John Robinson, executive vice president in the Indianapolis office of Jones Lang LaSalle, has good news to report: Office leasing activity throughout the city and its suburbs is on the rise. A lack of new construction and more confident office-space users are the reasons.
Midwest Real Estate News: How are things looking in Indianapolis as far as commercial office real estate activity is concerned? Are you seeing more deals these days? John Robinson: Certainly, when compared to two years ago there is increased activity. There has been a continual rise in commercial real estate activity during the last two years. It is improving, in Indianapolis and across the country.
MWREN: Why do you think this is? Robinson: A lot of it has to do with the primary occupiers of office space in Indianapolis. One of the biggest occupiers is state government. We also have a lot of insurance companies, law firms and financial-services providers. We’ve seen heavy activity and growth from financial-services firms recently. We’ve seen the law firms rebound to the point where there are some firms that are now expanding. Three or four years ago they were all considering contracting. That has now changed. At the same time, state government has remained strong as has insurance. These major occupiers of office space have really helped maintain stability in our office market.
MWREN: Are there any parts of the city that are seeing especially solid office activity? Robinson: We have five major submarkets, four suburban and the Central Business District. The CBD has been fairly consistent for the last three or four years. It has seen solid improvement because of decent absorption and the fact that there hasn’t been any new office construction in more than 10 years in downtown Indianapolis. If you look at the suburbs, you’ll see that the majority of the activity is taking place in the Keystone Crossing and North Meridian corridor. That is followed by the Northwest submarket. All of these submarkets have improved because of a lack of new office construction. It has been four years with an additional office building being built.
MWREN: What will help fuel even more activity in Indianapolis’ office sector? Robinson: Having the election over will help. There is always a sector of the office market that freezes during presidential election years. But overall, the activity in the office sector will improve whenever there is an overall improvement in the economy, both nationally and locally. Whenever that occurs, that’s when you’ll be seeing more leasing and new construction in the office sector. In the past two years, though, activity has not been a problem in the Indianapolis office market. There has been very solid activity in the larger-transaction range, 20,000 square feet and above. In fact, if right now in the suburbs you need 40,000 square feet, you will have trouble finding it in Class-A space.
MWREN: Is there anything unique to Indianapolis that is helping it through these challenging economic times? Robinson: Traditionally what I’ve said is that Indianapolis has lower highs and higher lows. We don’t have the big swings that major markets see. We also don’t have an abundance of new owners coming to town. Everyone here from an ownership standpoint is fairly well educated on the local market. They are not capable of making the dramatic mistake that would hurt the office market in general. They see where it’s been and think they know where it’s going. Every pretty much knows what to do. The ownership in this town, then, has been stable. We don’t have a ton of receivership properties. I can think of only four or five projects now that are in receivership or heading toward it. There aren’t that many desperate landlords. That helps.