By Jeremy Woods and Gwen Rodenberger, CBRE
Indianapolis industrial leasing activity in January may have started as cold as the winter temperatures, but activity has only gotten hotter, even as fall wanes into winter.
Indiana at one point called itself the Crossroads of America, and the moniker holds true today. Indianapolis is strategically located in the center of the state, with four major interstates running through it. The city’s businesses also benefit because of the second-largest FedEx hub at its airport. As a result, businesses can easily ship to most of the continental U.S. within three days, minimizing outbound shipping costs.
In January, occupiers requiring 1 million square feet of distribution space in Indianapolis would have six first-generation shells (equivalent of 104 football fields) to choose from. If you could live with a bit less space, roughly 900,000 to 975,000 square feet, another three options could be added to the tour (adding an additional 47 football fields).
Fast forward just three quarters to today, and five of the nine “mega-bulk” warehouses, as they are aptly named, are 100 percent occupied. Even the most seasoned experts would not have predicted the speed at which these spaces would be absorbed. In these five transactions alone, Indianapolis removed the equivalent of 80 football fields of available space in nine months.
Modern space needs
The Indianapolis industrial market is comprised of 352.3 million square feet of space, of which 55 percent (192.2 million square feet) is classified as modern bulk distribution. This designation is primarily based on physical specifications such as clear height, truck court depth and the amount of auto and trailer parking.
The year built correlates to a large degree with these physical attributes — the newer the building, the higher the clear height, the deeper the truck court and the greater the amount of auto and trailer parking available. Occupancy for this product type as of January 2025 was 86.2 percent and sits at 88.8 percent as of this writing. Moving the occupancy needle by 260 basis points on an inventory of over 193 million square feet is no small task. The five-year average occupancy for the modern bulk product type is 89.6 percent, which includes its peak in 2021 where it reached 94.9 percent.
Occupancy in this product type is prone to be lower than the overall industrial averages for one simple reason — this is the type of product developers build on a speculative basis, meaning new available inventory is constantly being created.
For example, in 10 years, the Indianapolis modern bulk distribution market has expanded from 81 million to 193 million square feet in size. If we look at the 352.3 million square feet making up all industrial product types in Indianapolis, net absorption through third-quarter 2025 was 4.4 million square feet, equating to a growth rate of 1.25 percent (annual net absorption as a percentage of existing inventory).
Isolating just the modern bulk distribution space, the growth rate increases to 4.7 percent with 9.1 million square feet of net absorption on the 192.2 million square feet of current inventory. Indianapolis will need to see another 2 million square feet of positive net absorption to reach its five-year average occupancy, and based on current trends, along with the percentage of modern inventory, the chances are good it will happen sooner rather than later.
According to CBRE’s third-quarter 2025 State of the U.S. Industrial & Logistics Market, from 2023 to year-to-date 2025, there was positive net absorption totaling 750 million square feet for buildings built in 2020 and newer. Buildings built in 2019 and older saw a negative 356 million square feet in net absorption.
This is clear evidence of a flight to quality in the U.S. market and is what we are seeing here in Indianapolis, as all five of the mega-bulk facilities leased this year were built since 2022. Indianapolis now ranks 10th in the nation for year-to-date total lease transactions (new leases and renewals) of 100,000 square feet and larger, with a 3.8 percent overall U.S. market share.
Indy advantages
Interestingly, if you were to rank the top 10 markets by their proportion of new transactions to renewals making up the total leasing volume, Indianapolis would be nearly tied for first with Houston at 77 percent.
By way of comparison, Chicago, with its massive inventory of 1.2 billion square feet of industrial space, saw its proportion of new leases at 56 percent of its 27.9 million square feet of lease transactions over 100,000 square feet. Leasing activity in Chicago as a proportion of its inventory was 2.4 percent compared with the Indianapolis market’s 16 million square feet of leasing activity on an inventory of 352 million square feet, equating to 4.5 percent — nearly twice the activity on a percentage of inventory basis.
An additional factor driving demand is a greater emphasis on labor dynamics, power availability and transportation efficiency. Indianapolis is a market with a higher percentage of its workforce in the transportation and logistics category compared to its U.S. peers.
Indianapolis also has low electricity costs and excellent infrastructure, due to initiatives such as the state’s Major Moves transportation initiative, which focused on highway improvements. With e-commerce activity returning to its pre-pandemic rate, we could see the market outperforming for reasons outlined above.
The Indianapolis industrial market, particularly the modern distribution segment, is on pace to see its second-highest transaction volume levels on record. The factors driving this demand from a macroeconomic level are complex, and there are undoubtedly many of them. What we can say is that, from an inventory level view, Indianapolis’s high proportion of newer, more functional space is a major factor in helping it outperform markets with a higher proportion of older inventory.
In addition, as e-commerce sales increase their percentage of overall sales in the U.S., having a centralized location minimizes outbound transportation costs, making Indianapolis an attractive location for these types of supply chains.
Finally, with its incredibly high-quality workforce, the proportion of which is centered on the transportation and logistics industry, Indianapolis checks yet another crucial box for today’s modern distribution operations looking to optimize their ever more complex supply chains.
Jeremy Woods is an executive vice president and Gwen Rodenberger is a senior research analyst with CBRE. This article originally appeared in the November 2025 issue of Heartland Real Estate Business magazine.