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Indy Could See Even More New Spec Projects in 2016

INDIANAPOLIS—The market just experienced its greatest level of occupancy gains in two years, with more than 1.9 million square feet of net absorption occurring in the second quarter alone.

By Brian J. Rogal | brianjrogal | | Updated on July 15, 2016

 

ind-Lebanon65-Rendering (2) NorthPointe Development’s Lebanon 65 development in Lebanon, IN.
INDIANAPOLIS—The Indianapolis industrial market has put up some impressive numbers so far this year, with users snapping up spaces in new buildings almost as fast as developers can apply the finishing touches. The market just experienced its greatest level of occupancy gains in two years, with more than 1.9 million square feet of net absorption occurring in the second quarter alone, according to a new report from Cushman & Wakefield . That brings year-to-date net absorption in the metro area to more than 2.8 million square feet, about 600,000 square feet more when compared to the amount of space absorbed in the first half of 2015. Furthermore, overall vacancy in the Indianapolis industrial market has fallen to 4.9%, reaching a sub-5.0% level for the first time in over two years. “We currently don’t have enough starts coming out of the ground,” Bryan Poynter , senior vice president, tells GlobeSt.com. Although there are some vacant buildings, C&W expects that may will soon secure tenants. NorthPointe Development , for example, already has a letter of intent for its new 741,000 square foot building in suburban Lebanon. In fact, C&W is tracking several significant possible deals in the market, and Poynter believes there could be as much as 2.5 million square feet of absorption in the next 90 days. “You have 200,000 square feet here, and maybe 350,000 square feet there,” vacant and unspoken for, but tenants looking for more than 500,000 square feet don’t have many options.     How to satisfy the robust demand from users is a question that “every developer right now is sitting in their office and trying to figure out,” he says. “The conversations are taking place as we speak about what the next spec building will look like and where to put it.” And demand is strong enough that even if one developer announces a plan later this year to construct a one million square foot building, it probably won’t derail any similar plans of others. However, such plans may need to be recalibrated. “I don’t think two such buildings will go into the same submarket.”

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