Indianapolis Retail Market Report

Low availability persists, despite headwinds. Regardless of initial disruptions, Indianapolis retailers shrugged off pandemic challenges, entering 2023 with a multi-decade low year-end vacancy level. This was due, in part, to a minimal construction slate last year, which directed retailers to sort through fewer options. Additionally, construction will fail to exceed 400,000 square feet yet again this year, helping funnel expanding retailers to existing properties. On the other hand, Salesforce’s announcement of a 10 percent companywide layoff, which would impact some of the 2,300 employees in the metro, spearheads the market’s negative employment projection for 2023. This will adversely impact consumer spending in 2023 as the rate of retail sales growth drops to 3.2 percent from the strong 9.1 percent gain felt last year. Nevertheless, increased net in-migration and expanding median household income growth will support Indianapolis retail fundamentals, making the market well-suited to mitigate this downward pressure in the near term.