INDIANAPOLIS—Few industrial markets in the US have shown as much strength as Indianapolis, and even though developers built so many specs in response that supply eventually outpaced demand, many companies are now looking for space, and brokers are confident that 2016 will see a lot of absorption. 

"The good news is that we are currently tracking about 12 million square feet of active deals in the market," JLL senior vice president Chip Barnes tells GlobeSt.com. Normally, at any one time, companies are looking for about 7 million square feet of industrial space in the metro area. "On the surface it may look like an overbuilt market, but we feel positive that a lot of the vacant space is going to be filled."   

That elevated level of demand should help JLL complete its latest leasing assignment. Northwestern Mutual has hired Barnes and JLL executive vice president Jake Sturman to secure tenants for Airwest 12 and 14, two new speculative class A industrial buildings totalling 924,530 square feet in southwest suburban Plainfield. The two-building portfolio, built by the Opus Group, is located at 2301 and 2201 Reeves Rd. Building 12 is 448,305 square feet and Building 14 is 476,225 square feet.

"These buildings have the modern size, 36' ceiling height, parking and docking capacity that e-commerce and other distribution businesses require," Barnes says. The buildings are located within one mile of Indianapolis International Airport and within a five-minute drive of I-70 and I-465. Tenants could reach more than 60% of the US population overnight from this location.

According to the latest market report by Avison Young's Chicago-based industrial capital markets group, Indianapolis has seen a steep drop-off in new construction. In the first three quarters of this year, developers finished 5.7 million square feet, compared to 5.0 million at this point last year. As of now, however, they only have about 800,000 square feet of space still under way.

"Developers have definitely hit the pause button," Barnes says, and this will help supply and demand move back into balance. And there are already signs that demand is catching up.

In the third quarter, for example, Chewy.com took 597,000 square feet in a new spec building, also in Plainfield, and Vroom signed a lease for more than 500,000 square feet at 5300 Performance Wy. in Whitestown. The overall vacancy rate was steady at 7.6%, and the availability rate for modern bulk declined 40 bps to 9.2%, according to CBRE.

"Indianapolis is one of the top distribution markets in the country and continues to draw tenants who want to tap into the region's strong transportation, logistics and warehousing infrastructure," Barnes says.

"Developers are still taking ground positions," he points out, and locking up much of the remaining land. "People are getting ready for the next wave of new development."