INDIANAPOLIS—This city and its suburbs have seen a tremendous expansion of industrial real estate over the past few years, and now that the recovery has gathered even more steam, the expansion seems to be accelerating. Developers of modern bulk distribution buildings, medium-sized distribution, manufacturing and other facilities have launched many projects and investors have also begun swooping in. Granite Real Estate Investment Trust, a Toronto-based firm, for example, has just purchased three industrial properties in the suburbs from subsidiaries of Ingram Micro Inc. for a total purchase price of $68.75 million.
The portfolio includes two logistics-distribution facilities in Plainfield, totaling 1,033,520-square-feet. Granite paid $65.45 million for the buildings, which also include a total of about 140,000-square-feet of office space and were constructed in 2009 and 1999. Ingram Micro, a global technology and supply chain services firm, will continue to occupy the properties and will enter into leases for an initial term of 10 years. The investment represents an in-going yield of about 6.5%, Granite officials say.
Granite also agreed to purchase 29 acres of adjacent land in the AllPoints Midwest Business Park for $3.3 million. The land will provide for up to 585,000-square-feet of new logistics - industrial space.
Granite will fund the investment with its line of credit and cash on hand.
According to Cassidy Turley, a commercial real estate services provider, by the third quarter the industrial sector here had already surpassed the five-year annual absorption average of 2.7-million-square-feet. In the third quarter alone, the market saw 1.4-million-square-feet of absorption and net occupancy gains for the year have already hit 2.84-million-square-feet.
“The Indianapolis industrial market is on an absolute tear,” says Jason Tolliver, regional vice president in Cassidy Turley's Indianapolis office. “The traditional drivers of industrial space like housing, manufacturing and warehousing are solid, but the new engine of e-commerce has shifted the market into another gear. As a result, Indianapolis has emerged as one of the strongest markets in the US with some of the largest e-commerce deals completed anywhere in the country.”
Granite is not alone in making big Indianapolis purchases. Chambers Street Properties, a real estate investment trust in Princeton, NJ, for example, earlier this year completed the $30.2 million purchase of 445 Airtech Parkway, a 622,440-square-foot warehouse and distribution property developed by Prologis/Browning Investments in suburban Plainfield's AirTech Business Park. The partners finished it in 2013, the first speculative industrial development in Indianapolis since 2008, and Hartz Mountain Corp., a pets product supplier, quickly signed a triple net lease for the entire space.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
