United States -  Indianapolis

Overview:

Indianapolis, the capital of Indiana, is the state's largest city and the third-largest city in the Midwest. The city is a primary industrial, commercial, and transportation center for the Midwest, as the most centrally located of the largest 100 cities in the United States. The city is well served by four interstates, six railroads, an international airport, and a foreign trade zone. Indianapolis is also home to seven major colleges and universities, as well as a number of Fortune 500 companies. The economic base is diverse in this market, with strong employers in the medical, education, technology, manufacturing, and distribution industries and sectors. Indianapolis remains one of the largest and fastest-growing medical and pharmaceutical hubs in the United States. Of particular note, Eli Lilly and Company, which is headquartered in Indianapolis, recently completed an 80,000-square-foot expansion of its insulin-manufacturing plant in 2015 and is planning a $70-million expansion of its global research and development headquarters by 2017.
 
Indiana has more manufacturing jobs per capita than any other state, and Central Indiana is a leader in engineering electric car and truck components. A major area employer in this industry is Rolls-Royce, which opened a new $42-million advanced aerospace production and repair facility in March 2015; in October 2015, the company announced a $600-million, five-year renovation to its existing Indianapolis facilities. Moreover, due to Indianapolis' central U.S. location, the city serves as a major distribution and logistics hub. In April 2015, Cummins Inc. broke ground on a $30-million global distribution headquarters in Downtown Indianapolis; the company plans to relocate up to 250 employees and hire an additional 150 employees upon its completion in December 2016. Additionally, Interstate 69 will reportedly be extended north from Evansville over the next several years, connecting to Interstate 74/465 at State Highway 37 in south Indianapolis and eventually opening a direct trade route from Canada to Mexico.
 
In addition, Indianapolis has emerged as a premier youth and amateur sports destination, as evidenced by the opening of the $45-million Grand Park sports campus in nearby Westfield in the spring of 2014. The 400-acre sports mega-park features 26 baseball diamonds, 31 multipurpose fields, and over ten miles of paved trails; its indoor soccer and basketball/volleyball facility opened in January 2016. According to Hamilton County Tourism, Grand Park attracts 1.5 million visitors annually and is anticipated to provide an estimated 40,000 room nights to the local area annually, as well.
 
Located in the heart of Downtown Indianapolis, the Indiana Convention Center, which is connected to Lucas Oil Stadium, currently houses 566,000 square feet of contiguous exhibit space. Since its expansion in 2011, the facility has generated over 730,000 room nights annually, accounting for a significant portion of demand for downtown hotels. Moreover, the convention center broke its record for annual attendance in 2014. However, attendance contracted in 2015 following the state's passing of the controversial Religious Freedom Restoration Act (RFRA) early that year; both the number of events and attendees declined as select events were canceled and people boycotted in protest. However, local officials expect the number of events and attendees to rebound strongly in 2016. Nonetheless, Indianapolis recorded a banner year in 2015, bolstered NCAA Men's Final Four Basketball Championship in early April 2015.
 
RevPAR soared to a new peak in 2015. Given the amount of high-quality new supply anticipated to enter the market in the coming years, average rates are anticipated to continue to increase, but occupancy is forecast to remain relatively flat in the near term. Over 20 hotel transactions occurred in the Indianapolis MSA between January 2014 and May 2016, but only one asset sold for over $140,000 per room—the Hyatt Regency Indianapolis. Overall recorded sales during that period averaged just under $55,000 per room.
 
* The HVI is an index, a statistical concept reflecting a measure of the difference in the magnitude of a group of related variables compared with a base period. As such, it is a measure of broad market trends, rather than a conclusion as to the specific value of any asset, and cannot be applied to an individual asset. A good comparison is the Consumer Price Index. While this index provides a reliable measure of the overall rate of inflation in a region, it does not indicate how the price of milk has changed at your grocery store. So how can the HVI be of use to an individual investor? Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent big picture data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Valuation Trends and Predictions:

Indianapolis United States
Previous Year +2% (21 of 71) +1% (49 of 71)
Growth in 2017 -1% (59 of 71) +2% (36 of 71)
Growth in next 3 years +2% (66 of 71) +10% (36 of 71)

Change In Value For Market:

Indianapolis RevPAR % Change

For more information, please contact:

Jai Patel
jpatel@hvs.com
  • +1 615 473-2447 (w)
Stacey Nadolny, MAI
snadolny@hvs.com
  • +1 419 367-3879 (w)