Indianapolis has the major positives that end users are looking for when they’re hunting for industrial real estate: The city is located in the heart of the country, an ideal spot for distribution. It is surrounded by highways and rail lines. The government in the state and city is pro-business. And there’s a large and highly-skilled workforce ready to work in the city’s distribution centers and warehouses.
For Michael Weishaar, senior director with the Indianapolis office of Cushman & Wakefield, this means that Indianapolis will always be a top choice for companies seeking industrial space.
“Our market is very strong right now,” Weishaar said. “The fundamentals that helped put us on target lists are still holding true today. I always talk about how we are the crossroads of America. That is true, and that is a big selling point today.”
The numbers back Weishaar up. They show an Indianapolis industrial market that is thriving today and shows no signs of slowing any time soon.
Big industrial numbers
In its most recent report, Cushman & Wakefield reported that the Indianapols industrial market absorbed nearly 2.3 million square feet during the third quarter of this year. At the same time, construction deliveries hit a high point for the year, with 10 buildings totaling nearly 2.6 million square feet.
Cushman & Wakefield reported that the Southwest submarket was the greatest driver of net absorption, with 805,445 square feet. The East ranked second, with 566,555 square feet of absorption.
Weishaar said that there are plenty of signs that this momentum isn’t about to slow. He points to FedEx, which is planning to build a $259 million distribution center in nearby Greenwood, Indiana, a facility that would be a major boon to employment here.
The FedEx facility will employ 455. This would include 80 fill-time jobs and 375 part-time ones.
“FedEx continues to invest in our market,” Weishaar said. “That shows confidence in the future here. Obviously, FedEx wouldn’t be building new facilities in our market if it didn’t see great things happening in Indianapolis.”
FedEx isn’t alone in targeting the Indianapolis area. UPS has invested $260 million for a new package-processing plant in Plainfield, a busy suburb of Indianapolis.
This new hub will be 893,000 square feet when done.
“That further illustrates the confidence others have in our market,” Weishaar said.
Weishaar said one of the factors attracting industrial users to Indianapolis is the business-friendly nature of the entire state of Indiana. The government here has a reputation for working with businesses to help make operating facilities in the state affordable, he said.
“We are a safe choice for users,” Weishaar said. “Our state government still has that positive reputation as an easy place to do business.”
Spec on the rise
As the Indianapolis industrial market continues to thrive, spec construction in this space is also on the rise, Weishaar said.
He said that Cushman & Wakefield is tracking nearly 7.5 million square feet of industrial construction right now. Of that number, roughly 5.8 million square feet is speculative, he said.
The good news? Weishaar said that 15 percent of that spec construction is already pre-leased.
With such a busy market, there are big industrial deals that tend to generate the most headlines. But Weishaar said that there are plenty of smaller industrial transactions, too, that truly fuel this market.
Weishaar said that the Indianapolis market today is seeing several industrial deals in the 100,000 to 300,000-square-foot range. And the users moving into these spaces are often new names to the Indianapolis market.
“There are a lot of new names that are coming into our area,” Weishaar said. “There are industrial users who are growing within our marketplace who have been here for a long time. But there are newcomers here, too, and that is adding to the vibrancy of our market. It’s nice to see that newcomers are still attracted to what Indianapolis offers.”
Weishaar said that the future of the Indianapolis industrial market is a bright one. There is simply nothing on the horizon that appears ready to slow down the growth here, he said.
“I do feel confident that we are going to continue to see spec development here,” he said. “There is a lot of construction activity going on now. That might give some reason to pause. But the good news is that the activity is there to support this construction.”
Like other busy industrial markets, Indianapolis is enjoying a boost from ecommerce users, Weishaar said. Amazon already operates four facilities in the Indianapolis market. And Amazon isn’t the only ecommerce company working from the area.