Brian Seitz, SIOR, Executive Vice President, JLL
Indianapolis was recently ranked as one of the top distribution markets in the country, landing at seventh out of 50 markets that were tracked, according to JLL’s report, The Leaderboard: The Top 18 Distribution Markets in the United States. Due to Indianapolis’ convenient location, unsaturated market and affordability, it is starting to warrant comparisons to the likes of New Jersey, California, Chicago and Dallas. The report ranked markets based primarily on important site selection influencers such as population and demographics, labor availability, wage rates, energy costs, transportation and infrastructure, industrial real estate leasing and investments, as well as local tax and economic incentive opportunities.
Six speculative industrial projects either broke ground or announced they will soon break ground during the third quarter totaling nearly three million square feet—further illustrating the strength of the Indianapolis-area’s thriving industrial sector. Even more impressive is that the developers of the facilities have enough confidence in the market that they are building them on a speculative basis with no signed leases yet. Why is Indianapolis’ industrial market so ideal?
Location is key
Indianapolis is located within a day’s drive to as much as 75% of the country plus locations in Canada. This is ideal from a distribution perspective for companies looking to move product quickly to customers. Not only that, but its number of interstate connections and air cargo options, such as FedEx’s second largest hub, increases the opportunities for delivery. The rise of e-commerce is significantly driving this demand. How else are you supposed to get your same-day delivery from Amazon Prime?
Indianapolis has a significant stock of Class A space, has not been overbuilt, enjoys relatively low land costs and is generally affordable which are factors that all attract warehouse and distribution operations. Taken into consideration the four new distribution centers coming on the market, there will be additional space available for companies to move right in and make it business as usual.
Generally speaking, Indianapolis enjoys a relatively reasonable cost of doing business. This is achieved thanks to favorable wages, labor availability to fill positions and a business friendly state that offers tax and municipality incentives. This is ideal from the perspective of both the site selection and investment opportunity.
Given the recent announcement of the projects in Plainfield, some may question if the peak is near. However, recent reports of brick and mortar stores filing bankruptcy due to online competition encourages companies to increase their e-commerce presence, so warehouse and distribution centers in ideal locations like Indianapolis serve as an opportunity for continued growth.