HomeMy WebLinkAboutCarmel Positioning StrategyECONorthwest i
City of Carmel
Positioning Strategy
Final Report
November 2023
Prepared for: City of Carmel
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Acknowledgements
ECONorthwest prepared this report for the City of Carmel. ECONorthwest and the City of
Carmel thank those who helped develop this Positioning Strategy.
City of Carmel
▪ Adrienne Keeling, Planning Administrator
▪ Mike Hollibaugh, Director of Community Services
Consulting Team (ECONorthwest)
▪ Tyler Bump, Project Director
▪ Kryn Sausedo, Senior Project Manager
▪ Oscar Saucedo-Andrade, Technical Manager
▪ Mary Chase, Associate
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Table of Contents
1. INTRODUCTION AND PURPOSE ........................................................................................................................... 1
2. NATIONAL TRENDS ............................................................................................................................................... 2
REMOTE WORK HAS CHANGED THE OFFICE LANDSCAPE THROUGH A ‘FLIGHT TO QUALITY.’..................................................... 2
BRICK-AND-MORTAR RETAIL IS ADAPTING TO CHANGING DEMAND FOR IN-PERSON SHOPPING. ............................................... 5
DEMOGRAPHIC CHANGES ARE DRIVING NEW TYPES OF HOUSING NEEDS AND PREFERENCES. .................................................. 5
3. REGIONAL TRENDS............................................................................................................................................... 8
REGIONAL CONTEXT .................................................................................................................................................... 8
THE INDIANAPOLIS OFFICE MARKET IS CHANGING FROM ITS DOWNTOWN-CENTERED DYNAMIC. ................................................. 9
RETAIL DEMAND IS CHANGING FOLLOWING OTHER LARGE-SCALE TRENDS IN COMMUTING AND ONLINE RETAIL. ...................... 11
RESIDENTS ARE SEEKING MORE HOUSING CHOICES WITH URBAN AMENITIES. ..................................................................... 11
4. CARMEL’S REGIONAL POSITION ........................................................................................................................ 13
CARMEL’S REGIONAL PEER CITIES ................................................................................................................................ 13
KEY INDICATORS ....................................................................................................................................................... 19
COMMERCIAL MARKET .............................................................................................................................................. 21
HOSPITALITY MARKET ............................................................................................................................................... 25
RESIDENTIAL MARKET ............................................................................................................................................... 28
5. POLICY TAKEAWAYS & RECOMMENDATIONS ................................................................................................... 35
KEY TAKEAWAYS ....................................................................................................................................................... 35
RECOMMENDED STRATEGIES ...................................................................................................................................... 42
STRATEGY 1: INTEGRATE RANGELINE WITH SURROUNDING AREAS. .................................................................................... 42
STRATEGY 2: SUPPORT PHASED REDEVELOPMENT ON LARGE OFFICE SITES ......................................................................... 45
STRATEGY 3: KEEP CARMEL AN ACCESSIBLE COMMUNITY FOR WORKERS TO LIVE IN ............................................................. 49
MOVING FORWARD .................................................................................................................................................. 53
APPENDIX A. OFFICE REPOSITIONING CASE STUDIES .............................................................................................. 54
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1. Introduction and Purpose
Carmel has built a thriving commercial and residential base over the last half century by
investing in infrastructure and amenities like the Monon Greenway, a thriving Arts and Design
District, and other distinct vibrant areas that have attracted new residents and businesses to the
city. Situated just north of Indianapolis, it boasts an abundance of corporate offices and national
headquarters, making it a desirable location for industries like finance, real estate, health care,
and professional services.
Over the past three years since the onset of the COVID-19 pandemic in 2020, major changes in
lifestyle and employment trends have shifted how commercial and residential markets function
across the country and beyond. As a result, Carmel, like many other cities in the United States,
is adapting to these changes to maintain its unique value proposition as an inner-ring suburban
city with easy access to well-paying jobs, abundant recreation activities, and a high quality of
life. As Carmel embarks on an update to key sub area plans, which are part of the
Comprehensive Plan, it is at a critical juncture to position itself properly as employers and
residents with newfound flexibility begin to rethink decisions about how and where to live and
work. The City is working to seize the opportunity to further set itself up for success in
continuing to attract businesses and new residents that contribute to the city’s strong tax base
and continue an excellent standard of living in Carmel.
ECONorthwest, working with the City of Carmel, developed this Positioning Strategy to outline
how Carmel compares with competitor cities in the region and clarify the actions that Carmel
should take to best react to larger economic trends. This report is organized in the following
sections:
▪ National Trends including major shifts towards hybrid and remote work, changing
trends for brick-and-mortar retail, and the implications of changing demographics and
housing options.
▪ Regional Trends that interpret the impacts of broader trends on the Indianapolis
metropolitan area, particularly as they relate to the relationship between the urban core
and suburban jurisdictions like Carmel.
▪ Carmel’s Regional Position which compares the City with its primary competitors in
the region, including Downtown Indianapolis, Fishers, Westfield, and Noblesville.
▪ Key Takeaways and Policy Recommendations that highlight critical decision points for
the city and outline actionable steps that the City and its partners can take to improve
Carmel’s economic position.
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2. National Trends
In 2020, communities across the United States saw significant changes to the way that people
live and work, with the onset of the COVID-19 pandemic transforming everyday life for many
workers and residents. As of 2023, cities are still attempting to understand the lasting impacts
and implications of these trends on a local level. Some shifts that occurred in recent years may
be one-time occurrences or one stage of recurring cyclical trends (such as shifts in capital
markets, high interest rates, supply chain disruptions, construction costs, and housing market s).
However, other shifts are beginning to transform into long-term, structural changes that will
change the way that cities think about strategic investments and policies to ensure prosperity .
The future surrounding remote work, brick-and-mortar retail, lifestyle preferences, retirement
trends, and more have local implications that may shift the ways suburban cities like Carmel
position themselves for economic success. The difficulty of distinguishing between temporary
and permanent changes can leave many developers, businesses, and financial institutions with
less certainty about the future, creating new challenges for economic development and
partnerships with the private sector. It is critical to study and analyze what has changed
nationally and locally to better understand and adapt to the future where needed. This section
discusses widespread economic trends to set the context for the greater Indianapolis region as
well as Carmel’s current position and potential for continued success among its competitor
cities.
Remote Work Has Changed the Office Landscape Through a
‘Flight to Quality.’
The COVID-19 pandemic continues to have an impact on the way that people work in
professional industries who had primarily worked in offices before 2020.
National level trends indicate that the greater flexibility in work location (originally necessitated
by social distancing) has resulted in employers now making decisions to embrace remote and
hybrid work situations with employees, or else seek out smaller, premium Class A office space
in desirable locations.1 Many of these decisions are part of attracting talent, driven by worker
preferences and companies looking to retain quality employees by providing locational
flexibility. In a survey done by New York’s Office Adaptive Reuse Task Force (one of the most
comprehensive studies of worker and employer preferences at the city level), 77 percent of
1 Patrick J. Kiger, “How to Make Office-To-Residential Conversions Work,” Urban Land Magazine (Urban Land Institute, December
1, 2022), https://urbanland.uli.org/planning-design/how-to-make-office-to -residential-conversions-
work/?utm_source=realmagnet&utm_medium=email&utm_campaign=HQ%20Urban%20Land%2012%2E05%2E2022 .
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office-based employers indicated a hybrid schedule would be their predominant post-pandemic
policy.2
For employers retaining physical space, many are intentionally seeking high quality
spaces with amenities that can attract employees to the office.
As more employers seek out smaller, premium office spaces , older Class B and C offices like
those in Carmel’s US-31 corridor are often not seen as ‘commute-worthy’ compared with
premium options. These spaces are becoming less in demand nationwide, leading to a higher
rate of vacancies as office leases signed before the pandemic expire.3 Office redevelopment
trends are one indicator of this ‘flight to quality’ and what is happening to older office buildings
taken off the market (with more recently built Class A space generally less likely to be removed
overall).
Before the pandemic, developers frequently repositioned office inventory for continued use as
upgraded office space. In 2019, office renovation was the most common type of redevelopment
nationwide (Exhibit 1). In the wake of the pandemic, development trends pivoted. Only a small
share (12 percent) of the total square footage taken off the market nationwide in 2021 and 2022
planned to remain in use as offices.4 Instead, many building owners and developers began
pursuing conversion to residential units or redevelopment of office space into commercial retail
and other uses.
2 New York City Department of City Planning, “New York City Office Adaptive Reuse Study,” January 2023,
https://www.nyc.gov/site/planning/plans/office-reuse-task-force/office-reuse-task-force.page.
3 Emma Goldberg, “What Would It Take to Turn More Offices into Housing?,” The New York Times, December 27, 2022, sec.
Business, https://www.nytimes.com/2022/12/27/business/what-would-it-take-to-turn-more-offices-into-
housing.html?partner=slack&smid=sl-share.
4 Jacob Rowden and Elena Lanning, “Conversion Activity Gaining Momentum” (JLL Research, October 19, 2022),
https://www.us.jll.com/en/trends-and-insights/research/office-research-snapshot-10-19-22.
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Exhibit 1. Office Inventory Removals and Redevelopment, United States, 2015-2022
Source: JLL Research
As part of shifts in employment and remote work trends, suburban areas with high
quality of life like Carmel are faring well.
As employers gain more locational flexibility, cities like Carmel are attracting a greater number
of businesses to locate offices outside of traditional downtowns.5 Carmel and other inner
suburban cities offer attractive amenities for employers and workers, while still providing
access to urban centers by their close-in location and transportation routes. Uncertainty about
the future of the office market has caused shifts in expectations from investors about preleasing
and a decrease in speculative development.6 Increasing costs for construction and rising interest
rates may make development less attractive to investors without preleasing, even in strong
markets like Carmel. However, even as there is uncertainty about office values and occupancy,
suburban markets are expected to retain value better than central business districts.7
5 Marie Ruff, “What the Urban to Suburban Shift Means for the Office Sector” (National Association for Industrial and Office Pa rks,
August 11, 2022), https://blog.naiop.org/2022/08/what-the-urban-to-suburban-shift-means-for-the-office-sector/.
6 Urban Land Institute and PWC, “Emerging Trends in Real Estate,” 2023, https://americas.uli.org/research/centers-
initiatives/center-for-capital-markets/emerging-trends-in-real-estate/2023-emerging-trends-americas/.
7 Ibid.
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Brick-and-Mortar Retail is Adapting to Changing Demand for In-
Person Shopping.
Brick-and-mortar retail experienced a transformation during COVID-19 pandemic,
driven by the acceleration of e-commerce and changing trends in consumer demand.
While social distancing provided an impetus for customers to shop online, many people found
benefits from the convenience of e-commerce compared to traditional retail. Retailers across the
country have realized the need to adapt and create a digital presence to supplement (or in some
cases replace) physical locations. Across retail industries, different dynamics are playing out
between retail types in the wake of the pandemic, but e-commerce has emerged as a clear
frontrunner, with sales increasing by over 30 percent between 2019 and 2020 alone.8 Many
retailers also understood the enduring value of physical stores and sought improvements to the
physical retail experience to continue drawing customers for in-person shopping as well as new
locations near where people live and recreate.
Walkable shopping districts are better able to compete with online retailers.
