Indianapolis Commercial Real Estate on the Rise.
Pinning Down Data on Quickly Shifting Office & Industrial Markets.
Indianapolis Office Market Insights
According to the Bureau of Labor Statistics, Millennials will make up 75% of the workforce by 2030. This shifting workforce demographic is changing the traditional office market landscape across the U.S. Communities are investing millions of dollars to create live-work-play environments to attract the talent needed to advance their communities into the next 50 years. The city of Indianapolis and surrounding communities, such as Fishers and Carmel, have followed the live-work-play path, resulting in millions of dollars being spent on new office developments.
Since 2015, the city of Fishers has made $340 million worth of investments in commercial and residential developments in its downtown area. In effect, companies are following. RQAW opened its new $4 million headquarters in June 2018 inside a newly constructed $47 million mixed-use development. And in Carmel, progress is coming along on multiple developments that will bring 224,600-square-feet of office space to the market. These developments, although large in nature, are expected to have a minimal impact on the office vacancy in Carmel, as 92% of the space will be occupied upon completion.
As it relates to the city of Indianapolis, much of the activity in Q2 was focused on renewing existing tenants, with a few larger tenants relocating to new space. Most notably was American Structurepoint relocating from its 42,000-square-foot building at 7260 Shadeland Station into 67,000 square feet at 9025 River Road in the Keystone submarket. Additional movements anticipated for the Keystone submarket include CBRE Group relocating out of the downtown market into 21,420 square feet at 8888 Keystone Crossing, and Duke Realty constructing a new 78,000-square-foot building for its new headquarters.
- We expect owners to continue to develop amenity-focused space within buildings and office parks to attract tenants.
- A rise in vacancy anticipated for downtown Indianapolis towards the end of 2018 due to large tenant relocation.
To access our full 2Q 2018 Indianapolis Office Market report, Click Here
Indianapolis Industrial Market Insights
Low interest rates, the revival of the manufacturing industry, and the rise in e-commerce have been key factors driving the growth of the industrial market in the United States. According to the National Association of Manufacturers, manufacturing supports an estimated 17.2 million jobs in the United States, and more than 800,000 new manufacturing employees have been hired over the past three years. This doesn’t seem to be slowing down anytime soon as a recent report by Deloitte and the Manufacturing Institute indicates that 3.5 million manufacturing jobs are expected to be created by 2025. The rise in e-commerce is also generating demand for more modern bulk warehouses, and with eight different interstate systems intersecting in Indianapolis, the local industrial market is following similar growth trends.
Indianapolis has experienced historical growth in the amount of new industrial buildings being constructed. In total, 7.4 million square feet is expected to be delivered in 2018, a slight decrease from 2017, where 8 million square feet was constructed. As for the activity of build-to-suit space compared to purely speculative buildings, so far, we’ve seen a decrease from 2018 compared to 2017.
Close to 50% of the space being constructed in 2018 is being built on speculative basis compare to 79% in 2017. As more companies are deciding to construct build-to-suit facilities, this limits the risk developers face finding tenants for their buildings and illustrates the demand from companies who want to locate to the Indianapolis market. As an example, the largest industrial project constructed thus far in 2018 was a 708,230-square-foot build-to-suit for HP/Ryder Logistics at Allpoints Midwest in Plainfield.
To access our full 2Q 2018 Indianapolis Industrial Market Report, Click Here
- Area’s located along interstate highways, such as Whitestown, Plainfield, and Greenwood, will continue to attract new industrial developments for the foreseeable future.
- With several existing large spec buildings having over 400,000 square feet of space available, we expect limited new spec developments over 400,000 square feet to get underway until these spaces become absorbed.