lower net absorption forecast this year in part reflects weaker 2025 leasing activity, with the fewest signings since 2020. Much of the move-in activity this year involves formats under 10,000 square feet. Smaller tenants are poised to benefit most from the new 2026 business personal property tax exemptions, suggesting that near-term net absorption will remain concentrated within this tenant cohort. These dynamics will partially contribute to the metro’s vacancy rate inching slightly higher, settling just under 12 percent as completions outpace a softer yet still positive demand growth.