Indianapolis commercial property owners are entering one of the most consequential refinancing windows in a generation. With over $936 billion in commercial real estate loans set to mature nationally in 2026 and Indiana commercial mortgage rates starting as low as 5.18%, the decision of when and how to refinance could define portfolio performance for years to come. Whether you hold an aging office tower Downtown, an industrial distribution center along the I-70 corridor near Plainfield, or a multifamily community in the booming suburbs of Carmel and Fishers, understanding your refinancing options in today's market is essential.
This guide breaks down everything Indianapolis property owners need to know about commercial refinance loans, from current rates and loan structures to submarket-specific strategies and the economic forces reshaping Central Indiana.
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Why Are Indianapolis Property Owners Refinancing Now?
The refinancing urgency in Indianapolis is driven by a convergence of factors. Nationally, the commercial real estate "maturity wall" has pushed roughly $936 billion in CRE loans into 2026, up significantly from prior years as lenders extended and modified loans throughout 2024 and 2025 to delay defaults. Over $100 billion in CMBS loans alone will mature in 2026, with more than half at risk of default.
In Indianapolis specifically, property owners who locked in low rates between 2019 and 2022 now face refinancing into a higher-rate environment. However, the local market offers distinct advantages. The metro's GDP of approximately $199.2 billion ranks among the top 30 largest economic markets nationally. Total wages paid to Indianapolis workers expanded 7.6% between Q1 2024 and Q1 2025, compared to 4.8% nationally. Unemployment averaged just 3.5% in 2025.
These fundamentals translate directly into stronger underwriting. Lenders view Indianapolis as a stable, growth-oriented market, which means borrowers here can often secure more favorable terms than property owners in volatile coastal markets.
What Are the Current Commercial Refinance Rates in Indianapolis?
As of early 2026, Indianapolis commercial mortgage rates start as low as 5.18% for well-qualified borrowers with strong properties. However, actual rates vary significantly based on property type, loan-to-value ratio, borrower experience, and debt service coverage.
For multifamily properties, HUD and FHA loan programs offer rates around 5.64% to 5.94%, with terms up to 35 years and loan-to-value ratios as high as 85%. Conventional commercial loans typically offer up to 75% LTV on most property types, with terms and amortizations up to 30 years. SBA-backed refinancing can reach up to 90% LTV for owner-occupied properties.
The spread between what borrowers locked in during 2020 to 2021 and today's rates can be 200 to 300 basis points or more. For a $5 million loan, that difference translates to $100,000 to $150,000 in additional annual debt service. That is why timing, loan structure, and lender selection matter enormously in the current environment.
How Is the Indianapolis Industrial Market Affecting Refinance Opportunities?
The Indianapolis industrial sector is the standout performer driving refinance activity across the metro. Overall industrial vacancy dropped to 9.0% in Q3 2025, improving 180 basis points from 10.8% the prior year. Net absorption accelerated dramatically in the second half of 2025, with users occupying 13.6 million square feet of previously vacant space, marking the highest six-month total ever recorded in the local market.
New leasing activity surpassed 23.9 million square feet by year-end 2025, a compelling rebound compared to the combined 27.8 million square feet completed over the prior two years. Meanwhile, the development pipeline shrank 37% from year-end 2024, with only 3.3 million square feet currently underway, signaling tightening supply ahead.
For industrial property owners seeking to refinance, these metrics translate into stronger appraisals and better loan terms. Cap rates for Class A industrial properties compressed to 4.84% in Q1 2025, while Class C industrial assets averaged 6.71%. If you own distribution or logistics space near the I-70/I-65 interchange, along the Plainfield corridor, or in the southwest industrial submarket, your property likely qualifies for favorable refinancing terms.
What Role Do Eli Lilly and Meta Play in the Refinance Landscape?
Two transformative investments are reshaping the economic foundation of the greater Indianapolis region and, by extension, the commercial refinance market.
