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Market Report

Indianapolis Retail Investment Forecast

2022 Outlook

Favorable Macro Trends Boost Indianapolis' Outlook;
Investors Search For Safety Amid Sales Volume Lift

Mild construction clears the path for continued improvement. Indianapolis is set to close 2022 with more staff on payrolls than its pre-pandemic figure; retail employment, however, has already surpassed its February 2020 high by more than 3,000 positions. This divergence is due to a comparatively strong retail performance during the pandemic, aided by an unemployment rate near the lowest of all major United States metros entering this year. Retailers absorbed over 850,000 square feet last year, compressing metrowide vacancy to 5.1 percent, equaling the 2019 rate. Powered by these trends, retail sales growth is projected to land above the national pace in the coming year, pointing toward additional demand by retailers. At the same time, rising construction costs and limited remaining lots in the core and neighborhoods to its north have led developers to pull back considerably. This will be just the second time in the last nine years with a scheduled completion volume below 500,000 square feet. The small pipeline, with few speculative projects, should benefit existing properties.

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