Some retail establishments underwent significant changes to their format in response to the
pandemic, with the emergence of pop-up stores and smaller-format locations catering to
changing consumer expectations for experiential retail. The suburban market in particular saw
growth nationwide compared to central business districts, influenced in part by decreased
demand from downtown workers.9 Among types of retail, there are also variations: restaurant
establishment growth is strongest in the inner suburbs while grocery, leisure, and other services
are growing most in outer suburban areas.10 Like Carmel, many suburban cities in the US which
have typically had a larger presence of auto-oriented big box stores have begun pivoting to
mixed-use developments and walkable shopping districts to compete with the rise of online
shopping.
Demographic Changes Are Driving New Types of Housing Needs
and Preferences.
The country’s aging population is changing decisions around housing.
In the United States, housing and age demographic changes have had a profound impact on
housing preferences and affordability. The population of the United States is aging quickly,
with forecasts showing that by 2030, 1 out of every 5 people in the country will be age 65 or
8 Mayumi Brewster, “Annual Retail Trade Survey Shows Impact of Online Shopping on Retail Sales during COVID -19 Pandemic,”
United States Census Bureau, April 27, 2022, https://www.census.gov/library/stories/2022/04/ecommerce-sales-surged-during-
pandemic.html.
9 Chris Wheat et al., “Downtown Downturn: The Covid Shock to Brick -And-Mortar Retail” (JP Morgan Chase & Co., January 2023),
https://www.jpmorganchase.com/institute/research/cities -local-communities/downtown-downturn-covid-shock-to-brick-and-
mortar.
10 Ibid.
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older.11 The COVID-19 pandemic also accelerated trends in retirement nationwide, with many
late career workers being able to increase savings and leave the workforce ahead of schedule in
2020 and 2021.12 However, many people are also choosing to stay in the workforce longer than
previous generations: as individuals live longer, the country is seeing an older workforce that
brings along both higher levels of experience and less certainty about workforce replacement.13
Younger cohorts of Millennial and Generation Z households face new challenges that are
distinct from previous generations, with higher rates of student debt, housing costs, and
inflation that contribute to slower growth in homeownership rates than previous generations.14
Exhibit 2. Homeownership Rates by Generational Cohort
Source: Redfin Analysis; Current Population Surveys (ASEC) 1976-2022); IPUMS
One critical place where these issues culminate for older and younger generations is around
housing options and affordability. Millennials and Generation Z tend to prioritize proximity to
work, amenities, cultural attractions, and walkable communities and sustainable housing
options. However, rising home sale prices, stagnant wage growth, and higher debt-to-income
ratios have made it difficult for many members of younger generations to enter the housing
market.15 This has led to increased demand for affordable rental options and shared living
arrangements. At the same time, many members of the Baby Boomers and Generation X are
looking to downsize from larger homes in favor of smaller, more manageable properties or
11 AARP and Opticos Design, “ Discovering and Developing Missing Middle Housing,” 2022,
https://www.aarp.org/livable-communities/housing/info-2022/missing-middle-housing-download.html.
12 Ibid.
13 ECONorthwest, “Redefining Economic Success in Washington State” (State of Washington, February 2022),
https://www.ltgov.wa.gov/2022-business-competitiveness-analysis.
14 Hillary Hoffower, “How the Last 20 Years of Economic Turmoil Broke Millennials,” Business Insider, April 14,
2022, https://www.businessinsider.com/millennials-money-financial-economic-trauma-recession-student-debt-
inflation-2022-2#:~:text=Millennials%20have%20been%20carrying%20around.
15 Ibid.
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transitioning to retirement communities. For many families, multigenerational solutions like
Accessory Dwelling Units (ADUs) are becoming more attractive options for their flexibility and
relative affordability.16
Walkable, mixed-use communities are also becoming more desirable locations
compared with auto-oriented locations.
According to the National Association of Realtors, walkability is an increasingly important
factor for households choosing where to live in cities across the country:17 As indicated in a 2023
survey, people want of all ages (and particularly those in Generation Z and Millennial cohorts)
prefer easy access to amenities such as shops, restaurants, businesses, cultural attractions, bike
trails, and transit. Home prices per square foot in areas with these amenities have generally
been rising according with this rising demand.18 The shift to compact districts with efficient
land use and easy access by foot or bicycle has changed where many people old and young
choose to live and where housing is in highest demand.
Exhibit 3. Home Price Comparison of Walkable and Drivable Neighborhoods
Source: Opticos Design
16 AARP and Opticos Design, “Discovering and Developing Missing Middle Housing.”
17 National Association of REALTORs, “2023 Community and Transportation Preference Survey,” April 2023,
https://www.nar.realtor/reports/nar-community-and-transportation-preference-surveys.
18 Joe Cortright, “Walking the Walk: How Walkability Raises Home Values in US Cities” (CEOS for Cities, August
2009).
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3. Regional Trends
Carmel and the Indianapolis metropolitan area’s changing market reflects national trends on
the local and regional scale. While across the country the pandemic and larger economic trends
have changed the way that people live and work, the unique regional conditions for the
Indianapolis metropolitan area and greater Central Indiana region are critical to understanding
Carmel’s current and potential position in the market. This section summarizes these trends and
the broader context, including economic, demographic, and real estate market changes in recent
years which will guide what strategies the City should pursue.
Regional Context
Indianapolis is the fifteenth largest city in the United States at the center of the Central Indiana
region, which has historically served as a national hub for sports entertainment and
manufacturing, with the dominant regional employment sectors today of healthcare and retail.19
Since the 1980’s, the population of the area has grown by nearly 50 percent, with particularly
fast growth in Hamilton County where Carmel and its competitor suburban cities are situated.20
Employment growth in the past two decades was over 18 percent in Central Indiana ; while
Indiana took a more severe loss in employment during the 2008 recession, both the state and the
region saw a smaller contraction during 2020 compared with the nation at only 3 percent.21
Exhibit 4. Annual Percentage Change in Employment by Region, CEDS Region, Indiana, and the
United States, 2002-2020
Source: US Bureau of Labor Statistics; Quarterly Census of Employment and Wages (QCEW); TIP Strategies, Inc.
Note: The Central Indiana CEDS region includes the following eight counties: Boone, Hamilton, Hancock, Hendricks,
Johnson, Madison, Marion, and Morgan.
19 Indianapolis Metropolitan Planning Organization, “Central Indiana Comprehensive Economic Development Strategy,” June 2022,
https://www.indympo.org/whats-underway/ceds.
20 Ibid 13.
21 Ibid 14.
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As the region’s market for talent becomes more competitive, suburban cities like
Carmel’s high quality of life investments, employment opportunities, and close
proximity to regional amenities in Indianapolis make it an attractive location.
Within the region,
Hamilton County’s higher
share of residents with
college degrees, higher
median income, higher
share of families with
children, and higher
median housing costs
generally set it apart within
the Indianapolis area.22 In
light of remote work trends,
Hamilton County also has
the highest share of
households with access to a
computer and broadband
internet in the region,
lending it an advantage
with the shift in workplace
norms.23
Exhibit 5. Median Household Income Variation in the Indianapolis
Region, Indiana, and United States, 2019
Source: Central Indiana Comprehensive Economic Development Strategy,
American Community Survey (2014-2019); TIP Strategies, Inc.
The Indianapolis office market is changing from its downtown-
centered dynamic.
Downtown Indianapolis has historically been the center of the Central Indiana region’s office
market, but like downtown areas across the country, continues suffering setbacks for
occupancy.
Although entertainment activities in Downtown Indianapolis have motivated some employers
to push partial return-to-office initiatives, many office tenants are likely to reduce their space
needs as their leases come up for renewal.24 Indianapolis has not seen as large of an uptake in
remote work compared with peer cities with similar economic and demographic profiles ,
(Exhibit 6). With fewer people working from home than in other major metropolitan areas, the
22 Ibid 13.
23 Ibid 14.
24 Avison Young, “Indianapolis Office Market Report,” 2022, https://www.avisonyoung.us/web/indianapolis/office-market-report.
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rise in vacancies in Downtown Indianapolis has not been as severe as other cities in the United
States but still indicates an overall change from pre-pandemic workplace dynamics.25
Exhibit 6 Share of People Working from Home by Peer Regions, 2019-2021
Source: Portland Metro Chamber, ACS PUMS, 2021 1-year estimates
Note: Reflects workers who worked remotely at least one day per week on average.
Carmel is the standout destination for firms relocating from Downtown Indianapolis.
Despite rising vacancies, Downtown Indianapolis still emerged as the highest demand area for
office space compared with suburban clusters as of 2022 according to the real estate firm Avison
Young.26 However, demand is shifting in the region to new office buildings offering premium
space in suburbs like Carmel that capture a higher rent per square foot.27 This reflects the
national trend of flights to quality for employers, and a regional shift between the central
business district and surrounding areas. Anecdotally from conversations with developers in the
region and analysis in this report, Carmel today is the highest-demand location within the
Indianapolis suburbs.
25 Oleh Sorokin, “Office Vacancy Rates in 2022,” National Association of REALTORs, February 21, 2023,
https://www.nar.realtor/blogs/economists -outlook/office-vacancy-rates-in-2022.
26 Avison Young, “Indianapolis Office Market Report.”
27 27 Oleh Sorokin, “Office Vacancy Rates in 2022.”
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Retail Demand is Changing Following Other Large-Scale Trends in
Commuting and Online Retail.
Retail is one of Central Indiana’s primary industries, which is also an important
component of mixed-use development.
Retail has generally seen a quick rebound from the pandemic particularly in the Indianapolis
suburbs.28 Many businesses in the region who are shifting to online models still retaining brick-
and-mortar storefronts. There is a growing trend towards retailers seeking out locations in
mixed-use developments that combine retail space with offices and multifamily housing for
convenient access to customers, particularly as “a way to bring the feel of urban living to
suburban areas.”29
As with many markets in the Midwest, Downtown Indianapolis is recovering more slowly than
suburban locations like Carmel in terms of retail, and retail employment has been on a general
downward trend over the past ten years.30 As some residents move out of the city’s Downtown
and commute less frequently in light of remote work options, demand for certain types of retail
like convenience stores and restaurants has declined,31 while shoppers in the suburbs continue
to shop in-person for many types of products.
Residents are Seeking More Housing Choices with Urban
Amenities.
Within the Indianapolis area, many households are seeking out a wider range of
housing choices than in the past.
This includes a shift away from single-family detached homes as the primary preference for
many. According to the MIBOR Realtor Association’s observations in the Central Indiana
residential market “walkable neighborhoods with mixed use property types are becoming a
consumer preference and a good investment for municipalities .”32 Even in traditionally car-
oriented suburbs, there is a growing demand for condo lifestyles and rentals-by-choice, with
residents seeking out multifamily units to maintain close proximity to parks, restaurants,
shopping areas, and entertainment.
28 Dan Rafter, “A Booming Industrial Market, an Evolving Retail Sector: Indianapolis CRE Market Continues to Show Its
Resiliency,” ReJournals, June 1, 2021, https://rejournals.com/a-booming-industrial-market-an-evolving-retail-sector-indianapolis-
cre-market-continues-to-show-its-resiliency/.