Eli Lilly's LEAP district in Lebanon, roughly 29 miles northwest of Downtown, represents a $13.5 billion commitment across 800 acres. The investment includes manufacturing facilities and the Lilly Medicine Foundry, a 1.2 million-square-foot, seven-building complex combining research, process development, and advanced manufacturing. The project is expected to yield more than 1,300 high-wage jobs by 2030 and stands as the largest single investment in active pharmaceutical ingredients production in U.S. history.
Meta broke ground in February 2026 on a $10 billion data center campus, also in Lebanon. The 1-gigawatt facility is one of Meta's largest infrastructure investments globally, joining a second Indiana campus in Jeffersonville where the company is already installing racks at its $800 million facility.
These combined investments, totaling over $24 billion, are creating a massive economic multiplier effect. Industrial warehouse, flex space, workforce housing, and supporting retail properties across Boone County, Hamilton County, and the northern suburbs are all seeing increased demand. If you hold commercial assets in these corridors, the long-term demand outlook strengthens your refinancing position significantly.
Which Indianapolis Submarkets Offer the Best Refinance Conditions?
Refinancing conditions vary meaningfully across Indianapolis submarkets. Understanding where your property sits in the market landscape helps you target the right lenders and negotiate better terms.
The southwest industrial corridor, anchored by Plainfield and extending along I-70, remains the tightest industrial submarket. Proximity to the FedEx and Amazon distribution hubs, combined with declining vacancy, makes properties here highly financeable. Expect lenders to offer higher LTV ratios and lower spreads for well-leased industrial assets in this zone.
Carmel and Fishers in Hamilton County are thriving suburban centers with strong demand for mixed-use, retail, and Class A office space. These communities benefit from high household incomes, excellent school districts, and continued population growth. Multifamily and retail assets in these submarkets command premium valuations.
Downtown Indianapolis presents a more nuanced picture. Office vacancy in the CBD climbed to a record 26.0% in 2025, as older Class B and C buildings struggle with reduced demand from remote and hybrid work models. However, multifamily properties downtown remain relatively stable, and adaptive reuse projects are gaining traction. If you own office space downtown, refinancing may require creative structuring or bridge loan solutions to manage the transition.
Boone County and the northern corridor are the emerging growth story, driven by the LEAP district and Meta investments. Properties in Lebanon and the surrounding area are seeing upward pressure on rents and valuations as the construction and operational workforce expands.
What Loan Types Are Available for Indianapolis Commercial Refinancing?
Indianapolis property owners have access to a broad range of refinance loan structures, each suited to different property types, borrower profiles, and strategic goals.
Conventional commercial mortgages offer fixed rates for 5, 7, or 10-year terms with amortization periods up to 30 years. These work well for stabilized properties with strong cash flow and are available through national banks, regional banks like First Internet Bank and Centier, and credit unions.
CMBS (conduit) loans provide fixed-rate, non-recourse financing for stabilized commercial properties valued at $2 million and above. They offer competitive rates but come with more rigid prepayment structures and less flexibility for property modifications.
SBA 504 loans allow owner-occupants to refinance with up to 90% LTV and below-market fixed rates on the CDC portion. This is an excellent option for Indianapolis business owners who occupy at least 51% of their commercial property.
Bridge loans serve as short-term solutions for properties in transition, including value-add repositioning, lease-up, or renovation. Given the downtown office market challenges, bridge financing is increasingly relevant for owners planning adaptive reuse or major tenant improvements.
Agency loans (Fannie Mae and Freddie Mac) remain the gold standard for multifamily refinancing, offering terms up to 30 years, LTVs up to 80%, and interest-only options during initial periods.
Use our commercial mortgage calculator to model different loan scenarios and compare monthly payments across these structures.
How Should You Prepare for a Commercial Refinance in Indianapolis?
Successful refinancing in the current market requires thorough preparation well before your loan maturity date. Here is a practical timeline and checklist for Indianapolis property owners.
