IRR-Indianapolis Mid-Year Viewpoint 2015 Local Market Report - Industrial
The Indianapolis industrial market continues its trend of strong positive net absorption into 2015, with some of the strongest leasing activity in the US. Overall, net absorption is anticipated to increase through the balance of 2015, with continued strong absorption anticipated for 2016. The modern and traditional bulk distribution sectors, particularly in the Southwest market, continue to represent the vast majority of the construction, absorption, and leasing activity. However, several smaller, mid-size speculative projects of less than 150,000 square feet are planned or nearing completion.
Significant speculative bulk development in most submarkets has ticked vacancy rates up slightly from historical lows in 2013, yet vacancy remains lower than historical averages. Thus far in 2015, almost half of the new industrial product delivered were build-to-suit projects, following a similar trend in 2014 when over half of the new product was build-to-suit.
Historically, the Plainfield submarket (35 million square feet) has captured a majority of the new construction in the Indianapolis area since the 1990’s. Recently, a 353,000 square foot speculative facility in Plainfield was completed, with half of the building being leased. The 1 million square foot speculative Building 6 in Plainfield’s AllPoints Midwest is nearing completion. Additionally, two speculative buildings totaling 297,000 and 127,000 square feet in the Plainfield market are also nearing completion. As Plainfield nears full absorption, other submarkets have seen an increase in demand. In the East market, Morrell Food Group is developing a 426,000 building in the East market, with completion anticipated by the 4th quarter 2015. Ulta recently completed a 671,000 BTS building in the South market in Greenwood. Additional South market construction activity includes development of a 470,000 square foot speculative building as well as a 100,000 square foot facility for Poynter Sheet Metal. In the Northwest market, a 741,000 square foot speculative facility is nearing completion in Lebanon.
Going forward, continued strong growth is anticipated for the balance of 2015, with similar growth projected for 2016. Almost 4 million square feet of speculative space projected to be delivered in 2015 is expected to place a slight upward pressure on vacancy rates, but generally in line with historical averages. Rental rates and pricing are anticipated to increase slightly through 2015.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.