Following a minor setback during the first quarter, net absorption in the Northwest Indiana area turned positive during the second quarter, totaling 109,828 square feet, according to the second quarter 2014 Northwest Indiana submarket review by NAI Hiffman.
Hiffman’s submarket review revealed the area’s vacancy rate improved by 30 basis points during the quarter to 6.68 percent. The rate is 56 basis points below the vacancy rate last year, and more than 5.4 percent below the 12.11 percent peak rate that was reached in late 2009.
Construction continues to expand in the area, with two build-to-suit projects underway. The first is a 123,000 square foot build-to-suit facility for Munster Steel, in Hammond’s West Point Industrial Park. The second is a 350,000 square foot build-to-suit project for Urschel Laboratories Inc. at Coffee Creek Center in Chesterton.
There are four additional build-to-suit projects expected to break ground, totaling 628,000 square feet, during the third quarter for Illini Hi-Reach Inc., Superior Truss & Panel Inc., MonoSol, and Pratt Industries.
Significant sale transactions in the area include Industrial Realty Group LLC who, in June, purchased two buildings in Hammond as part of a four property portfolio acquired from Mirvac Industrial Trust. According to Hiffman’s submarket review, the Hammond buildings include the 249,980 square foot building located at 2531 S Columbia Ave, and the 269,093 square foot building at 4527 S. Columbia Ave.
There were several significant new lease transactions, including Pratt Recycling Inc.’s 110, 187 square feet lease at 1 N. Bridge St. in Gary, and AM Manufacturing’s 56,800 square feet lease, as well as International Paper Company’s 56,400 square feet lease, at 9200 Calumet Ave in Munster. However, steel manufacturer, Heidtman Steel Products, signed the largest lease for 112,900 square feet at 4407 Railroad Ave in East Chicago.
There are nine available options for 100,000 square feet or larger contiguous blocks of space remaining, which suggests that the area can support additional tenant demand.
Overall, there is nothing but positive things in store for Northwest Indiana, as the submarket review concluded that companies continue to be drawn to the area’s economic advantages (as opposed to the neighboring areas of Illinois), construction activity over the past two years has accelerated, and the vacancy rate has returned to healthier levels below 7 percent.