12 to 18 months before maturity, begin reviewing your current loan documents, including prepayment provisions, yield maintenance calculations, and defeasance requirements. Request a preliminary property valuation to understand where your asset stands relative to the original loan basis.
9 to 12 months out, engage a commercial mortgage broker or begin soliciting term sheets from multiple lenders. In Indianapolis, the competitive lending landscape includes national banks, CMBS lenders, life insurance companies, and local institutions. Getting three to five quotes ensures you understand the full range of available terms.
6 to 9 months out, select your lender and begin the formal underwriting process. This includes ordering a full appraisal, environmental assessments (Phase I at minimum), updated rent rolls, trailing 12-month operating statements, and property condition reports.
3 to 6 months out, finalize loan documents, complete title and survey work, and coordinate with your existing lender on payoff logistics.
The most common mistake Indianapolis borrowers make is waiting too long. Starting 6 months before maturity leaves almost no negotiating leverage and may force you into an unfavorable extension with your current lender.
What Impact Do Property Taxes Have on Indianapolis Refinancing?
Indianapolis property owners face a significant and often overlooked factor in their refinancing analysis: rising property tax assessments. Marion County property tax assessments spiked an average of 27% in the latest cycle, with higher tax bills payable in 2026.
This matters for refinancing because higher property taxes directly reduce net operating income (NOI), which is the primary metric lenders use to determine loan size. A property generating $500,000 in NOI before the reassessment might see that figure drop to $465,000 or less after the tax increase, potentially reducing the available loan amount by $400,000 to $500,000 at typical debt service coverage requirements.
Savvy borrowers should appeal their assessments before beginning the refinance process. Indiana's property tax appeal process is relatively straightforward, and a successful appeal can meaningfully improve your refinancing proceeds. At minimum, factor the higher tax burden into your cash flow projections when comparing loan options.
How Is the Multifamily Refinance Market Performing in Indianapolis?
The Indianapolis multifamily market offers strong refinancing conditions heading into 2026. Rent growth reached 2.3% year-over-year in 2025, outpacing the national average, with projections of 3.5% growth by year-end. Suburban Hamilton and Johnson counties led absorption as renters continued to seek value and quality of life outside the urban core.
New multifamily supply is declining sharply, with only 2,545 units expected in 2025, representing a 60% reduction from the prior year. This supply contraction is easing vacancy pressure and supporting rent growth, both of which strengthen refinancing fundamentals.
Cap rates for Class A multifamily assets held at 4.74%, while Class B assets compressed to 4.92% and Class C properties averaged 5.38%. These tight cap rates reflect strong investor demand and translate into higher property valuations for refinancing purposes.
For multifamily owners, agency lending through Fannie Mae and Freddie Mac remains the most attractive refinancing path, offering the lowest rates and longest terms. However, properties with fewer than 5 units or those requiring significant capital improvements may be better served by local bank portfolios or bridge financing until stabilization is complete.
What Are the Biggest Risks to Watch When Refinancing in Indianapolis?
While Indianapolis offers a fundamentally strong refinancing environment, several risks deserve careful attention.
Interest rate volatility remains the primary concern. Although rates have stabilized compared to the rapid increases of 2022 and 2023, the spread between current rates and the low-rate loans originated in 2020 to 2021 creates a significant debt service gap that borrowers must plan for. If your property's NOI has not grown enough to absorb higher debt service, you may face a cash-in refinance where additional equity is required at closing.
Office sector distress is concentrated but real. With downtown CBD vacancy at 26.0% and nationally office values down 55.8% since issuance for many CMBS loans, office property owners face the most difficult refinancing environment. Creative solutions, including partial conversions, lease restructuring, or shorter-term bridge financing, may be necessary.
The "extend and pretend" overhang means that many loans originally due in 2024 and 2025 were modified and pushed into 2026 and 2027, increasing competition for refinancing capital in those years. Indianapolis borrowers should expect longer processing times and more thorough underwriting reviews.
