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Market Insights | Fall 2024 | Lafayette, IN

Fall 2024

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$1,313

Average
Rent

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6%

Average
Vacancy

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3%

YoY Rent
Change

October 14, 2024

The Lafayette-West Lafayette Metropolitan Statistical Area (MSA) is one of the fastest-growing metro areas in Indiana. The region's strategic geographic location in proximity to Indianapolis and Chicago, along with plentiful modern amenities, have defined it as a highly desirable place to live.

Greater Lafayette has been ranked as the No. 1 emerging housing market in the nation for three consecutive quarters by The Wall Street Journal and Realtor.com due to its strong economy, its sizeable and highly skilled workforce, and relative affordability compared to the larger metropolitan areas in the region. Greater Lafayette is progressing into a major technology hub for advanced manufacturing in the industries of aerospace and defense, nanotechnology, agriculture, and medicine.


Employment

Purdue University is the primary economic driver for greater Lafayette and is responsible for over 20% of all economic activity in the region. The Discovery Park District at Purdue is a multi-billion-dollar development that has attracted the global company Saab. Saab will hire up to 300 employees for its new manufacturing facility that produces the T-7 Red Hawk. Also, SkyWater Technology has recently announced plans for a new $1.8 billion semiconductor plant that will create hundreds of jobs in high technology. Purdue University and Ivy Tech are collaborating in the creation of new professional education and training programs to sustain the region’s highly skilled workforce pool. 

As of August 2024: 

  • • Total nonfarm jobs in the Lafayette-West Lafayette metro area was 108,600 in greater Lafayette, up 1.9% YoY compared to 1.5% nationally.
  • • The leisure and hospitality industry sector recorded the highest job growth rate with an increase of 11.2% and a net gain of 1,200 jobs.
  • • Manufacturing reported the most jobs of any industry with 21,000 area residents employed. The job growth rate decreased by 1.4% over the previous year with 300 job losses.
  • • The mean hourly wage for all 22 major occupational categories was $26.73 compared to $31.48 nationally. 

Lafayette had 15,770 jobs in production, accounting for 15.8% of local area employment. The average hourly wage for this occupational group was $23.35, above the national wage of $22.90. Among the higher-paying jobs in this group were stationary engineers and boiler operators and tool and die makers, with mean hourly wages of $34.62 and $32.88, respectively. (Source: BLS, July 2024 publication)

% ∆ from Aug 2023
Metro Area Employment (Thousands)24-AugLafayetteNational
Total Nonfarm108.61.9%1.5%
Mining, Logging And Construction 5.08.7%2.8*
Manufacturing21.0-1.4%-0.2%
Trade, Transportation, and Utilities15.31.3%0.7%
Information0.70.0%0.1%
Financial Activities3.72.8%0.4%
Professional and Business Services9.6-1.0%0.3%
Education and Health Services14.00.7%3.9%
Leisure and Hospitality11.911.2%1.7%
Other Services4.25.0%1.1%
Government23.20.9%2.3%

Source: Bureau of Labor Statistics


Rental Market

Multifamily demand remains strong in greater Lafayette with a 12-month asking rent growth rate of 4.5%. Rents increased at an annual rate of 4.5% during Q3 2024, nearly on par with the 10-year historical average annual gain of 4.2%. Average rent broke the $1,300 per month threshold at the beginning of 2024 and currently stands at $1,313. Average rent in greater Lafayette is estimated to increase to $1,320 by year's end and close to $1,340 by the end of Q1 2025.    

The Lafayette metro area had a vacancy rate of 7.4% at the beginning of Q4 2024, an increase of 260 basis points over the previous year. While vacancy is expected to remain elevated in the near term as deliveries coming online are absorbed, the vacancy rate is expected to decrease to 6.3% by year’s end and drop further by approximately 60 basis points, hovering at 5.7% by the end of Q1 2025.

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$1,693

Average Monthly
Mortgage Payment

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$1,313

Average Monthly
Rent

Source: CoStar

Average Rent / Vacancy

  • Average Vacancy
  • Average Rent
  • 7.7
  • 9.7
  • 6.3
  • 4.0
  • 7.4
  • 6.3
  • 19 1007
  • 20 1027
  • 21 1100
  • 22 1197
  • 23 1298
  • 24 YTD 1320

Asking Rent / Bedroom

  • Lafayette MSA #a9cff2
  • US #262626
  • Studio
    • 1260
    • 1548
  • 1 Bedroom
    • 1135
    • 1537
  • 2 Bedroom
    • 1423
    • 1793
  • 3 Bedroom
    • 1494
    • 2203

Multifamily Construction

Renter demand accounted for 384 units at the beginning of Q4 2024, with 240 units classified as upper-tier and 144 units in the mid-tier segment. The year-to-date growth rate is 2.6%. Nearly 800 units have been delivered over the past 12 months, and approximately 545 units have been absorbed. Three properties with a total of 353 units are currently under construction, representing 2.4% of multifamily inventory.

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119

Single Family
Permits

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454

Multifamily Permits
(5+ Units)

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$289K

Median Single
Family Price

Completions / Net Absorption

  • Growth
  • # Units
  • 2.2
  • 4.4
  • 1.6
  • 1.5
  • 1.4
  • 1.4
  • 23 847
  • 24 542
  • 25 127
  • 26 178
  • 27 200
  • 28 230

Units by Submarket Delivering in 2024

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353

Units Under
Construction

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542

Deliveries in 2024


Multifamily Sales

Sales volume over the past 12 months for recorded sales transactions totaled $11.7 million, and the collective asset value was $1.8 billion. All five transactions in greater Lafayette were in the mid-tier property category. The Q3 2024 asking price per unit of $117,483 increased by $1,517 from Q1 2024, below the national average of $225,000 per unit.

The market capitalization rate rose by approximately 10 basis points year-over-year to 7.2%. Sales volume has averaged $20.8 million annually over the past 10 years.

$12M

Transaction Volume
Past 12 Months

7%

Market Cap Rate

$118K

12 Mo. Market
Sale Price / Unit

1%

YoY Change Market
Sale Price / Unit

Average Sales PPU / Cap Rate

  • Cap Rate
  • $/Unit
  • 6.5
  • 6.4
  • 6.0
  • 6.5
  • 7.1
  • 7.2
  • 19 112823
  • 20 109339
  • 21 120701
  • 22 116932
  • 23 116500
  • 24 YTD 117483