In recent years, the Plainfield, Ind., submarket has become nearly synonymous with U.S. distribution in the same way that 8A (New Jersey), the Inland Empire (Southern California) and the I-55 corridor (Chicago) have.
Those submarkets all ring a bell with tenants and investors alike because of excellent infrastructure, aggressive development, availability of appropriately-zoned land and a proven, critical-mass of existing facilities.
In Indianapolis, though, very little distinction exists between “submarkets” within the greater metro area. In fact, there is little if any difference between the various submarkets in terms of labor, transportation, real estate cost or incentive opportunity — the driving factors of site selection. What sets Plainfield apart is its perception.
The perception of Plainfield is that “everyone else is there.” That herd mentality has rung especially true among institutional investors and third-party logistics providers. However, if you take a look around, you may be surprised what else you’ll find in surrounding areas. Here are some highlights from Plainfield’s neighboring submarkets that often go unnoticed:
- Greenwood is at 100% occupancy and recent investment sales indicate cap rates at and below 7%
- Mt. Comfort is at 92% occupancy and one pending lease away from 100. It boasts some of the highest net rents in the metro area ($3.08 psf average)
- Whitestown/Lebanon has benefited from some recent activity including Subaru (700,000 SF), Lids (700,000 SF) and Gander Mountain (700,000 SF), which are all completed or in-progress during 2013
- Monrovia was awarded a 550,000 SF BTS, priced at a 6.75% yield and has more land than any other submarket available for future development
All of these “alternative” Indianapolis submarkets include both high-profile ownership (e.g., Prologis, Duke, Cabot, KTR, Hillwood, etc.) and Fortune 500 tenants (e.g., Adidas, CVS, Case New Holland, Harley-Davidson, Emerson, Amazon, etc.)
Need more evidence that life exists outside of Plainfield? Consider this: the majority of retail distribution centers actually reside outside of the Indianapolis metro area including the mega –distribution centers occupied by Home Depot, Wal-Mart, Family Dollar, Advance Auto, Lowe’s, Pet Supplies Plus, Tractor Supply and others.
Plainfield will certainly see its share of tenants and aggressive speculative developers. However, the savvy investor and occupant will take advantage of all the benefits that these alternative submarkets have to offer, including lower land costs, abundant labor and incentives opportunities. Look for more distribution activity to occur all around Indianapolis as these advantages are exploited.