Is Spec Construction Outstripping Demand?

INDIANAPOLIS—The Indianapolis region has been one of the top-performing industrial markets in the nation for several years, and according to a recent report by JLL, in the fourth quarter it continued to see both strong leasing and construction activity. However, the total vacancy rate at the end of the year was 6.3%, up from 5.2% at the end of 2013. And experts attribute much of that increase to a flurry of speculative construction.

“There were a lot of spec buildings built in response to really hot years like 2011 and 2012,” Steve Schwegman, a lead broker for industrial real estate at JLL’s Indianapolis office, tells GlobeSt.com. In those years the market sometimes saw several million-square-feet absorbed during a single quarter and “there was a lot of aggressive money willing to build spec.”