The Indianapolis market remains an attractive one to developers as 2019 moves into its second month. How attractive? A recent report from Avison Young says that developers have a record-setting 7.5 million square feet of industrial space in the pipeline for the Indianapolis area today.
That figure includes 17 speculative projects. And this follows what was a record-setting year in 2018, when the Indianapolis industrial market saw construction deliveries of 8 million square feet.
“Even with several buildings of more than 500,000 square feet delivered in 2018, we’re still seeing significant demand for more space,” said Sean McHale, principal in Avison Young’s Indianapolis office. “Lease rates are rising and unemployment is falling, with the Indianapolis market continuing to attract developers, investors and end users.”
Even with the new speculative space being added to the market, the industrial vacancy rate in the Indianapolis area remains near 4.9 percent, according to Avison Young. In the fourth quarter, the market enjoyed 1.8 million square feet of positive absorption.
The 260.2-million-square-foot Indianapolis industrial market saw occupancy gains of 8.65 million square feet in 2018, Avison Young said. The southwest submarket accounted for nearly half of these gains, seeing a positive net absorption of 4.2 million square feet for the year, according to Avison Young’s numbers.
Some of the bigger deliveries last year include the 933,825-square-foot speculative building from Sunbeam Development in the Franklin Tech Park and a 912,000-square-foot spec building developed by IDI in the Ameriplex Business Park. The Indianapolis market also saw a 635,440-square-foot speculative building delivered by Exeter Property Group in nearby Whitestown, Indiana.
Current net asking rates in Indianapolis are in the range of $3.80 to $3.95 a square foot.