29 Ibid.
30 Indianapolis Metropolitan Planning Organization, “Central Indiana Comprehensive Economic Development Strategy .”
31 Dan Rafter, “A Booming Industrial Market, an Evolving Retail Sector .”
32 MIBOR Realtor Association, “Market Insights Report” (Metropolitan Indianapolis Board of Realtors, May 2023),
https://www.mibor.com/marketinsights.
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Different generations and households may have different motivations for seeking out a
variety of housing types.
In Central Indiana, overall demand for homes is currently elevated; but the volume of single -
family homes returning to the market is expected to increase as the Baby Boomer generation
seeks to downsize with options like ADUs, condos, or townhomes.33 At the same time,
economic conditions for younger generations like Millennials including high student debt
combined with pressures on the housing market make affordability a primary concern in the
Indianapolis area, like much of the US.34 Condos, multifamily rentals, and middle housing types
can offer a range of options that meet the needs of both younger and older generations through
more affordable housing costs and right-sized units that are more integrated with communities.
Exhibit 7. Indiana Counties by Amount of Affordable Available Units for Low Income Households
Source: Prosperity Indiana
Hamilton County is the most expensive place to live in the Central Indiana region.
Within the region, Hamilton County has typically had both the highest median home values
and median monthly rents within the Central Indiana region.35 Although this is accompanied by
the highest median incomes (Exhibit 5), cost burden has been increasing for Hamilton County
residents, particularly among low-income households earning less than 30 percent of the area’s
median income.36 New types of housing options and units that are affordable to a wider range
of incomes will be important needs for Hamilton County to address in coming years.
33 George Vlahakis, “Real Estate Report: ‘Generational Housing Bubble Is on the Horizon’” (Indiana University, April 26, 2023),
https://news.iu.edu/live/news/28233-real-estate-report-generational-housing-bubble-is.
34 James Briggs, “When the Baby Boomers and Gen X Sell Their Homes” (Axios Indianapolis, May 1, 2023),
https://www.axios.com/local/indianapolis/2023/05/01/millennial-housing-bubble.
35 Indianapolis Metropolitan Planning Organization, “Central Indiana Comprehensive Economic Development Strategy .”
36 Hamilton County, “2021 Consolidated Annual Performance Evaluation Report,” 2021,
https://www.hamiltoncounty.in.gov/DocumentCenter/View/17856/DRAFT-PY-2021-CAPER?bidId=.
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4. Carmel’s Regional Position
Carmel’s Regional Peer Cities
Overview
Carmel primarily competes with Downtown Indianapolis for office tenants. Situated directly on
the northern border of Indianapolis, the City of Carmel has many advantages for its accessible
location. Other suburban cities that compete with Carmel are Fishers, Westfield, and
Noblesville. These cities seek to develop a similar combination of high-quality lifestyle
amenities mixed-use districts and commercial offices with a similar model to Carmel. For
Carmel to remain a strong regional competitor, the City will need to leverage its existing
strengths and address development constraints.
Exhibit 8. Carmel’s Comparator Cities
Source: ECONorthwest
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Downtown Indianapolis
Downtown Indianapolis is the core of the
state’s capital city with a mix of historic charm,
modern amenities, and tourist attractions.
Monument Circle stands at the heart of the
area, featuring the iconic Soldiers and Sailors
Monument and serving as a major gathering
place and event hub. The area is also home to
renowned sports venues, museums, and parks
like Lucas Oil Stadium, Gainbridge
Fieldhouse, Newfields, the Indiana State
Museum, and White River State Park. These
regional attractions draw in tourism, while
major employers and institutions like the
Indianapolis campuses of Indiana University
and Purdue University bring in a mix of
workers, students, and visitors. Like central business districts (CBDs) across the United States,
Downtown Indianapolis has struggled with higher office vacancy rates in the last three years
with the rise of work-from-home and hybrid workplace trends.
Exhibit 9. Summary of Real Estate Deliveries, Downtown Indianapolis, 2013 to 2023 YTD
Source: CoStar
Image: Indianapolis Business Journal
Population: 880,621 (2022, citywide)
Size: 5 sq miles (approx.)
Population Growth Rate (Since 2010): 8.1%
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Fishers
Among other suburban cities in Hamilton
County to the direct east of Carmel, Fishers is
the city’s closest comparison in terms of its
character and recent market trends. As a
rapidly growing suburb, the city has invested
in quality-of -life improvements and connected,
mixed-use areas in a similar way to Carmel
with a trail network and ample recreation
opportunities. The Nickel Plate district offers a
walkable, mixed-use area that is similar but on
a smaller scale than Carmel’s Monon
Greenway corridor. Although it is not
currently at the same level of demand and
inventory as Carmel, this corridor represents
part of the larger regional trail system which
may contribute to more opportunities
throughout Indianapolis’s northern suburbs.
37 U.S. Census Bureau QuickFacts Estimates, 2022.
Image: Fishers Parks
Population: 101,966 (2022)37
Size: 35.6 sq miles
Population Growth Rate (Since 2010): 28.8%
Exhibit 10. Summary of Real Estate Deliveries, City of Fishers, 2013 to 2023 YTD
Source: CoStar
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Westfield
Westfield is another suburban city that lies
directly north of Carmel along the US-31
corridor that helps to connect Hamilton
County with Indianapolis. The city has a
more rural character and lower population
density compared with Carmel but has also
developed a number of amenities in recent
years, including the Grand Park Sports
Campus and Events Center as well as Grand
Junction Plaza. The town also connects to the
Monon Greenway as it extends north of
Carmel, leading to Westfield’s recreational
facilities and residential areas. Although
Westfield does not currently have an
inventory of commercial space to truly rival Carmel, it is anticipated to see growth in coming
years given its location on major transportation routes and current abundance of undeveloped
land and underutilized industrial space (Exhibit 16).
38 U.S. Census Bureau QuickFacts Estimates, 2022.
Image: Visit Hamilton County
Population: 54,605 (2022)38
Size: 31.1 sq miles
Population Growth Rate (Since 2010): 54.3%
Exhibit 11. Summary of Real Estate Deliveries, City of Westfield, 2013 to 2023 YTD
Source: CoStar
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Noblesville
The City of Noblesville is located adjacent,
northeast of Carmel, set further away from
central Indianapolis than other comparable
cities. Noblesville is home to a historic
downtown area, with a commercial main
street and the Hamilton County Courthouse
as an anchor characteristic. Although
Noblesville has a somewhat more rural
character in general compared with Carmel,
the city is also connected to the regional trail
system as well as Highways 37 and 38. In
recent years, the City has recently seen
greater investment in new multifamily
housing near its downtown area.
39 U.S. Census Bureau QuickFacts Estimates, 2022.
Image: Realty World
Population: 72,748 (2022)39
Size: 34.3 sq miles
Population Growth Rate (Since 2010): 40.0%
Exhibit 12. Summary of Real Estate Deliveries, City of Noblesville, 2013 to 2023 YTD
Source: CoStar
ECONorthwest 18
Sub Areas
Carmel and its competitor
cities have sub areas with
distinct identities that offer a
greater access to specific
amenities, commercial centers,
and housing types.
Carmel’s Monon Greenway is
part of the Rangeline corridor,
which provides retail, office
space, and multifamily
housing in a walkable area
with high-quality public
amenities and vibrant social
activities.
Exhibit 13. Carmel and Comparison City Sub Areas
Source: ECONorthwest
Likewise, surrounding cities in Hamilton County have also begun to cultivate similar hubs
connected to the regional trail system that emphasize mixed -use development which caters to
growing demand for new commercial and residential formats within these traditional
suburban communities.
Today, Carmel’s Rangeline
corridor is the most developed
among these districts, with
Fishers’ Nickel Plate district
quickly evolving with new
bicycle paths, offices, and
apartment buildings. If
current trends continue more
may emerge as regional
competitors for a range of
market segments including
young professionals, retirees,
and more.
Exhibit 14. Carmel and Comparison City Sub Areas
Source: ECONorthwest
ECONorthwest 19
Key Indicators
This section provides an overview of real estate market trends in Carmel’s competitor cities
using commercial real estate data from CoStar. The exhibits in this section show real estate
metrics to help provide context to the performance of real estate in these areas. These metrics
include an inventory of square footage for different real estate types, triple-net (NNN) rents,
and vacancy rates.
Commercial Real Estate Market Overview
Among Carmel’s competitor cities, Downtown Indianapolis has by far the greatest inventory of
commercial real estate by square footage. With a huge inventory of regional offices, retail, and
industrial space, Downtown Indianapolis offers over 66 million square feet of commercial real
estate. Nearly half of this inventory is composed of office space. For Carmel’s suburban
competitors, Fishers has the most even balance of office, retail, and industrial commercial space.
Westfield’s commercial market leans heavily towards industrial space . Westfield has a smaller
inventory across these different use types but is proportionately strong in its supply of
industrial space.
Among commercial real estate types, vacancy rates were highest for commercial offices in each
one of the comparable cities except Noblesville (which also had the smallest overall inventory)
in 2023 year-to-date, with the lowest vacancy seen in Carmel. This supports the findings of the
Market Study that show a strong office market in Carmel and indicates that offices continue to
be in relatively high demand for the region. Although Carmel’s re tail vacancies were slightly
higher than Fishers and Westfield, they still indicate a healthy retail market, and remain lower
than Downtown Indianapolis. Westfield’s relatively low inventory of office space may
contribute to its outlier status, with less than a million square feet of space that is more sensitive
to fluctuations in
individual company
decisions. Noblesville’s
inventory was so low
that it was unable to be
calculated for 2023
YTD. The only
commercial vacancy
type that was
unusually high in
Carmel was for
industrial space, which
represents only a small
share of the city’s
overall commercial real
estate market.
Exhibit 15. Commercial Vacancy Rates (Office, Retail, Industrial) in
Carmel’s Comparable Cities, 2023 YTD
Source: CoStar
ECONorthwest 20
Compared with Fishers,
Westfield, Noblesville,
and Downtown
Indianapolis, Carmel has
a proportionately large
share of both retail and
office space, with the
smallest share overall of
industrial real estate.
This reflects Carmel’s role
as an important regional
hub for corporate
headquarters and white-
collar employment as well
as its recent investments in
retail (particularly in
mixed-use corridors).
Other suburban
jurisdictions maintain a
stronger presence of
industrial land, which may
be tied to a variety of
factors for land costs,
freight transportation, and
the pool of workers
available. Given the
relatively low significancy
of the industrial sector
within Carmel’s economy,
this section focuses more
specifically on office and
retail markets.
Exhibit 16. Commercial Real Estate Breakdown (Office, Retail,
Industrial) in Carmel’s Comparable Cities, 2023 YTD
Source: CoStar
ECONorthwest 21
Commercial Market
Office
Among its competitor cities, office space in Carmel commands the highest rents per square
foot and the lowest vacancy rates. This trend has been occurring for most of the past decade,
with Carmel surpassing rents per square foot of office space in Downtown Indianapolis in 2016.
While Fishers and Downtown Indianapolis have generally tracked just below Carmel’s rents
per square foot in this period, Westfield falls further behind with the lowest rate amongst all
five geographies.
Exhibit 17. Office Rents per Square Foot, Carmel and Comparable Cities, 2013 to 2023 YTD
Source: CoStar
Note: ‘Downtown’ as listed in charts refers to Downtown Indianapolis.
