INDIANAPOLIS — Indianapolis’ office market is showing signs of a rebound, with businesses filling more space and some vacant downtown buildings finding new uses, according to a new report.
Even so, challenges remain. Cities have grappled with empty office buildings since the pandemic as companies reassess how much space they need. In the third quarter of 2026, the Indianapolis market’s office vacancy rate was 20.4%, the report said.
The report from real estate firm JLL found that more office space has been filled than vacated for two consecutive years.
“We have a lot of buildings now that are just functionally obsolete in a post-COVID world. There’s just certain uses that have virtually disappeared during COVID, those being the largest office users in the market, kind of back office operations and call centers. Those buildings now are just not going to be utilized any longer,” said Jon Robinson, JLL’s managing director.
Some buildings that have not attracted office tenants are being considered for other uses. Several properties could be converted for industrial businesses, while former office space is also being converted into hotels or mixed-use developments, JLL said.
“That’s hotels, in some cases it’s multifamily, a religious facility, in some cases, they’re being torn down for industrial buildings. That affect is that it’s shrinking the supply. When you get rid of a bunch of empty buildings, it helps the vacancy rate also. There’s virtually no new construction anymore,” Robinson said.
About one in five office spaces in the market remains empty. Robinson said returning vacant buildings to use can attract businesses, bring investment to nearby areas and help revitalize underused properties.
“Retailers all disappeared downtown. It used to be you’d go downtown for that pocket of energy that’s created during the work day and it just became a death spiral of no retailers, no people, no reason to be there. That’s healed significantly. Sports and convention is propping our downtown right now and doing very well. The office market is dragging behind downtown. I do think the redevelopment of Traction Yards by Hendricks is going to be monumental in getting downtown to rebound,” Robinson said.
