Indianapolis has long been an industrial power in the Midwest. That hasn’t changed. But uncertainty over interest rates, the upcoming presidential election, the health of the economy and geopolitical issues has slowed both sales and leasing in this market’s industrial sector.
The good news? The fundamentals of Indianapolis’ industrial market remain strong. There is still demand for warehouse, distribution and other industrial space here. The market, like so many others across the country, is waiting for a dash of certainty.
We spoke to Alex Davenport, senior vice president of the Colliers Midwest Capital Markets team, about the state of his market’s industrial sector. He’s a solid choice for this interview: Since joining Colliers in 2016, Davenport has been involved in more than $2 billion in transaction volume encompassing more than 23 million square feet of industrial, office and retail product across the Midwest.
Here is what he said about both the challenges facing the Indianapolis industrial market and the hope for a better future for this sector.

Alex Davenport, senior vice president of the colliers Midwest Capital Markets team
A slowdown in sales: Year-to-date in industrial, the square footage of what we’ve sold in the Indianapolis market is about a third of where we were in 2022. And it’s about a sixth of what we did in 2021, square-footage-wise.
When COVID hit and we for all intents and purposes shut down the whole economy, we wanted to put some gas on the fire to encourage some spending and economic activity. For two years, the Federal Reserve Board set its federal funds rate at 0%. That resulted in a ton of expansion of the economy. People were buying new homes and new cars. Developers were pursuing new development.
We had the ecommerce boom during COVID, too. Spec industrial space was a big deal in Indianapolis based on where we sit. You can reach a large majority of the United States in a day’s drive. Us being the crossroads of America, we had a ton of third-party logistics and warehousing demand.
We built so much new product. We weren’t unique. This happened across the country. And when interest rates started to run up in the early summer of 2022, that really slowed sales activity. Now there is limited liquidity across the board, and bid sheets have notably shrunk. Lenders are pulling back on leverage. Rates are going up. It’s all led to sellers holding on for better days.
Leasing challenges, too: The leasing side has slowed, too. Tenant demand is the real story here. As interest rates went up it was harder to close industrial sales. But tenant demand was still strong. That is now changing. In the third quarter, we did 2.7 million square feet of new industrial leasing. Our five-year average per quarter is 5.1 million square feet. We were at about half of that average in the third quarter. This third quarter was our slowest since the beginning of 2017.
People say that we are near pre-pandemic levels of leasing activity in our industrial market. But it is slower than that. This is all driven by a lot of uncertainty. It’s not just interest rates. It’s not just debt. There are consumer and corporate credit concerns. There are geopolitical issues. Everyone is just on the sidelines now: the manufacturer that is trying to expand to that next facility, the developer who is trying to decide whether to build that new building and the lender who will lend on that next deal. There is a lot of decision-making that is stalling today.
We are at a point in time in which we have virtually no new industrial development announcements. There are still new industrial developments being delivered today. But those decisions were made a while ago. There are very limited new announcements for the foreseeable future. We are right sizing the ship on supply.
But the long-term picture is more positive: The long-term view of the Indianapolis industrial market, though, is extremely positive. We are seeing more reshoring of manufacturing. The CHIPS and Science Act is providing new funding for the research and manufacture of semiconductors. Consumer habits have changed in a way that make it important for companies to operate more warehouse and distribution facilities. The Indianapolis industrial market is still well-positioned to take advantage of all this.
The leasing activity in all the markets we track is down in the third quarter relative to the last couple of years. It’s this point in time when no one has any conviction on what is going to happen. We are coming into an election year. There are these terrible events happening across the globe. There is expiring debt that is causing some concerns. We are in this kind of locked-up position.
But I think that the new year is going to bring a renewed thirst for expansion and growth. Lenders will be able to reallocate for the year and be more aggressive. But until we close out the year, it will remain sleepy.
An historically strong market: Indianapolis has always been a strong industrial market, and I believe that industrial remain the darling of the commercial sectors here for a long time.
We certainly have a great location. We have more interstates flowing through our state. Companies that locate here can reach a great portion of the United States is one day’s drive. The cost of doing business in Indiana is favorable, too. Our labor market has remained very strong.
The other element is the support our business community gets from municipalities. Municipalities provide a lot of financial incentives to encourage companies to do business. The surrounding communities around Marion County work together to create an environment of new growth.
But the most important reason for our industrial market’s strength remains our central location. That is important to any company’s supply chain. And that is not going to change. That is why I believe that our industrial market will survive this slow period and will emerge strong. Like I’ve said, the long-term future of industrial here remains bright. The long-term picture is a positive one.