While many central business districts in the United States saw soaring office vacancy rates at
the onset of the COVID-19 pandemic in 2020 and beyond,40 Carmel as well as Downtown
Indianapolis saw only modest changes to vacancy rates. Falling far below the average office
40 Oleh Sorokin, “Office Vacancy Rates in 2022,” National Association of REALTORs, February 21, 2023,
https://www.nar.realtor/blogs/economists -outlook/office-vacancy-rates-in-2022.
ECONorthwest 22
vacancy rate reported nationwide by the National Association of REALTORs (which was 12.5%
at the close of 2022),41 Carmel remains a relatively strong office market.
Among its competitors, Fishers more closely follows the trends for offices in Downtown
Indianapolis and Carmel. Although Fishers has only a fraction of the total inventory of office
space in the central business district, it reached a comparatively lower vacancy rate in 2023
year-to-date. Westfield’s small inventory of less than 1 million square feet of office space makes
the city’s vacancy rate more sensitive to fluctuations in individual building occupancy. The high
rates in 2023 year-to-date indicate that offices are not performing as well in the city but may be
due to a small number of individual companies moving their location.
Exhibit 18. Office Vacancy Rate, Carmel and Comparable Cities, 2013 to 2023 YTD
Source: CoStar
41 Ibid.
ECONorthwest 23
Sub Area Spotlight: Rangeline and Nickel Plate District Office Markets
Carmel’s Rangeline corridor offers a walkable, mixed -use area around the Monon Greenway that is in
increasingly high demand for businesses and residents. Since 2011, rents per square foot for office
space rose sharply in the Rangeline corridor and surpassed the City’s average rents. In recent years,
the City of Fishers has invested in developing the Nickel Plate district as a similar type of area with
enhanced public infrastructure to create more pedestrian friendly environment and amenities like
gathering spaces and trails.
While this area has not yet seen the same level of success as Carmel’s Monon Greenway, there are
both benefits and potential downsides for having a similar environment nearby. Although it can mean
competition for office tenants seeking premium space with high quality amenities, having an
interconnected trail system throughout the region can also add value for Carmel’s investments in
bicycle and pedestrian infrastructure.
Exhibit 19. Office Rents per Square Foot, Nickel Plate vs. Rangeline, 2011-2022
Source: CoStar
Exhibit 20. Office Vacancy Rates, Nickel Plate vs. Rangeline, 2011 -2022
Source: CoStar
ECONorthwest 24
Retail
Rents and vacancy rates for retail space in Carmel and its comparable cities have fluctuated
since 2013, but suburban cities generally outperformed Downtown Indianapolis. In the
region, Downtown Indianapolis offers the largest inventory of retail space with nearly 9 million
square feet. Among suburban cities in this analysis, Carmel offers roughly double the inventory
of Fishers and over five times the total square footage of retail space in Westfield with nearly 7
million square feet. The city’s lower rents compared with other suburban cities may indicate a
wider range of options available, including both higher end retail, big box chain stores, auto
dealerships, and older establishments in areas like Home Place or E 96th Street.
Despite Carmel’s relatively lower rents per square foot in the suburban market, the city (like
Fishers and Westfield) still far surpassed retail rents in Downtown Indianapolis since 2013. In
2020 and 2021, both Fishers and Westfield saw a sharp rise in rents per square foot and a dive in
retail vacancy rates, indicating a sharp increase for retail demand in these jurisdictions.
Exhibit 21. Retail Rents per Square Foot, Carmel and Comparable Cities, 2013 to 2023 YTD
Source: CoStar
ECONorthwest 25
Within the region, falling suburban retail vacancy rates in Carmel, Fishers, and Westfield
indicate growing demand outside of the Downtown Indianapolis. Contrary to national
trends,42 Downtown Indianapolis saw a decline in retail vacancies from 2019 to 2020, but still
did not keep pace with Carmel or other cities in the northern suburbs. This indicates that while
the region is not experiencing the same overall loss of brick-and-mortar retail, it may be
following the overall trend of more retailers seeking suburban locations driven in part by
remote work. The extremely low vacancies in Carmel, Fishers, and Westfield indicate that
upward pressure will likely continue on the retail market in these citi es.
Exhibit 22. Retail Vacancy Rate, Carmel and Comparable Cities, 2013 to 2023 YTD
Source: CoStar
Hospitality Market
Hotel
Like other types of real estate, Downtown Indianapolis offers by far the greatest inventory of
hotel rooms in the region, with institutions like the convention centers, universities, museums,
music and sports venues, and parks continuing to attract visitors to the central city. Despite
setbacks to the hospitality industry during the pandemic, over 700 new rooms are slated to be
added to the Downtown Indianapolis inventory.
42 Chris Wheat et al., “Downtown Downturn: The Covid Shock to Brick -And-Mortar Retail.”
ECONorthwest 26
The hotel market in suburban Hamilton County is primarily characterized by business travel on
weekdays and a higher influx of leisure travel on weekends, including visitors to attractions like
the Grand Park Sports Campus and the Palladium. In the suburban market, Fishers is quickly
catching up to the inventory of hotels available in Carmel, while Westfield ’s market remains
relatively small in comparison. Easier access to Indianapolis may drive the higher inventory in
Carmel and Fishers compared with Westfield, which is further removed from the central city.
Exhibit 23. Hotel Room Inventory in Carmel and Comparable Cities, 2023 YTD
Source: CoStar
Downtown Indianapolis still commands
higher room rates than suburban cities,
holding on to a slight advantage over
suburban cities. Despite changes to travel and
tourism over the past few years, including a
drop in occupancy and room rates in 2020, the
attractions and activities in Downtown
Indianapolis still show more demand from
visitors than surrounding areas. Aside from
2020, average daily room rates have
continuously risen for Downtown Indianapolis
and stayed consistently above those of
suburban areas.
43 Chris Sikich, “Carmel’s Financing, Ownership, of $40 Million Luxury Hotel Creates the Opportunity for Risk or Reward,” The
Indianapolis Star, https://www.indystar.com/story/news/local/hamilton-county/2018/03/25/carmels-financing-ownership-40-
million-luxury-hotel-creates-opportunity-risk-reward/341951002/.
What Is a City’s Role in Hotel Development?
While major cities are hospitality hubs, suburban cities like
Carmel also present opportunities for hotel development and
tourism growth, driven by the presence of employers and
attractive entertainment districts. Both its location on the edge
of Indianapolis as well as local attractions and businesses make
Carmel well-positioned for hospitality as the presence of
corporate headquarters and commercial areas generates steady
demand from travelers. With strategic partnerships, planning
and investments in unique amenities, suburban cities can
cultivate themselves as destinations in their own right beyond
accommodating visitors to larger central cities and draw in new
tax dollars. Carmel’s boutique Hotel Carmichael is an example
of a local public-private partnership which has helped to
encourage the city’s hospitality sector and support economic
development with public support.43
ECONorthwest 27
In the suburban market, Carmel had higher average daily room rates than either Fishers or
Westfield in 2023 year-to-date. Although Westfield is relatively new to the hospitality market,
with very few hotel rooms available prior to 2016, it competes more closely with Carmel than
Fishers, largely due to the high volume of traffic to Grand Park Sports Campus in April through
October.
Exhibit 24. Hotel Average Daily Room Rate, Carmel and Comparable Cities, 2013 to 2023 YTD
Source: CoStar
Despite variation in room rates, all five areas are seeing
similar vacancy rates and experienced similar occupancy
impacts from the pandemic. In 2020, vacancy rates sharply
increased for hotels related to nationwide travel bans and
social distancing but began to see recovery starting in 2021.44
Carmel and its comparable cities in the region saw this quick
rebound to pre-pandemic vacancies in 2021. Although there is
only a small amount of variation between jurisdictions,
Carmel had the lowest vacancy rate in 2023 year-to-date.
44 Bureau of Labor Statistics, “Leisure and Hospitality Projected to Mostly Recover Pandemic -Driven Employment Losses,” The
Economics Daily (U.S. Department of Labor, October 17, 2021), https://www.bls.gov/opub/ted/2022/leisure-and-hospitality-
projected-to-mostly-recover-pandemic-driven-employment-losses.htm.
Why Does it Matter?
Hamilton County charges a lodging
tax for hotel rooms of up to 5% for
overnight stays. This revenue is
used for a variety of purposes to
develop new amenities and tourism-
related features in the area.
ECONorthwest 28
Exhibit 25. Hotel Room Vacancy Rate, Carmel and Comparable Cities, 2013 to 2023 YTD
Source: CoStar
Residential Market
Multifamily Rental Market
Given its larger size and density, Downtown Indianapolis has a higher overall inventory of
multifamily units compared with suburban jurisdictions, which generally trend towards a
greater stock of single-family homes. With smaller populations in Carmel, Fishers, and
Westfield than Downtown Indianapolis, there are proportionately fewer units.45
Among the four suburban cities, Carmel offers the largest market for multifamily rental units,
with over 8,700 units and more in the development pipeline. Carmel and Fishers have a similar
population size, but Carmel has nearly 2,000 more units of multifamily housing. Westfield,
which has about half of the population of Carmel, also has far fewer multifamily units. With
over 700 new units in the development pipeline, Carmel is likely to continue offering more
options for multifamily residences compared with other suburban jurisdictions.
45 This section covers multifamily rentals, which can range from smaller-scale buildings to larger complexes. For-sale condo units
are covered below under home sales.
ECONorthwest 29
Exhibit 26. Multifamily Rental Unit Inventory in Carmel and Comparable Cities, 2023 YTD
Source: CoStar
Rents in Carmel began to rival Downtown Indianapolis in 2020. While other suburban cities
have seen steady rent declines (reaching under $1.00 per square foot in 2023 year-to-date),
Carmel and Downtown Indianapolis continued to show increased demand for units since 2013.
In 2013, Fishers and Westfield had higher rents than either Carmel or Downtown Indianapolis.
This trend has since reversed. This may be because the inventory of units in these cities may be
composed primarily of older apartment buildings depreciating in value or struggling to retain
tenants.
ECONorthwest 30
Exhibit 27. Multifamily Rent per Square Foot, Carmel and Comparable Cities, 2013 to 2023 YTD
Source: CoStar
Carmel also has the fewest available multifamily units among its competitors, emphasizing
growing demand in the city. In 2020, Carmel did not experience the sharp spike in Downtown
Indianapolis multifamily vacancies that Fishers and Westfield experienced. With the advent of
remote and hybrid work, many households made new housing choices seeking more affordable
options or areas with higher quality of life. Carmel’s rise in demand indicates that the city’s
amenities and larger inventory of units just outside of Indianapolis helped it avoid the same
vacancies as other cities in the region .
ECONorthwest 31
Exhibit 28. Multifamily Vacancy Rate, Carmel and Comparable Cities, 2013 to 2023 YTD
Source: CoStar
ECONorthwest 32
Sub Area Spotlight: Rangeline and Nickel Plate District Multifamily Markets
One of the key features of Carmel’s high Rangeline corridor and Fishers’ Nickel Plate District is their
mix of both commercial and residential uses. These newer areas break from their cities’ typical
suburban format of single-family detached homes separated from shopping areas and employment
hubs. Trends in multifamily rents and vacancy rates indicate increased demand for households seeking
to live in these walkable, mixed-use districts.
