Indianapolis is experiencing explosive growth in the mid- and big-box grocery store sector. Capitalizing on the consumer trend of active and healthy lifestyles, the metro area has attracted new concepts to the market. Fresh Thyme Farmers Markets will soon join the already healthy and organic offerings of Whole Foods, The Fresh Market and Earth Fare. Although these brands have a smaller footprint than traditional grocers, these specialty gourmet grocers account for seven new stores consuming more than 160,000 square feet of retail space throughout Indianapolis and the suburban markets. This growth in the organic and health food concepts complements the well-care businesses that expanded their presence in the Indianapolis area last year, including Vision Works, Med Express, ATI Physical Therapy and Accelerated Physical Therapy. Consumer demand for convenient access to personal well-care services, such as medical spas, massage therapy, cosmetic dentistry and personal fitness is on the rise. These types of businesses account for a significant amount of absorption within several neighborhood shopping centers throughout the market. In that vein, consumers also are choosing healthier dining options such as grab-and-go prepared foods at their local grocer rather than hitting the fast food drive-thru or dining at a restaurant. This preference …
Indiana
The big story in the Indianapolis office market is not the latest change in the occupancy rate or rents, but rather the desire by landlords and tenants to create a sense of place. Connectivity and collaboration, amenities and perks, as well as talent recruitment and retention have taken on a heightened importance. Interestingly, these buzzwords are used just as frequently when assessing corporate real estate as they are in the human resources department. Employees today look for their work experience to offer something more than a desktop. They look for connectivity to diverse and conveniently located amenities within walking distance. They want easy access to biking and walking trails and fitness facilities. They seek open collaborative workstations, game rooms, huddle rooms, bike storage, as well as showers and lockers. Their desires are influencing real estate development and the locations employers ultimately select. There is ample evidence of these trends in Indianapolis. Thanks to the wisdom of the city’s early founders and more recently key city officials, Indianapolis enjoys a condensed city core. Its downtown already has the framework to offer up an easy-to-connect experience, recently enhanced with a world-class urban bike and pedestrian path connecting neighborhoods, cultural districts and other …
The Indianapolis industrial market has experienced a significant amount of absorption during the past several quarters, driving down the multi-tenant vacancy rate to 3.3 percent and leading to a new round of speculative development, according to brokerage firm Cassidy Turley. The key engines driving growth are technology, housing, auto suppliers, and distribution centers related to Internet sales. Some 3.2 million square feet of speculative industrial space is under construction in the Indianapolis area. The city currently has 240.5 million square feet of inventory. When completed, the speculative product in the development pipeline is expected to result in the multi-tenant vacancy rate rising closer to the historical norm of approximately 4 percent. Michael Weishaar, senior vice president and principal at Cassidy Turley’s Indianapolis office, says the low industrial vacancy rate is partly the result of proper planning. “Our developers are intelligent about oversupply,” says Weishaar. “They saw a rough economy and thought we needed to re-look at our supply chain.” With so much speculative development under way, is there enough demand to absorb it all? Although vacancy rates will rise closer to their historical average in the short term when space comes available, in the long run this amount of space …
Activity is picking up in the Indianapolis retail market, buoyed by a strengthening economy that has intensified retail expansion. Positive job growth, escalating new home construction and rising retail sales are attracting new stores and have instigated other retailers to consider additional locations in selective pockets around the metro area. The northern submarkets within Hamilton County are particularly active, especially around Exit 10 of I-69 in Noblesville, where new housing construction has fostered retail growth. In Carmel, the renovation and re-tenanting of The Centre and The Corner are moving forward. The 82nd Street corridor is also lively as the nearly completed expansion of The Fashion Mall has attracted new retailers to the state such as West Elm and Free People. Nearby, last year’s repositioning of Rivers Edge is initiating smaller new developments with Dairy Queen, Wendy’s and Famous Dave’s among the recent openings. The 127,000-square foot project will include an Earth Fare grocery, Walgreens and Panera Bread. Large spaces are being filled across the metro area. Jo-Ann Fabrics is taking 28,000 square feet along Highway 36 and Brickhouse Fitness has penned a lease for 15,000 square feet along Lafayette Road. Although retail construction is at near historic lows, smaller buildings …
Despite the slow economic recovery nationwide, there is life in the commercial real estate investment market in Indianapolis, especially in the office sector. Nearly 900,000 square feet of office properties traded hands in Indianapolis in 2011, for a total of $119 million, which is a 70 percent increase over office sales in 2010, and four times the sales volume in 2009. Major property sales such as Intech I/II/III, 9225 Priority Way Dr. in the Precedent Office Park and Heather Glen II marked a return of stabilized office building sales in Indy last year. The increase in sales velocity is expected to continue with several major office properties currently on the market, including the Capital Center downtown, Pennwood Office Park in Carmel and the Ascension Health Ministry Service Center in the northwest submarket. Cassidy Turley is tracking an additional 3 million square feet of office properties expected to come to market this year, or in 2013. Continued improvement in office fundamentals is an encouraging sign for investors. With 237,000 square feet of positive net absorption in the fourth quarter of 2011, the overall vacancy rate for Indianapolis now stands at 20.3 percent. No new speculative construction, three consecutive quarters of positive …
