“We're not putting more focus on secondary cities per se,” Huffman says. “We're going where the opportunities present themselves, and some of those happen to be in best-in-class suburban product where there is extremely limited competition on the buy given the investment community's overwhelming focus on urban areas today.”

A JLL team led by James Postweiler and John Robinson, managing directors, and Peter Harwood, executive vice president, marketed the property. JLL's Keith Largay, managing director, and Paul Spellman, senior vice president, arranged the acquisition financing. JLL's Adam Broderick, managing director, and Traci Kapsalis, senior vice president, will head the leasing team for Parkwood Crossing going forward.

“Demand for high quality office assets in Indianapolis is growing as the city's vacancy is nearing historic lows, and Parkwood Crossing is the highest quality office park in the city,” Postweiler says. “The Carmel and North Meridian submarkets in particular are poised for tremendous rent growth given increased tenant demand and lack of remaining quality development sites.”

INDIANAPOLIS—Downtown office developments have garnered a lot of attention in recent years, but many investors see tremendous opportunities in the suburbs, including ones in secondary markets. Rubenstein Partners, LP and its partner, Indianapolis-based Strategic Capital Partners, just illustrated that by acquiring Parkwood Crossing, an 8-building, 1.2 million square foot office campus in the Carmel submarket of Indianapolis, for $162.9 million. Most observers consider the property, developed by the seller, Duke Realty Corp., between 1989 and 2005, the premier office campus in suburban Indianapolis. JLL brokered the transaction and will serve as exclusive leasing agent for the property.

“This micro-market has incredibly compelling demographics in terms of population and job growth, educated populace, and income,” Brandon Huffman, regional director, Midwest, for Philadelphia-based Rubenstein, tells GlobeSt.com. “In response to those compelling demographics, there's been a tremendous amount of new development over the last 20 years, mostly by Duke. With Duke now out of the office business and most prime sites no longer available – or very expensive to acquire – we expect the supply side response to be dramatically muted vis a vis historical development, which bodes incredibly well for rent growth.”

The occupancy rate of Parkwood Crossing currently stands at 94%, but that will soon come down to the mid-80s, Huffman adds. The new owners plan to launch a $20 million capital program, including the development of a standalone, state-of-the-art amenity center providing facilities for dining, fitness, conferences, and workplace collaboration. The center will connect directly to a new campus trail which will provide pedestrian access throughout the campus. The Rubenstein/Strategic joint venture also plans to make substantial investment to upgrade building physical systems and implement other aesthetic upgrades.

Rubenstein isn't the only investor looking beyond the primary markets. “The aggressive pricing in major markets is forcing national investors to consider acquisitions in strong secondary and suburban locations in order to achieve their yield targets,” James Hanson, a Chicago-based principal with Avison Young, tells GlobeSt.com. “These markets have trailed major markets in recovery from the recession so they are only now poised for strong improvement in fundamentals that began to appear in major markets two to three years ago. Avison Young has recently marketed class A office assets in other Midwestern markets and met with strong interest from a combination of local and national investors. Those factors, along with the high quality of development that Duke is known for, help to enhance the appeal to investors.”

“We're not putting more focus on secondary cities per se,” Huffman says. “We're going where the opportunities present themselves, and some of those happen to be in best-in-class suburban product where there is extremely limited competition on the buy given the investment community's overwhelming focus on urban areas today.”

A JLL team led by James Postweiler and John Robinson, managing directors, and Peter Harwood, executive vice president, marketed the property. JLL's Keith Largay, managing director, and Paul Spellman, senior vice president, arranged the acquisition financing. JLL's Adam Broderick, managing director, and Traci Kapsalis, senior vice president, will head the leasing team for Parkwood Crossing going forward.

“Demand for high quality office assets in Indianapolis is growing as the city's vacancy is nearing historic lows, and Parkwood Crossing is the highest quality office park in the city,” Postweiler says. “The Carmel and North Meridian submarkets in particular are poised for tremendous rent growth given increased tenant demand and lack of remaining quality development sites.”