Since 2011, multifamily rents in both Rangeline and Nickel Plate have remained above their respective
cities’ average. Although vacancies are still higher in Nickel Plate compared with Fishers overall,
historical data show that this will likely change in coming years if current trends continue. As demand
increases for a mix of housing types in central and connected areas, this is leading more developers to
seek out opportunities for mixed-use buildings in both suburban cities.
Exhibit 29. Multifamily Rents per Square Foot, Nickel Plate vs. Rangeline, 2011-2022
Source: CoStar
Exhibit 30. Multifamily Vacancy Rates, Nickel Plate vs. Rangeline, 2011 -2022
Source: CoStar
ECONorthwest 33
Single Family and Townhome Sales
Carmel’s single-family homes and townhomes are larger and more expensive on average
compared with other cities in the region. In the past twelve months, Carmel’s sales were
higher than all comparison cities in this analysis , including Downtown Indianapolis. The large
median square footage of homes in Carmel indicates that this is due in part to larger homes
than other suburban cities like Noblesville and Westfield. However, Carmel also surpassed
most of its competitors in prices per square feet. Only single-family homes in Downtown
Indianapolis were slightly more expensive per square foot, but their smaller sizes led to lower
overall prices compared with Carmel.
The high price of housing in Carmel is not completely even across the City. As the Market
Assessment shows (Appendix A), areas like Home Place and the E 96th Street corridor offered
lower price points for smaller, older homes in Carmel . However, large luxury homes in the
trade areas of districts like US-31 and Rangeline likely contribute to the higher median price
citywide, as well as other residential areas removed from major corridors.
Condos represent a lower cost option in Carmel for units that are still close in size to
townhomes. The cost differential between single family homes, townhomes, and condos is
sizable in Carmel, with the average condo costing nearly half of the average single-family home.
While Carmel stands out in the region for high home prices, condos are much lower compared
to those in Downtown Indianapolis and only slightly higher than Westfield or N oblesville.
Exhibit 31. Median Single Family and Townhome Sale Price by Carmel Comparable City (Past 12
Months, August 2022-July 2023)
Source: Redfin
ECONorthwest 34
Exhibit 32. Single Family and Townhome Sale Price PSF by Carmel Comparable City (Past 12
Months, August 2022-July 2023)
Source: Redfin
Exhibit 33. Single Family and Townhome Median SF by Carmel Comparable City (Past 12 Months
Sales, August 2022-July 2023)
Source: Redfin
ECONorthwest 35
5. Policy Takeaways & Recommendations
The market landscape of Indianapolis and the Central Indiana region has changed since 2020 as
landmark shifts initiated by the COVID-19 pandemic changed the way that people live and
work. Strategic positioning plays a pivotal role in the success of cities like Carmel, which have
successfully developed a high quality of life and strong sense of community that draw in
residents and businesses. Today, Carmel faces a crucial point of adapting to ‘the new normal’ in
order to continue its innovation and prosperity.
This section presents key takeaways from our comprehensive analysis of Carmel ’s current
conditions and its key regional competitors. Through data analysis, stakeholder conversations,
and benchmarking against successful case studies, we have gained valuable insights that shed
light on Carmel's current position and future potential. These findings informed actionable
recommendations to support the city's vision and ensure its strong advantage in the region
presented in this section.
Key Takeaways
Takeaway #1: National and regional market trends indicate a shifting demand towards
mixed-use, amenity-rich districts outside of traditional downtowns.
Market trends in Carmel’s competitor cities within the region reflect national trends, including a
notable shift in demand within the real estate sector. As of 2023, there is a growing emphasis on
new property types and locations for office, residential, and retail purposes , leaning into greater
demand for mixed-use developments. As the market evolves, investors, developers, and
businesses must be attentive to emerging opportunities to capitalize on the region's growth and
emerging potential.
ECONorthwest 36
Shifting from Downtown to
Suburbs
Given the influence of commuting and
remote work trends, office market trends
are one important indicator of regional
changes and where employers decide to
locate. With greater flexibility offered by
remote and hybrid work, more places in
Hamilton County could begin to compete
with Carmel in coming years if emphasis
on Downtown Indianapolis continues to
decline.
Over the past five years, Carmel’s
Rangeline corridor, which offers premium
office space around the city’s Monon
Greenway, has seen vacancies drop
sharply as rents rise, indicating a strong
demand in the area. During this time
period, Downtown Indianapolis’s office
space has seen steadily increasing
vacancy and virtually stagnant rental
rates.
Similarly, vacancies for multifamily units
are higher in Downtown Indianapolis
compared with the Rangeline corridor.
Although Downtown Indianapolis slightly
outpaced Carmel overall in terms of
multifamily rents and vacancy rates,
Rangeline continues to show its
competitive edge.
The high performance of both multifamily
housing and office space in Rangeline
compared to Downtown Indianapolis’s
historically strong market indicates the
success of the area’s mixed-use,
pedestrian-scale development. The low
vacancies in the Rangeline area’s
markets indicate that Carmel would be
able to absorb new mixed-use
developments in similarly configured
areas.
Exhibit 34. Office Rents PSF and Vacancy Rate,
Rangeline and Downtown Indianapolis, 2013 to 2022
Source: CoStar
Exhibit 35. Multifamily Rents PSF and Vacancy Rate,
Rangeline and Downtown Indianapolis, 2013 to 2022
Source: CoStar
The national and local market is witnessing a transition towards demand for mixed-use areas
and well-connected communities that break from the traditional suburban separation of spaces
for living, working, and recreating . Beyond traditional office spaces, there is an increasing
ECONorthwest 37
demand for flexible workspaces, co-working facilities, and mixed-use developments that
integrate residential and commercial spaces with public spaces. Investors will increasingly
consider these new property types to cater to evolving consumer preferences.
Homebuyers and renters are also seeking different living
experiences, which fuel a growing demand for innovative
residential developments. Properties offering modern
amenities, middle housing types, sustainable features, and
proximity to urban-style centers continue to be gaining
traction. Builders and developers should focus on creating
attractive residential spaces that cater to the changing
lifestyle needs of potential buyers. As retail spaces also
adapt to the rise of e-commerce and changing consumer
habits, prime locations are shifting, and businesses are
seeking out areas with high foot traffic, good accessibility,
and a blend of in-person experiences. Retail developers
may begin to see opportunities to locate alongside
suburban offices and multifamily developments in
communities like Carmel and its peers.
Takeaway #2: Carmel’s Rangeline corridor is well positioned as the premier walkable
district in the region to capture demand for new commercial and residential types.
While established employment and commercial areas of Carmel like the US-31 and E 96th Street
corridors remain active, attention is turning towards emerging neighborhoods and districts like
the Rangeline area along the Monon Greenway. Infrastructure improvements, cost advantages,
and potential for growth are attracting real estate investments in these locations. Investors need
to assess the long-term potential of these areas, considering factors such as transportation links
and planned developments in traditionally auto-oriented areas.
What is Middle Housing?
Middle housing refers to moderate
density housing types that fall in between
traditional single-family homes and larger
apartment buildings. Middle housing can
include accessory dwelling units (ADUs),
duplexes, cottage clusters, and
neighborhood-scale mixed-use/live-work
buildings. These housing types can offer
moderate density to improve walkability
while still matching the existing
character of a neighborhood. Middle
housing is often effective at meeting the
needs of certain households such as
seniors seeking to downsize, early career
workers, and young families.
ECONorthwest 38
Changing Suburban Demand
Larger trends are showing that more
employers and residents in major cities
are looking to suburban areas like
Carmel as desirable locations. However,
many are beginning to seek new
options beyond traditional single-use
office parks and low-density single-
family homes.
Within Carmel, mixed-use districts are
already showing to be extremely
competitive in the market for office
space. The US-31 corridor which has
traditionally been home to some of
Carmel’s premier office space has been
outpaced by the Rangeline corridor in
the past five years in terms of rents.
While vacancies for both areas have
fluctuated, Rangeline’s extremely low
inventory of vacant office space
indicates continuing strong demand
from tenants in Carmel, and
particularly within areas like
Rangeline with access to a number of
lifestyle amenities. Although US-31
has long served as a regional
employment hub, its auto-oriented,
single-use office spaces are beginning
to experience vacancies more similar
to Downtown Indianapolis (
Exhibit 34).
In the multifamily market, units
available along US-31 are in high
demand, with a low vacancy rate
indicating that there is room to expand
new housing options along this corridor.
Exhibit 36. Office Rents PSF and Vacancy Rate,
Rangeline and US-31, 2013 to 2022
Source: CoStar
Exhibit 37. Multifamily Rents PSF and Vacancy Rate,
Rangeline and US-31
Source: CoStar
As of 2023, Carmel is seeing the benefits of its strong reputation for high quality of life and
premier office, residential, and commercial spaces in the region. Right now, the City is primed
to take advantage of the next generation of investment in Carmel as a close -in suburban city as
residents and employers look outside of Downtown Indianapolis to live, work, and play.
Setting the stage for new opportunities while the market is still in a state of change can ensure
that the City continues to see successes like the Rangeline corridor and revitalize its legacy areas
like US-31.
ECONorthwest 39
Takeaway #3: The role of the city is to catalyze development that meets the needs of
residents and increases livability by investing in high-quality amenities.
Cities have a limited but potentially powerful set of tools at their disposal to position
themselves for economic success. Local regulations, policies, and partnerships with the private
sector can help to foster thriving communities that increase quality of life for residents. In recent
years, the City has taken strategic steps to successfully attract businesses and residents in line
with changing demand and demographics in the region. The City has also maintained sufficient
flexibility in regulations and policies like zoning and parking requirements to continue
attracting investment in office, retail, and residential development.
The City’s vision for developing the Monon Greenway, implementing tax increment financing
in key areas, developing excellent transportation infrastructure throughout the city , and
strategically partnering with the private sector has yielded a number of benefits for Carmel
residents. Successful strategies like providing funding from tax increment financing for
structured parking in up-and-coming areas have allowed Carmel to build moderate density in
its central commercial areas and respond to increasing preferences for walkable, pedestrian-
scale districts.
The City’s Role in Development
Over the past two decades, the City has
followed a vision to transform the former
railroad line adjacent to Rangeline Road
into a vibrant district in the heart of
Carmel. The Carmel Redevelopment
Commission’s successful public-private
partnerships have resulted in an
unprecedented influx of mixed-use
development in the city, encouraging
active transportation and public
gathering spaces.
When developing large projects,
assembling multiple adjacent parcels
under single ownership can be
challenging. Cities can assist this
process through programs to acquire and
consolidate parcels into larger
development sites. This parcel
aggregation reduces costs and
complexities for developers compared to
negotiating with multiple landowners. By
facilitating the land assembly process,
cities make investment in community-
serving projects like affordable housing
more financially feasible.
Exhibit 1. Monon Greenway Bicycle and Pedestrian
Paths in the Rangeline Corridor
Source: ECONorthwest
ECONorthwest 40
Takeaway #4: Carmel’s auto-oriented corridors must adapt to stay competitive.