Although the Indianapolis retail market took a hit during the downturn, it never sunk as deeply into the doldrums as other U.S. cities, and has been relatively quick to rebound from its modest slide. Maintaining an unemployment rate well below the national average (8.7 percent at year-end 2010), with the prediction of 20,000 new jobs for 2011 ensures this market is headed in the right direction. Retail real estate brokers in this statistical region of more than 2 million were actually quite busy in 2008 and 2009 when most other regions were reeling from the economic crunch. Recognizing still-strong market fundamentals, retailers tried to seize on the doom and gloom of the times to lowball local landlords, who for the most part would not yield to unreasonable rent offers that they knew would tie them up for years to come. While retail vacancies remain low in the city’s most robust retail corridors, they are higher than they were before the downturn began in areas where demographics have shifted. We continue to see a flight to quality in this market with the most attractive, well-positioned shopping centers commanding surprisingly strong rents. For instance, Class A big box rents in highly desirable …
In comparison to many other U.S. markets, the Indianapolis bulk warehouse sector has weathered the financial crisis and the downturn fairly well, but in no way is the city immune to the recession. The market’s vacancy rate has crept up from 13.25 percent at the beginning of 2009 to 15.20 percent at the end of the third quarter. Some of this increase in the vacancy rate can be contributed to two new projects coming online — Browning Development’s Axcess70 Buildings 1 and 2, totaling 673,000 square feet, and Browning/Duke Realty’s 533,520-square-foot Allpoints Midwest. In 2008, the modern bulk warehouse market experienced more than 5 million square feet of positive absorption while managing reasonable growth of 3.35 million square feet. The net result was a 7.5 percent increase to the entire Indianapolis modern bulk market. Through the close of third quarter 2009, the market has remained mostly idle, while only recording two new transactions — AEL Span 144,075-square-foot deal and Niagara Water’s 226,900-square-foot deal — and only growing the overall market inventory by 2.5 percent. Only a couple of new projects have come online, but these projects were financed and under way prior to the financial crisis really hitting in the …
The hottest trend is to simply not develop! This holds true for all types of speculative development and is currently the case for build-to-suits. There is just nothing being built. Contemplated projects are more complex than ever. To get a development out of the ground, it now takes a true partnership between the user, developer, broker and lender. Having all the parties at the table to structure the deal is key to success in this environment. Four speculative projects, totaling approximately 1.45 million square feet, have been built since third quarter 2008 — the projects are currently 5.3 percent occupied. Facilities recently built include the 533,520-square-foot Allpoints Midwest Building 2 built by Duke and Browning in Plainfield; two buildings built by Browning in Mt. Comfort — a 423,000-square-foot modern bulk facility and a 250,000-square-foot hybrid-bulk facility; and Precedent’s 245,041-square-foot building, which is also in Mt. Comfort. These projects added 2.5 percent to the vacancy in the modern bulk product type. The above projects are located within the southwest and east submarkets of Indianapolis and situated along the Interstate 70 corridor, which is the jugular vein for commodities flow. Browning is the most active developer and is involved in three of …
While national multi-housing trends have begun to show recessionary weakness, Indianapolis area market fundamentals have held up well over the past 12 months. Indianapolis has long been one of the more affordable single-family markets in the country and until recently had been well-supplied with several very efficient large single-family developers. The deterioration of this industry is the single largest factor responsible for the city’s stable and improving multi-housing performance. The Indianapolis multi-housing market consists of 130,000 units in 683 communities (larger than 20 units). The average community size is 191 units. Market wide occupancies in Indianapolis bottomed out in 2003 at 87.1 percent and have been steadily climbing since to 90.9 percent in 2008. During this same period concessions have declined and 2008 rent growth was 2.2 percent, placing rents at $659 ($.75 per square foot). The city’s top 50 communities, once threatened to a greater degree by single-family housing, have faired well over the past several quarters. As with most seasonal markets, the Indianapolis market shows a very predictable bell shaped occupancy curve with fourth and first quarter occupancy lows and peaks in the second and third quarters. Until first quarter 2009, the impact of the current recessionary environment …
The Indianapolis industrial market posted a strong showing last year despite the economic challenges impacting the nation. More than 4.3 million square feet of space was absorbed in 2008, and the region’s industrial vacancy rate closed at 7.4 percent, a decrease of 1.1 percent from the start of the year. Several factors contributed to the area’s ability to move forward, not the least of which is the area’s long-standing stature as the Midwest’s crossroads for distribution. Construction continued, but on a more restrained level. Approximately 1.9 million square feet of new industrial space was completed last year, which is only a quarter of the volume — 8.8 million square feet — of new space added in 2007. A significant component of this new inventory was build-to-suit or expansions by existing owners or users. Additionally, rental rates for industrial space remained level; rents have not moved in either direction since 2007. The rates have remained low compared to other Midwest cities, which has attracted new regional and national players while encouraging local businesses to maintain and renew their existing leases. As in past years, modern bulk distribution space has led the charge of new activity. Approximately 4.3 million square feet of …