Many reasons account for the strengthening commercial real estate markets across the Midwest. Most important, though, might be this fact: Since 2008, few of the markets that Midwest Real Estate News covers has seen much commercial building activity.
It makes sense, then, that demand for commercial space is starting to increase in these markets.
Look at Indianapolis. Adam Broderick, vice president in the Indianapolis office of Jones Lang LaSalle, said that commercial real estate activity is increasing in Indiana’s biggest city. And the reason is a familiar one: Building activity in the city has been nearly nothing for more than three years.
“We haven’t had any new construction in the market since 2008, really,” Broderick said. “We don’t have any vacant spec buildings pulling the market down. Because of that, we have seen an increase in 15,000- to 30,000-square-foot deals in the last 18 months. That’s been the majority of our activity, especially in our suburban market.”
Broderick works mostly with the office sector. He said that the last new office project in the Indianapolis region came in late 2008, two buidings in the city’s northeast sub market. Since then, office buiding has halted.
Broderick does predict that the next office project to hit the area will probably come in the next 12 to 18 months. But even then, he doesn’t expect anything approaching an office building boom.
“Some of the groups that we saw building new spec buildings from 2004 to 2008 have left that business,” Broderick said. “We were fortunate here. We didn’t overbuild during the boom times. Building activity certainly toed the line, came close to that. But there weren’t any 150,000- to 200,000-square-foot buildings sitting empty for years at a time like we saw in some other markets.”
That’s pretty much the blessing of the Midwest. Most of our markets, while working through the recession and its slow recovery, haven’t had to deal with a large number of empty spec buildings.