Despite recent progress, Carmel’s employment
and commercial areas with a more traditional
suburban format are oversupplied and under-
amenitized compared to the key demand drivers
in today’s market, despite the growing
concentration of new Class A office in some areas
(Exhibit 38). As more businesses and households
seek out compact, walkable neighborhoods,
corridors like US-31 and E 96th Street are not yet
reflective of these trends. Positioning these
established areas for a gradual transition to
mixed-use districts presents a unique opportunity
to create vibrant, sustainable, and economically
thriving spaces in Carmel.
By strategically integrating residential,
commercial, and recreational elements, the city
can foster a sense of community, enhance quality of life, and attract both residents and
businesses. Retrofitting old office parks by redeveloping parking areas is one way to build
complementary growth in these auto-oriented areas both through vertical and horizontal
mixed-use development depending on site-specific conditions. In some cases, redeveloping or
expanding existing buildings or new infill development in lower-density areas may be the more
appropriate and feasible option for creating more amenity rich districts . The City can also
support this by continuing to build out bicycle and pedestrian infrastructure and public gather
spaces in these areas to ensure that they are connected and able to attract visitors and residents
to new areas.
Exhibit 38. Share of Office SF by Class,
Carmel, 2023 YTD
Source: CoStar
ECONorthwest 41
Suburban Market
While Carmel is currently well positioned
for changing market demand in some
areas, other cities in southern Hamilton
County are also following the trend
towards mixed-use centers.
In Fishers, the Nickel Plate district has
received an influx of public and private
investment into new development and
infrastructure similar to the Monon
Greenway area. Although Fishers has
less direct access to central Indianapolis,
the declining emphasis on connectivity to
the city’s Downtown and greater location
flexibility for employers and workers
gives it potential to offer a similar value
proposition to Carmel as it builds out
new areas like Nickel Plate.
Rents for office and multifamily real
estate have risen over the past decade
in Carmel and Fishers. While Nickel Plate
remains slightly below the performance
of the Rangeline corridor, the district
continues to outpace Fishers overall
(Error! Reference source not
found.Exhibit 18 and Exhibit 28).
The Nickel Plate district’s fluctuations in
vacancy (particularly for multifamily
residential) generally track new
deliveries coming online, while rents
continue to closely track Rangeline.
If Carmel is not able to meet increasing
demand by transforming some of its
currently auto-oriented development
patterns to meet changing preferences,
other areas in the region like Nickel Plate
may begin to capture more of this
audience.
Exhibit 39. Office Rents PSF and Vacancy Rate,
Rangeline and Nickel Plate District, 2013 to 2022
Source: Costar
Exhibit 40. Multifamily Rents PSF and Vacancy Rate,
Rangeline and Nickel Plate District, 2013 to 2022
Source: CoStar
ECONorthwest 42
Recommended Strategies
Carmel’s Objective Moving Forward: Think Big, Think Long-Term, Stay Committed
Carmel achieved its vibrant, mixed-use core that attracts residents and businesses through a
bold vision that enabled market demand among growing industries like health care and real
estate for its amenity-rich hubs and easy proximity to central Indianapolis by major regional
thoroughfares. The role of the City was to initiate and catalyze a larger vision for the core,
bringing in partners from the private sector. The City should continue to have a
comprehensive, bold vision for the city, even if its role may be able to shift from initiator to
facilitator.
Strategy 1: Integrate Rangeline with Surrounding Areas.
As the Rangeline area thrives, Carmel can strategically extend the corridor to better integrate
with nearby neighborhoods and foster future mixed-use nodes with locally-serving businesses
throughout Carmel. This strengthens both communities: it allows those in the Rangeline area to
access more resources outside of the corridor and it allows those in surrounding neighborhoods
to connect more easily with the trail, restaurants, and workspaces that now run along the
Monon Greenway. In addition to improving the bike, pedestrian and vehicular connections,
blending in transitional edges of the built environment to smoothly change from a low to higher
density environment will help provide a greater mix of building types to support the new
demand that exists. This strategy highlights potential regulatory changes and infrastructure
improvements that the City could implement to integrate Rangeline with surrounding areas
and foster connected mixed-use districts in Carmel.
Action 1: Address Zoning Barriers for Mixed-Use Development
Ensuring that zoning and regulatory policies around key commercial and employment areas
align with the City’s intended strategies will successfully position Carmel for mixed-use
development and new formats of retail, office, and residential space. Density requirements in
core areas around the Rangeline corridor are already generally well-aligned with best practices
for mixed-use developments.
Along US-31, the special MC zone which allows targeted types of development for employment
and complimentary uses provides a good example of what the City could seek to implement at
a smaller scale both in potential neighborhood nodes and along the E 96th Street corridor. This
zone specifically allows for a greater number of uses and more intense development along this
major local and regional road in order to foster a more pedestrian -friendly district with
transition zones to surrounding single-family residential neighborhoods.
ECONorthwest 43
Carmel Mixed-Use Zoning
The US-31, Rangeline, and E 96th Street corridors are characterized by commercial business (B) and
mixed-use (C) zones, as well as Planned Unit Developments (PUDs) and small areas of Urban
Residential (UR) and Urban Core (UC) between the higher intensity areas of the US -31 and Rangeline
corridors. Although there are also clusters of Industrial (I) and Manufacturing (M) zoning in this area,
many parcels today are occupied by commercial offices or residential buildings.
The Meridian Corridor (MC) is a special designation targeted at supporting employment and
complimentary uses on parcels adjacent to US-31 to serve both local and regional users, which allows
for mixed office, retail, residential, and entertainment uses. Th e City also has several overlay zones,
including the Home Place, Monon Greenway (MG-OL), Home Place (HP-OL), Range Line Road (RL-OL),
and Old Town (OT-OL) Overlays.
Outside of these major corridors and some auto-oriented neighborhood shopping centers, much of
Carmel is designated for low-density residential use (S and R), with some moderate density up to 8
dwelling units per acre in transitional areas. S1, S2, R1, and R2 allow only for single-family residential
use.
Exhibit 41. Citywide Zoning Map
Source: City of Carmel
Although zoning around US-31 is amenable for mixed-use development, the City should
consider refinements that enable a wider range of these projects. We identified the following
adjustments to consider:
▪ Create flexibility for setbacks and height requirements in the Meridian Corridor that
align with more pedestrian-orientated uses. Current zoning requires wider setbacks
and lower building heights for MC parcels that are adjacent to single -family areas. While
commercial parcels are generally large along US-31, many are situated next to R-1 or S-2
residential properties that allow only single-family homes, which restricts building
height to 2 stories. Implementing step backs where upper floors are recessed can
ECONorthwest 44
mitigate the impact of new buildings on residential areas but also create more
development opportunity on portions of the site further away from residential areas.
Flexibility for the 20–30-foot front yard setbacks on local, arterial, boulevard, and
collector streets should also be considered alongside new transportation investments to
support a more pedestrian-oriented environment along new bicycle and pedestrian
improvements.
▪ Provide flexibility in ground floor requirements and uses to allow for scaled
redevelopment, particularly for large-floorplate commercial buildings. The MC and
UC zones currently only allows for multifamily housing on upper floors, which would
require mixed-use developments to entirely fill the ground floor with other uses such as
retail, services, and offices. The large floor plates of many existing buildings and
generally large parcels may make it difficult to fill the entirety of these spaces with
nonresidential uses for new construction or conversion projects. Allowing for active
ground floor design in lieu of or as a portion of current commercial requirements could
maximize flexibility for mixed-use developments with a residential component.
▪ Add flexibility in existing mixed-use districts for both vertical and horizontal mixed -
use development with different configurations of residential units. In addition to the
potential for vertical mixed-use development, horizontal mixed-use buildings may be an
opportunity especially on larger sites with existing assets (like office buildings) but
where infill around the site could happen and support office demand. Adjusting ground
floor retail requirements could include specific options for horizontal mixed-use that still
incorporates commercial uses, but better utilizes existing large lots in MC and UC zones.
Action 2: Support the integration of bike and pedestrian infrastructure to promote a
more pedestrian-friendly environment.
The city can utilize its role in public space planning and infrastructure investments to further
enhance walkability and bike-ability around the Monon Greenway and Rangeline area. There
are a variety of minor improvements and strategic actions the City could implement over time
as opportunities arise:
▪ Prioritize bike and pedestrian network connections to surrounding neighborhoods and
areas to the Monon Greenway. This could involve building new dedicated
bike/pedestrian paths or improving sidewalk connectivity and continuing to install safe
street crossings to link nearby residential areas.
▪ Enhance trail access points with amenities like bike parking, wayfinding signage, and
lighting both on the Monon Greenway and future offshoots. Provide clear and visible
entrances to the trail to make it easy for residents to access.
▪ Improve road crossings and intersections near the Monon Greenway and other
multimodal corridors to prioritize pedestrian and cyclist safety. This could include
ECONorthwest 45
features like pedestrian islands, crosswalk markings, traffic calming elements, and
signals.
▪ Work with developers to require or incentivize pedestrian/bike infrastructure and trail
connectivity in new projects adjacent to multimodal trails as requirements for sidewalks,
bike lanes, trails can extend the network. Carmel’s Comprehensive Plan includes a menu
of street-side components for different street typologies, including off-street and
curbside facilities; it will be key to implement these around new development areas.
Exploring wayfinding and streetscape themes to connect changing districts like US-31
can help to enhance their desirability for users and investors.
▪ Convert underutilized right-of-way or vacant space near the bicycle and pedestrian
network into linear parks and paths. Repurpose space to create greenways and trails.
▪ Continue to implement traffic calming and speed reduction strategies on roads
crossing the Monon Greenway and key bicycle/pedestrian routes to improve safety and
comfort. Elements like speed humps, chicanes, and road narrowing can reduce speeds.
▪ Provide amenities like benches, water fountains, public art, and landscaping along the
full length of the trail and connecting paths to create an appealing environment for
walking and biking.
Although public-private partnerships have often been successful in Carmel, the role of the
public sector in private development can be complicated and open to misinterpretation.
However, the role of the public sector in ensuring public amenities is generally a simple, risk -
averse way of both supporting city residents and private property owners in the area.
Strategy 2: Support Phased Redevelopment on Large Office Sites
Large-format suburban offices that are home to corporate headquarters, medical offices, and
major employers along the US-31 corridor have long been an important factor in Carmel’s
economy. However, in the wake of the COVID-19 pandemic, changing trends in remote work,
commuting patterns, and lifestyle preferences have shifted demand away from large volumes of
parking towards more pedestrian-oriented areas. There is an opportunity now to pursue
amenity-rich infill development and targeted redevelopment of underutilized space to support
existing office buildings with desirable features for office tenants, employees, and residents.
Transforming seas of asphalt parking lots into vibrant mixed -use communities represents a
major opportunity, albeit not without challenges. Creative solutions to issues like restrictive
parking agreements and onerous lending requirements will be needed. Using TIF has allowed
many of these buildings to include structured parking to modestly increase density along
certain corridors and improve the quality of transportation infrastructure. In return, important
local and regional employers have contributed to the strong tax base and employment options
available in Carmel. In response to changing trends, the City should work with stakeholders
including property owners, developers, and tenants to navigate potential redevelopment
ECONorthwest 46
opportunities that reposition Carmel’s existing building stock to remain competitive for
attracting employers and residents in the region.
Action 3: Develop a Parking Strategy
In many communities, user demand and local requirements for parking are major barriers for
creating walkable, mixed-use districts. In suburban cities like Carmel, many people depend on
traveling by car, but there is an increasing desire for denser, more pedestrian-friendly areas.
