Investors still hungry for Indianapolis industrial assets

Investors love Indianapolis’ industrial market. Just look at the latest research from Avison Young. According to the CRE firm, industrial building sales in the Indianapolis market jumped 45.7 percent on a year-over-year basis, reaching $1.4 billion across 23.6 million feet during the four quarters ending in the second quarter of this year.

And in the third quarter? Expect more of the same. Avison Young reported that there are seven sales totaling $101.2 million in the pipeline so far in the third quarter.

Avison Young’s report includes sales data from Real Capital Analytics.

Avison Young was recently awarded the exclusive sale listing for a 353,000-square-foot warehouse at 7901 W. 21st Street in Indianapolis. The property is fully leased to Venture Logistics, LLC and Iron Mountain Inc.

Avison Young principals Erik Foster and Mike Wilson, based in the company’s Chicago office and leaders of the firm’s national industrial capital markets group, are representing an institutional owner in selling the asset. The team is working in conjunction with Sean McHale, principal, and Steve Schaub, senior vice president, both in the firm’s Indianapolis office.

“The Indianapolis market continues to outperform many other industrial markets in the country due to its centralized location and superior distribution network,” said Foster in a statement.

A deeper look at Real Capital Analytics research shows that during the second quarter of 2019 individual property sales volume in Indianapolis reached $103.8 million, slightly outpacing portfolio volume of $95.9 million. The average price per square foot rose 20 percent to $56 during the same year-over-year time frame that came to close at the end of the second quarter.

REITs have made up the majority of buyers through mid-August of this year, accounting for 59.4 percent of the total industrial building acquisitions. Institutional buyers purchased 18.2 percent of the industrial buildings sold in the Indianapolis market while private investors snapped up 13.1 percent of the buildings. Institutional investors made up 47.6 percent of all sellers in 2019, while private investors sold 41.2 percent of buildings. REITs sold a small fraction of buildings, making up 5.3 percent of sellers.

The largest sale so far in the third quarter is Westcore Properties’ disposition of 135 S. Mount Zion Road in Lebanon, Indiana, to Stockbridge. The 1.1-million-square-foot building is part of a 25-property portfolio that is nearly 100 percent leased. The building sold for $56.5 million, according to Real Capital Analytics.

The industrial vacancy rate in Indianapolis is still a low 4.4 percent despite a construction pipeline that totals 4.8 million square feet. During the second quarter, the Indianapolis market saw 2.48 million square feet of industrial absorption, according to Avison Young research.