Construction cost inflation affecting renovation or value-add budgets can undermine refinancing plans that depend on projected post-renovation NOI. Build conservative assumptions into your pro forma.
Frequently Asked Questions About Commercial Refinancing in Indianapolis
What is the minimum credit score needed for a commercial refinance in Indianapolis?
Most commercial lenders in Indianapolis require a minimum credit score of 660 to 680 for conventional loans, though some SBA and bridge lenders will work with scores as low as 620. The borrower's overall financial profile, including net worth, liquidity, and experience, often matters more than the credit score alone. CMBS loans focus primarily on property-level metrics rather than borrower credit.
How long does a commercial refinance take to close in Indianapolis?
A typical commercial refinance in Indianapolis takes 45 to 90 days from application to closing, depending on the loan type. Agency multifamily loans (Fannie Mae and Freddie Mac) generally close faster at 45 to 60 days, while CMBS loans may take 75 to 90 days due to rating agency requirements. SBA 504 refinances can take 60 to 120 days. Starting early and having your documentation organized is the best way to ensure a smooth process.
Can I cash out equity when refinancing my Indianapolis commercial property?
Yes, most commercial loan programs allow cash-out refinancing in Indianapolis. Conventional lenders typically cap cash-out at 70% to 75% LTV, while agency multifamily loans may allow up to 80% LTV on a cash-out basis. SBA 504 loans permit cash-out for eligible business expenses. The amount of available equity depends on your property's current appraised value, existing loan balance, and the lender's debt service coverage requirements.
Are there prepayment penalties when refinancing a commercial loan in Indianapolis?
Most commercial loans include some form of prepayment provision. Fixed-rate CMBS loans typically require defeasance or yield maintenance, which can cost 5% to 15% of the loan balance depending on the remaining term and current rates. Bank loans may have step-down prepayment penalties (such as 5-4-3-2-1%) or fixed penalties. Some adjustable-rate and bridge loans have no prepayment penalty after an initial lockout period. Always factor prepayment costs into your refinancing analysis.
What debt service coverage ratio do lenders require in Indianapolis?
Most Indianapolis commercial lenders require a minimum DSCR of 1.20x to 1.25x, meaning the property's net operating income must be 120% to 125% of the annual debt service. Agency multifamily loans may accept 1.20x, while CMBS and bank loans typically require 1.25x or higher. Given the recent property tax increases in Marion County, it is critical to calculate your DSCR using updated tax assessments to avoid surprises during underwriting.
Should I choose a fixed or floating rate for my Indianapolis commercial refinance?
The choice depends on your hold period, risk tolerance, and market outlook. Fixed rates provide certainty and are ideal for long-term holds, especially at current rates that may represent a relative value compared to where rates peaked in 2023. Floating rates, typically based on SOFR plus a spread, offer lower initial payments and more flexibility, including easier prepayment, but expose you to rate increases. Many Indianapolis borrowers are choosing fixed-rate options in 2026 to lock in certainty given ongoing macroeconomic uncertainty.
What Is the Bottom Line for Indianapolis Commercial Refinancing?
Indianapolis stands as one of the strongest Midwest markets for commercial refinancing in 2026. The metro's diversified economy, anchored by transformative investments from Eli Lilly and Meta totaling over $24 billion, provides a foundation of demand growth that supports property values across asset classes. Industrial fundamentals are among the best in the nation, multifamily rent growth outpaces national averages, and even the challenged office sector is finding new life through adaptive reuse.
The key for property owners is to act decisively and start early. The national maturity wall means increased competition for refinancing capital, and lenders are prioritizing borrowers who demonstrate preparation, strong property fundamentals, and realistic expectations.
Ready to explore your refinancing options? Browse our complete guide to commercial refinance loans, check current rates on the commercial mortgage calculator, or learn more about the Indianapolis commercial real estate market. To discuss your specific property and financing needs, contact our team for a confidential consultation.