Developing a targeted plan for parking can have a number of benefits that stem from using land
effectively to create more vibrant, sustainable, and cost-effective communities.
Implementing shared parking policies that allow for complimentary uses to share space and
right-sizing parking requirements can allow land to be efficiently repurposed for infill
development or public amenities. With policies that account for different demand patterns
between different users (such as office, retail, and residential), cities can help to reduce the
amount of space required for parking, reducing costs for developers and encouraging more
walkable centers.
Supporting structured parking near central, high-volume locations can also help to manage
demand in more land-constrained areas. However, garages to accommodate automobile users
are typically an expensive component of construction that can impact the feasibility of new
projects. This is particularly true for any developments planning to incorporate public benefits
like below-market-rate units for workforce housing. Public funding for structured parking is
one strategy which has been used successfully in Carmel that allows denser development in
centers like Carmel’s Arts and Design District and City Center to be feasible , while working
with developers to ensure public benefits in exchange for public funding.
Privately-owned surface parking and garages are both typically considerable assets for
investors and property owners, particularly in areas like Carmel seeing increased density but
with little to no existing transit infrastructure.46 For lenders and owners to see the value in
forgoing a portion of parking space in favor of infill redevelopment for office, retail, or
commercial uses, there needs to be some assurance that assets will not lose value in this
transition. Demonstrating that effective strategies are being implemented can help to reach
agreements for repurposing parking space for infill uses. Local government can take some
steps to help foster this type of area which yields benefits for residents, businesses, and the
environment:
▪ Encourage shared parking solutions in auto-oriented commercial corridors. For
Carmel’s traditional, auto-oriented office parks and commercial districts like US-31 and
E 96th Street developing a shared parking strategy can help to reduce the need for large
surface parking lots, allowing land to be used for small retail or services or
46 Daniel Flynn, “Parking Industry: Strategic Considerations for Investors” (JLL, January 16, 2019),
https://www.us.jll.com/en/views/parking-industry-considerations-for-investors.
ECONorthwest 47
redevelopment of parking structures. The City can encourage and promote this option
and help to support creative solutions like it has done in the Rangeline area.
▪ Allow flexibility for parking requirements in mixed-use development to meet market
demand. Carmel provides some flexibility for parking requirements in its current
development standards, particularly in its MC, UR, UC, and C zones targeted for mixed-
use development. Extending flexibility for the number of required parking spaces in
mixed-use buildings and simplifying requirements by use type can help to encourage
developers to find more efficient solutions while meeting market demand.
▪ Partner with developers to ensure user needs are met such as the City providing
incentives to support the viability of a development. The City of Carmel has done an
effective job in working with development around the Monon Greenway in recent years.
The City has helped to find solutions through providing partial public funding for
structured parking.
Action 4: Continue the City’s successful approach of requiring shared public amenities
in exchange for incentives like TIF.
The City should continue to cultivate public-private partnerships that yield tangible community
benefits by incentivizing the private sector. This strategy ensures that public dollars amplify
both private investments, create economic opportunities, and enhance the public realm.
Carmel’s Comprehensive Plan has objectives around improving mobility options , investing in
public infrastructure, and planning for transit-supportive density, scale, and last-mile
connectivity in applicable areas, including US-31. Today, the City partners with Hamilton
County’s public transit system to offer origin-to-destination services, including mobility device
users and older adults. As Carmel grows, providing options to move people efficiently to and
from high-traffic centers will be key to continuing making them successful, accessible, and high
quality.
As areas around commercial and mixed-use hubs begin to see increased density, the City
should continue to track transportation needs associated with new development. Expanding
transit options in core areas can help to reduce congestion, avoid pressures on parking
availability, improve air quality, and attract more customers and workers to businesses.
Investing in new public realm improvements around future transit stops and encouraging
transit-oriented development can help to ensure that Carmel can leverage these investments to
attract visitors, workers, and residents.
ECONorthwest 48
Developers interested in repositioning traditional single -use office buildings or other low-
density suburban properties face challenges around gaining approval from lenders , negotiating
lease terms with current tenants, and navigating a relatively small field of architectural and
engineering expertise. The City can help to catalyze these projects that bring more needed types
of housing options and public amenities in several ways:
▪ Demonstrate the viability and successes of mixed-use
developments as great examples of office repositioning to get
financial support from lending institutions. In addition to
parking strategies, demonstrating the success of well -connected
mixed-use projects with multifamily housing, pedestrian -
oriented commercial uses, and premium office space can help to
ease hesitancy from financial institutions around repositi oning
traditionally well-performing office space. While the City may
be limited in its ability to provide guidance around
renegotiating leases or financing terms, it can help to address
concerns about the availability of parking and automobile
infrastructure by demonstrating the success of mixed-use
development that has resulted from public-private
partnerships.
▪ Communicate a comprehensive strategy around infrastructure investments to support
phased redevelopment and use strategic infrastructure investments as a catalyst for
Tax Increment Financing (TIF)
In Indiana, using TIF as a tool for
development requires an economic
redevelopment area to be
established that includes specific
geographic boundaries. For twenty-
five years, all increases in business
property taxes in excess of the
amount received in the base year go
into a fund for redevelopment like
parking garages, streetscape
features, and infrastructure.
In Carmel today, existing TIF districts
already cover many parcels along the
Rangeline, US-31, and E 96th Street
corridors, meaning that the City can
begin this action within existing TIF
districts.
Exhibit 42. Map of TIF-Applicable Parcels in Central Carmel
Source: City of Carmel
Appendix A of this
document includes case
study examples in
comparable communities
that could help to
highlight the potential of
repositioning office space
in communities like
Carmel. Educational
materials and a
comprehensive strategy
may help to reassure
office tenants and
building owners as the
City seeks to capitalize on
changing trends.
ECONorthwest 49
development. Looking ahead, strategic infrastructure investments can catalyze
development and regenerate neighborhoods. Breathing new life into obsolete office
parks curbs vacancies and boosts tax revenue, making redevelopment an important
consideration for City investment. It can also be a critical consideration for developers,
lenders, and tenants to understand how new infrastructure will impact phased
redevelopment.
▪ Look towards potential for investment around future transit options. Carmel today
has a limited set of origin-to-destination transit options operated through partnership
with Hamilton County. As the City continues to grow up rather than out, it may seek to
increase its range of transit services along major corridors like US-31. Developing public
amenities around station areas and incentivizing private investment in around these
nodes can help to maximize benefits for residents’ quality of life and businesses’
visibility and accessibility for workers.
Strategy 3: Keep Carmel an Accessible Community for Workers
to Live in
Housing production in Carmel has not kept pace with growth, reducing workforce housing
availability and creating challenges for meeting the needs of some households. Balanced growth
should remain top-of-mind as Carmel plans its future. Developments blending high-end
offerings with workforce housing will allow more residents to partake in the city's continuing
prosperity. With mindful planning and partnerships, Carmel can foster inclusive growth and
communities imbued with a distinct sense of place.
Alongside Carmel’s success in attracting employers
and lifestyle amenities, it will also need to consider
how the City can ensure that those who live and work
in Carmel can afford to find suitable housing.
Exploring options for new multifamily housing units
and moderate-density middle housing types can help
to provide a broader range of options for residents
including early career workers, young families, and
retirees.
Action 5: Support Office-to-Residential
Conversion
Office-to-residential conversion of obsolete office
stock is gaining increasing attention nationally as a
way to add multifamily housing and redevelop
underperforming assets. Older suburban office parks
like those in the US-31 corridor have sometimes
become opportunities for redevelopment or adaptive
Project Financing Context
The construction industry is facing considerable
challenges financing projects in the current
economic climate. Rising material and labor
costs due to high inflation and supply chain
issues have made budgeting for projects more
unpredictable. Meanwhile, rising interest rates
have made financing more expensive, with
construction loans requiring higher interest
payments. With elevated costs and borrowing
expenses, developers may struggle to secure
favorable financing terms for new projects, or
lenders may impose stricter lending standards.
These financing difficulties come at a time
when the demand for new construction is high
across many sectors like housing, offices, and
infrastructure. Managing project costs and
obtaining funding is crucial but increasingly
complex for construction firms in this
environment of cost escalations and limited
capital availability. The industry must adapt
financial planning and underwriting approaches
to account for inflation and identify creative
funding sources to keep projects viable.
ECONorthwest 50
reuse, as more companies and workers perceive them as obsolete in terms of amenities and
design (see Appendix A for case study examples).47 Many of these buildings are part of
sprawling corporate campuses with lower heights and wider footprints than offices in central
downtown areas, and many are also occupied by large, single tenants.48 Some of these buildings
can be attractive for residential development from a physical and financial standpoint if they
have floor plates which offer access to operable windows and open floor plans that can be
configured into residential units (or low enough height to add an atrium).
However, location among other office park buildings which continue to serve corporate
functions, large parking lots, and few retail options may limit the attractiveness of these
properties for residential use. Developing a mix of uses around these areas that can attract and
sustain residents and visitors is a key consideration for Carmel as it thinks about partnerships
and creating a cohesive vision for US-31 and E 96th Street.
In general, office-to-residential conversion units are likely to produce market rate multifamily
units.49 Converting office space to residential units has different financial considerations than
ground-up construction because it requires acquisition of a performing asset; in most cases, this
involves higher costs than acquisition of vacant land or tear-down structures.50 If vacancy rates
in a building are above average compared with the local market while higher demand for
residential units promises greater revenues as multifamily rentals, there may be a sufficient
incentive for property owners to pursue conversion projects.
These projects can still be risky, given the relatively small field of architectural and engineering
experience related to office-to-residential conversion, potential for unknown challenges with
reconfiguring buildings, and lingering uncertainty around remo te and hybrid work trends.51
The City can potentially help to:
▪ Highlight and market new opportunities of federal funding for office to residential
conversion to property owners and investors. New upcoming federal funding available
for office to residential conversions can also help to make projects more feasible.52 City
staff can potentially help to highlight these opportunities for developing large mixed -
use areas with multifamily housing that is likely to be more attainable to the workforce.
47 Dustin C. Read, “Profiles in the Evolution of Suburban Office Parks” (National Association for Industrial and Office Parks,
August 2019).
48 Ibid.
49 Anjali Kolachalam, “Office to Residential Conversions: Scalable Opportunity or Too Unique to a City Block?” (Washington DC:
Up for Growth, November 2022).
50 Ibid.
51 Richard McGahey, “Converting Offices to Residences Can Help Fight the Housing Shortage,” Forbes, December 9, 2022,
https://www.forbes.com/sites/richardmcgahey/2022/12/09/converting-offices-to-residences-can-help-fight-the-housing-
shortage/?sh=139de24f7eb3.
52 US Department of Housing and Urban Development, “Exploring Office to Residential Conversions,” 2023,
https://www.grants.gov/web/grants/view-opportunity.html?oppId=349496.
ECONorthwest 51
▪ Support and remove barriers to tenant improvements to upgrade lower class office to
premium spaces. Upgrading aging office buildings with tenant improvements can help
revive class B office space to better meet changing business needs. Streamlining
permitting and zoning to enable mixed-use conversions allows older buildings to adapt
and make renovations to layout and amenities that are more competitive. This can allow
property owners and developers to consider partial conversion to residential units.
