This time last year experts claimed the imbalance between supply and demand in the industrial market would be temporary. And they were right. Data shows the industrial market in Indianapolis is back on track.
After a recent report from JLL was released, we can see developers actually finished around 6.0 million SF of new construction in the Indianapolis metro area, which is only slightly less than the 6.4 million SF completed during the previous year. According to an article from GlobeSt.com, “About 40 percent of the new space was leased at delivery. The vacancy rate did increase from 6.3 percent to 8.2 percent, but total net absorption for the year was 5.2 million square feet, a significant increase over 2014, when tenants absorbed 4.2 million square feet. Furthermore, over the past 12 months, rental rates increased 7.3 percent.”
Brian T. Seitz, Executive Vice President in JLL’s Indianapolis office, tells GlobeSt.com. “The market continues to evolve to a more balanced market in 2016 than it was in 2015. There is a steady amount of activity in the market right now that we believe will absorb additional space in the vacant spec buildings, building on the momentum that started to take hold with lease up activity in 2015.”
“Indy historically has been a market where we will see either over supply or under supply of product, it’s rarely positioned at total equilibrium,” Seitz adds. “Once we’ve run out of space there is a ‘rush’ to build spec space, that is followed by a period when development stops until we eventually run out of the excess space. And the cycle continues. It really is a matter of evening out the peaks as much as possible.”
Read more from Brian Seitz about the state of Indianapolis’s industrial market in the full GlobeSt.com article.