Diamonds in the Rough | Indy Industrial

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By Steve Schwegman
Executive Vice President
JLL Indianapolis

Large speculative development and build-to-suits have monopolized the Indy industrial headlines recently. Meanwhile, two areas of the industrial market have silently outperformed their peers. Here are my top two (quietest) performers in the Indianapolis industrial market:

Park 100 mid-sized warehouse/ distribution

  • “Eye Catcher”
    • In mid-2014, Becknell Industrial announced the spec development of 3 industrial buildings on a land site that’s sat idle/vacant for decades: North by Northwest.  Prior to construction, leases were out on over 60% of the development!
  • Why so Successful?
    • North by Northwest is just on the fringe of the Park 100 industrial area which is over 19 million SF and 94% occupied.
    • Most of the buildings in Park 100 were constructed between the 1970’s and early 2000’s.  There’s been very little new development available for tenants seeking to upgrade their image or functionality of their space (until Becknell at North by Northwest).
    • Labor – the park sits in a very densely-populated area of Indy and offers close proximity to both white-collar and blue-collar labor pools.
    • Rents – because occupancy has remained steady/climbing and because availability has been limited, rents have performed well over the last several years.
  • Any challenges?
    • There will be very limited opportunities for developers to mimic Becknell’s success at North by Northwest due to the limited availability of land.

Comfort bulk distribution

  • “Eye Catchers”
    • Tippmann announces build-to-suit of 420,000 SF creating 200 jobs in January 2015.
    • Project Vine (a Fortune 50 retailer) signs lease on 456,000 SF in December 2014.
  • Why so Successful?
    • Occupancy –  over 3 million SF of bulk product and 100% occupied
    • Rents – because occupancy has remained steady/climbing and because availability has been limited, rents have performed well over the last several years.
    • Labor – not nearly as much competition for warehouse/ distribution labor (compared to other areas of Indianapolis) for a larger available workforce at more competitive wages.
    • I-70 – a very popular corridor for truck traffic into, out of and through Indianapolis.
    • Pro-business county – 10-year tax abatement available and granted on speculative development.
    • Availability of Land – still several sites available and ready for industrial development.
  • Any challenges?
    • There is a critical mass perception among most developers that the existing base of industrial product is too small.  The developers that have been successful in ground-up or value add projects in Mt. Comfort are: The Peterson Companies, Browning Investments, KTR Capital, Welsh Property Trust and Hillwood Properties.

Developers and tenants are already taking note of the momentum happening in these areas of town. I would expect to see more mid-sized warehouse development in 2015/2016 in Whitestown (the area closest to Park 100 with suitable land available) and the announcement of speculative development in Mt. Comfort with a likely delivery in 2016.

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