Demand for new industrial space needs to slow eventually, right? Maybe. But in Indianapolis, at least, there’s no sign of that slowdown in sight.
Avison Young in its second quarter research found that the industrial vacancy rate in Indianapolis remained at a low 4.4 percent, even as developers continue to build new warehouses and distribution centers across the region.
According to Avison Young, much of the 6.4 million square feet of new industrial space being built is speculative construction. But this space is expected to be absorbed quickly.
“We are continuing to see a lot of large leases keeping the vacancy rate down even as we build millions of square feet of new speculative space throughout the market,” said Sean McHale, principal in Avison Young’s Indianapolis office. “The big question is how long the strength of the market will continue as the cost of construction continues to rise and labor and supply shortages continue throughout the area.”
Avison Young reported that during the second quarter, new tenants absorbed about 2.48 million square feet in the Indianapolis industrial market. This includes such large leases as RADIAL’s 590,000-square-foot lease in Brownsburg, Indiana; Puma’s 635,000-square-foot lease in Whitestown, Indiana; and Knauff Insulation|Martin & Cain’s lease of 511,680 square feet in Greenwood, Indiana.
Construction activity is high, too. Avison Young pointed to CT Realty’s 1-million-square-foot building under construction in the Crossroads Logistics Center in Whitestown and Strategic Capital Partners’ 440,056-square-foot Commerce Park building also in Whitestown. Browning Investments|Cabot Properties is also building a 439,000-square-foot building in Mount Comfort, Indiana.
As demand rises, developers are targeting areas along the very edges of the Indianapolis area. In Whiteland, Indiana, south of Indianapolis, Jones Development Company is building a 2.4-million-square-foot specualtive business park, Whiteland Exchange. Avison Young is marketing this park. Construction has already started on the park’s first two buildings, one of 436,000 square feet and the second at 169,000 square feet.
The biggest spec industrial developments added to the Indianapolis market in the second quarter were a 635,000-square-foot building by Exeter Property Group in Whitestown, a two-building project totaling 526,000 square feet in Plainfield built by Ambrose Property Group and HSA’s 262,000-square-foot building at 845 Airtech Park in Plainfield.