The office sector set a record in Indianapolis during the fourth quarter of last year, with rents growing at their fastest pace ever, according to the latest research by Colliers Interntational.
In its fourth-quarter research, Colliers reported that asking rents for the Indianapolis office market rose 4.4 percent in the fourth quarter. That is the highest annual increase on record.
Average direct asking rent hit $19.85 during the quarter, up from $19.01 during the fourth quarter of 2016.
Vacancy rates did rise a bit in this market, with Colliers reporting that the Indianapolis-area office market saw a vacancy rate of 16 percent in the fourth quarter. That’s up a bit from 15.4 percent in the fourth quarter of the previous year.
What’s interesting is that the Indianapolis CBD now has a lower office vacancy rate than does the area’s surburban markets. That’s the first time this has happened since 2012. Class-A product downtown abosrbed 265,090 square feet. This was due in large part to increased activity in top-tier office towers.
Colliers reported that downtown top-tier office towers shed 2.9 pp of vacancy in 2017 and ended the year with a 15.8 percent vacancy rate. Growth in the tech sector has played a big role in boosting activity in this sector, with Salesforce’s second quarter move into the newly branded Salesforce Tower being one of the biggest deals. InfoSys’s absorption of two floors in OneAmerica Tower was another big move for the CBD.
Class-A asking rental rates rose to an impressive $23.80 by the fourth quarter of last year, up 5.2 percent on a year-over-year basis.
Colliers had good news for investors and brokers, too, saying that 2018 should be a busy year in the office sector. The company pointed to the fact that Indianapolis made Amazon’s list for a potential second headquarters as yet another sign that this Midwest city is gaining attention as a hub for tech companies.