The office vacancy rate is too high in too many Midwest sectors. This isn’t surprising: Unemployment is too high, too. It won’t be until the unemployment rate falls dramatically that we’ll see office rates do the same.
Still, there are glimmers of hope in office markets across the Midwest.
One of those markets? Indianapolis.
CBRE recently released its fourth quarter 2013 office outlook for Indianapolis. According to Mike Cagna, research coordinator for CBRE, the overall Indianapolis office market saw its vacancy fall from 18.8 percent at the end of 2012 to 18.1 percent at the end of 2013. Last year also saw the return of spec construction to the Indianapolis market, Cagna said.
Of course, the results varied depending upon which Indianapolis submarket you were analyzing. In downtown Indianapolis, the office vacancy rate actually rose to 18.9 percent from 17.4 percent in the fourth quarter of 2013.
The suburban office market performed better, absorbing 212,000 square feet in the fourth quarter of last year. The vacancy rate in the suburbs fell to 17.7 percent at the end of 2013. It stood at 19.5 percent at the end of 2012.
The suburbs enjoyed some large leases last year. HP Enterprises Services leased 25,000 square feet at Parkwood Three, while hc1 completed a 17,000-square-foot expansion at Northwest Technology Park.
Notable leases in the downtown Indianapolis submarket included BKD, LLC signing a 58,000-square-foot renewal at Capital Center and Evanced Solutions, LLC signing a 17,000-square-foot lease at 701 E. New York Street.
The downtown market also saw two non-traditional office deals. The Indianapolis Star signed a lease to occupy 105,000 square feet formerly occupied by Nordstrom in Circle Center Mall. StreetLinks Lender Solutions will move its headquarters from the south side and occupy 25,000 square feet on the ground floor of the mixed-use Artistry project that is now closing construction at 451 E. Market St.