In late July, Sunbeam Development Corporation purchased the I-70 West Commerce Park in the Indianapolis suburb of Monrovia, Ind. The corporation now plans to build a 525,000-square-foot speculative industrial building at the park, the first phase of its long-term plans to develop the park.
Sunbeam’s purchase totals 685 acres, 660 of which are zoned for industrial use, with the remaining 25 acres zoned for commercial use.
The deal is a big one for the Indianapolis area. But it’s also not all that unusual today. Spec industrial building — in the bulk modern warehouse arena — has returned to Indianapolis. And it’s a trend that doesn’t look to slow any time soon.
“What really has driven the spec development in our market in the modern bulk area is that we’ve had positive net absorption in this sector for more than 10 years now,” said Luke Wessel, senior managing director and principal at Cassidy Turley‘s Indianapolis office. “That is very positive. There were some years during this time when we saw more than 5 million square feet of net absorption.”
In some years during this period, the sector saw 5 million square feet of net absorption. And at the end of 2011, the modern bulk warehouse portion of the industrial market boasted a low vacancy rate of 1.7 percent in the Indianapolis market, Wessel said.
With such a low vacancy rate and such high rates of absorption, it’s not surprising that developers see a need in Indianapolis for new bulk warehouse space.
“Our location, the low cost of doing business here and the positive business environment that Indianapolis offers will make sure that this trend continues,” Wessel said.
Wessel welcomes the return of spec in the industrial market. The new buildings should attract companies that would have otherwise had to seek space in other Midwest markets, he said.
“I can’t sit here and give you names, but I do believe that there were companies, leases that could have come to Indianapolis in the past if we had had more product prior to this new wave of speculative construction,” Wessel said. “You go back 12 to 24 months when we didn’t have that product. There are people in our market who felt that we were missing out on opportunities because we didn’t have that new spec product.”