Action 6: Allow for Middle Housing in Transition Areas with Development Potential
Middle housing options like duplexes and townhomes are in high demand in Carmel as an
option for moderate density housing around key core areas. On average, single-family homes in
Carmel come at a higher price point than any of its competitors in the northern Indianapolis
area suburbs (Exhibit 32). While townhomes in the city also come at a relatively high price point
for the region, they are generally more attainable to moderate-income, workforce households
than large, detached homes characteristic of much of Carmel.
Accessory dwelling units (ADUs), which have begun to gain some attention in Carmel in recent
years, can also meet a variety of housing needs by providing additional living space which can
accommodate multigenerational households or small-scale rental units in existing communities.
Although a recent ordinance failed to pass in 2021, there could be potential to continue
momentum for incremental allowances for ADUs in more single-family zones. Emphasizing the
ability for ADUs to be consistent with existing neighborhood character and their importance for
age-friendly housing could become an advantage for Carmel as a c ommunity which supports
multigenerational households and aging in place.
Middle Housing In Carmel
In Carmel today, duplexes are permitted within R -3 and R-4 zones, while R-1, R-2, S-1, and S-2
zones are restricted to single-family homes. The R-5 zone which is applicable in few places allows
for more intense multiple-unit development, as well as some of the city’s commercial and
employment zones.
Around the Rangeline corridor, there is a transition from more intense commercial areas to single-
family parcels, with some targeted areas allowing for duplexes and more dense multifamily housing
just adjacent to Rangeline Road and the Monon Greenway. However, the US-31 corridor has a
quicker transition from its MC mixed-use corridor to single-family zones to the west side.
Currently, ADUs are permitted in limited areas of Carmel, including C-1 and C-2 mixed-use zones.
However, these types of units generally fit well with single-family homes as either internal or
detached accessory units. ADUs must confirm to the same height, setbacks, lot coverage, FAR,
landscaping, and design requirements as the base zone.
Exhibit 2. Zoning Map Detail of Rangeline and US-31 Areas
Source: City of Carmel
ECONorthwest 52
In order to accommodate the growing number of workers in Carmel and a variety of
households, the City could help to encourage more types of housing options. Although
allowing for moderate density does not guarantee that it will be built, the City could proactively
make the following adjustments to open the door for development if there is sufficient demand:
▪ Consider new options for ADUs by expanding allowances for ADUs in single family
zones as incremental approach to adding new residential units. Current zoning allows
for either one attached or one detached ADU per property in limited areas. The City
could consider expanding allowances for ADUs to single family zones as a first step,
with an incremental approach for allowing internal units such as basement or garage
conversions.
▪ If uptake of ADUs increases (along with public support), allowing for a second
accessory unit with requirements that help to preserve existing neighborhood
character. For instance, the City could allow for an internal conversion ADU on
properties that already have a detached unit to allow for moderate density increases
within existing structures.
▪ Explore areas to expand middle housing allowances near major corridors like US-31
or E 96th and strategically upzoning areas near new mixed-use developments. If there
is development capacity and potential opportunities for redevelopment in areas adjacent
to major corridors like US-31 or E 96th Street, the City could consider strategically
upzone parcels near new development, allowing for middle housing types like
townhome or duplex development.
ECONorthwest 53
Moving Forward
With its reputation as a premier location in the region, Carmel must take bold steps to retain its
competitive edge. While the Rangeline corridor showcases the city's prowess in cultivating
dynamic urban places, aging office parks and auto-centric corridors now lag behind evolving
market demand.
Through nimble zoning, tactical infrastructure investments, and creative public -private
partnerships, Carmel can catalyze the gradual metamorphosis of these areas into vibrant mixed -
use nodes. Seamlessly connected by walkable streets and trails, a necklace of urban centers will
emerge, each with distinct character.
To thread this vision into reality, flexibility and collaboration will be instrumental. Carmel must
embrace its vital role as a public partner focused on enriching public spaces, sparking
investment, and enhancing quality of life. By taking purposeful steps together, Carmel can
transform its possibilities into progress, retaining its place as a regional model for decades to
come.
ECONorthwest 54
Appendix A. Office Repositioning Case Studies
Case Study 1: Attracting Millennials Leaving the City for the Inner Suburbs
Project: Park + Ford
City: Alexandria, VA
Year Built/Converted: 1967/2021
Units Produced: 435
Building: 450,000 SF (across two
roughly equally sized 14-story
buildings), with 90 x 180 ft.
rectangular floor plates
Vacancy: 38%
Conversion Cost Per Unit: $271,264
Context: Park + Ford is located on the west side of Alexandria, an i nner ring suburb within the greater
Washington D.C. market. Alexandria is part of a well-connected region, but the project site is located
away from major transit lines in a more auto-oriented area with easy highway access and growing
connectivity to regional bike trails. Before conversion, it primarily hosted federal agencies as tenants.
Project Description: In 2020, Lowe and USAA Real Estate began pursuing residential conversion for the
majority of two buildings located near the interchange of I-395 and King Street. In the wake of the
COVID-19 pandemic, the building saw rising vacancies in former office tenan ts. The development team
saw the opportunity to reposition these properties into mixed -use residential buildings, with a focus on
attracting millennials moving from the city to lower density suburbs with easy access to highways.
The new units in Park + Ford offer apartment residences larger than those which are typically
developed as new construction in the Washington D.C market in order to utilize interior floor space . To
be attractive to young professionals, the building offers a number of premium amenities and ground
floor retail. Additionally, the project transformed 10,000 square feet of structured parking space into a
daycare to add value for young families.
Outcome: After occupancy, Park + Ford has exceeded its pro forma expectations and saw a faster
uptick in occupancy than anticipated with remote workers leaving the city during the pandemic.
Sources:
• https://www.bisnow.com/washington-dc/news/multifamily/construction-begins-on-435-unit-office-to-
residential-conversion-in-alexandria-106567
• https://www.businesswire.com/news/home/20220629005344/en/Lowe-and-USAA-Real-Estate-Unveil-Park-
Ford-Transformation-of-1980s-Era-Office-Complex-Into-Modern-Apartments-in-Alexandria-Virginia
• https://www.nmhc.org/globalassets/research--insight/research-reports/conversion/behind-the-
facade_conversion-report.pdf
ECONorthwest 55
Case Study 2: Transforming Office Parking Lots to Multifamily Housing
Project: Link Apartments
City: Charlotte, NC
Year Built/Converted: 2020
Units Produced: 553
Building: N/A
Vacancy: N/A
Total Cost Per Unit: $300,000
(approx.)
Context: The Link Apartments are
located in Charlotte, North Carolina
outside of the city’s central business
district (CBD). At the time of
construction, the Little Sugar Creek
greenway had recently been
extended to the area (providing
improved bike access) and another
new renovation project nearby
created a new anchor for dining and
shopping within walking distance.
Project Description: In 2014, Grubb Properties purchased two old mid-century office buildings located
in a developing area outside of Charlotte’s downtown area, including ten acres total of the two
buildings and their large surface parking lots. In the following years, the dev eloper first renovated the
outdated offices into premium Class A spaces, and then repurposed the parking lots for new
construction multifamily housing. The process involved rezoning the land for multifamily use and
making a number of public realm improvements to sidewalks surrounding the buildings. The final
project includes a shared parking garage to serve both office and residential tenants.
Outcome: According to Grubb Properties, the method of converting suburban office parks has been
beneficial in this case and others, “By re-zoning the land for multifamily use, we essentially got the land
for free. This is particularly powerful in urbanizing parts of cities like this one where land is expensive.
In these areas, surface parking is a very poor use of that precious ‘resource.”
Sources:
• https://www.grubbproperties.com/blog/great-unpaving-transforming-parking-lots-neighborhoods
• https://www.fastcompany.com/90876627/how-parking-lots-across-the-u-s-are-being-turned-into-housing
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After
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Case Study 3: Pivoting New Suburban Class A Office for Mixed-Use Development
Project: Six at Park
City: Parkville, MO
Year Built/Converted: 2019/2020
Units Produced: 27
Building: 54,000 SF, (half MF, half
office), 100 x 120 ft. rectangular floor
plates
Vacancy: 40% pre-leased as
prerequisite for construction
Conversion Cost Per Unit: $66,667
Context: Parkville, MO is an affluent Midwestern river town with historic charm located approximately a
20-minute drive to Kansas City. Like Carmel, the small city is home to corporate headquarters and prior
to the COVID-19 pandemic had a higher rate of residents commuting to an d from Kansas City. Six at
Park is located along Missouri’s Route 9, a regional connection to the CBD next to Park University.
Project Description: During construction which began in 2019, the Foutch Brothers development team
saw an opportunity early in the onset of the COVID-19 pandemic to pivot to a mixed-use office and
residential building. Meeting the growing wave of remote work, the developer swi tched from an all-
office plan to a split of half-office and half-apartment early in 2020.
The development received support from the Parkville Old Town Community Improvement District (CID)
and the City of Parkville for developing parking space to be shared between office tenants, residents,
and visitors to Old Town.
Outcome: The project had a positive financing experience, with the initial office loan able to cover
apartments when reassessed. Six at Park met pro forma expectations, and although the target market
was students because of the building’s proximity to Park Universi ty, it ultimately saw most units
occupied by workers at corporate offices in Parkville.
Sources:
• https://www.bizjournals.com/kansascity/news/2021/03/24/foutch-six-at-park-parkville-apartment-
conversion.html
• https://www.nmhc.org/globalassets/research--insight/research-reports/conversion/behind-the-
facade_conversion-report.pdf
• https://parkvillemo.gov/download/SixAtParkIndependentCost-BenefitAnalysis.pdf
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Case Study 4: Renovating Structured Parking to Meet Growing Housing Demand
Project: 508 West Apartments
City: Spokane, WA
Year Built/Converted: 1964/2022
Units Produced: 85
Building: 55,000 SF building + 14-
story 43,000 SF parking structure,
rectangular 87-60 and 48x64 floor
plates
Vacancy: 40-50%
Conversion Cost Per Unit: $176,000
Context: The 508 West apartments
are located in a CBD-adjacent district
in mid-sized city with a cluster of
medical and bioscience industry
employers.
The building’s 14 -level attached
parking garage was originally
constructed with flat floors with
relatively small square footage,
minimizing the need for replacing
entire floors and allowing for natural
light to reach into new units.
Project Description: Developer targeted new remote workers coming into the market for its relative
affordability and concentration of medical professionals. This project leveraged an underutilized
existing parking garage by converting it into residential units alongside the main building’s renovation.
To make the former garage work for residential use, the developer took out every other floor to create
high-ceiling loft-style studio and one-bedroom units. The final product is a mixed-use residential
building with ground floor commercial (including a coffee shop, pharmacy, and hair salon).
Outcome: This project was a risky concept, which is not a typical development in the Spokane market.
The developer obtained a loan from a local financier with interest in the area who trusted
Brumback/Squire’s track record in the region. The building was also a long-term hold which was
seeing increasing vacancy and limited potential to continue as single -use office.
Sources:
• https://www.spokesman.com/stories/2019/dec/20/downtown-medical-office-building-garage-to-be-conv/
• https://www.spokanejournal.com/local-news/brumback-to-convert-qualmed-plaza-into-rental-units/
In Progress
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