Indianapolis Industrial Market Continues Hot Streak

650 Commerce Parkway East in Greenwood, IN, was built in 2014 and just got filled.

INDIANAPOLIS—As reported in GlobeSt.com, the Indianapolis region experienced a construction boom about two years ago, only to see it followed by a slowdown in leasing. However, leasing activity began picking up again, and the industrial market continued that hot streak in the first quarter of 2016, with overall market vacancy levels falling to 5.3% as the result of another strong quarter for absorption, according to a new report from Cushman & Wakefield . Net absorption levels hit nearly 1.3 million square feet, as several previously vacant modern bulk spaces were occupied, C&W finds. This marks the seventh consecutive quarter of significant positive absorption, with over 1 million square feet absorbed in six out of the seven quarters. “There is a solid crop of new users looking at our market,” Michael Weishaar senior managing director for Cushman & Wakefield in Indianapolis, tells GlobeSt.com. Drive DeVilbiss Healthcare , for example, a medical device manufacturer, took 235,000 square feet at 650 E. Commerce Park Dr. in south suburban Greenwood, while Nestle Waters took the other 235,000 square feet, filling this new modern bulk facility. As reported in GlobeSt.com, Cabot Properties and Quadrangle Development Co. began developing the structure at the height of the building boom in 2014. “But we are still seeing a lot of tenants that have ties to the e-commerce industry,” he adds. The C&W national research team estimates that 40% of all net absorption in the past three years has been e-commerce related. And that means big things for a centrally-located market such as Indianapolis. “E-commerce users continue to see value in the central Indiana market.” Weishaar is not certain that all this activity necessarily means the market will see another spec construction boom on the scale of two or three years ago. However, he does expect that Indianapolis will soon have some new spec projects. “ Sunbeam [Development Corp.] is not holding off,” he says, “They are going to go vertical on a spec project.” In fact, counting all the industrial projects announced, under construction or recently completed, Weishaar says C&W is tracking about 15 million square feet of space, although some of the announced ones may not break ground for some time. Big investors have also looked over the prospects for the industrial sector here, and seem to like what they see. Earlier this year, OVB Indianapolis Industrial, LLC , a joint venture between Biynah Industrial Partners and Olympus Ventures , purchased eight modern bulk buildings totaling more than 3.8 million square feet and a 42-acre land site in the Indianapolis area. And Weishaar, who was selected to lease the properties, says a major vacancy in the portfolio was just filled. “You’ve just got a lot of good activity,” he says. “It helps substantiate the story that Central Indiana is a safe place to do business from an industrial standpoint.”