The industrial market shows no signs of slowing in Indianapolis, with both build-to-suit and spec projects delivering millions of square feet of new product to the area.
And for Stan Elser, executive vice president of the Indianapolis office of Lee & Associates, that’s something that deserves a big headline.
“We have a great story to tell in this market,” Elser said. “And we’re all excited to be telling it.”
Elser says that his company is tracking 12 spec industrial buildings in the Indianapolis market that exceed 100,000 square feet each. In total, these buildings are bringing 4.2 million square feet of new spec construction to the Indianapolis market. Most of these new buildings are in the 400,000-square-foot to 600,000-square-foot range, Elser said.
At the same time, there are several build-to-suit industrial buildings that are now going up across the Indianapolis market, Elser said. His company is tracking nearly 5 million square feet of this kind of industrial space, he said.
In all, that’s close to 9 million square feet of new industrial construction coming to the market.
“That is unprecedented,” Elser said. “I don’t know if we’ve ever had more spec construction than we’ve seen in the last five years here. It might be record-setting.”
That leads to the obvious question: Why now? Why is all this spec and build-to-suit construction hitting Indianapolis now?
“Companies are pulling the trigger on their expansion plans,” Elser said. “They are feeling better about the economy. They are making growth decisions again.”
There could be some negatives, though, with such a large amount of new industrial construction. After the building binge ends, the Indianapolis market could be left with too much empty industrial space to fill.
“Our bulk inventory might be high enough at the end of the year that we will suddenly see a tenant’s market here again,” Elser said. “It is certainly a landlord’s market today. But that could change.”
Elser points to several reasons why Indianapolis makes sense for industrial users. First, the unemployment rate in this market is at its lowest point in five years. Personal incomes continue to rise. And the state and local governments are both friendly to businesses.
“We have a great business climate in Indiana,” Elser said. “That also applies to Indianapolis. We have some of the lowest taxes and best business incentives in the Midwest. We have a reputation for having less regulation.”