The Indianapolis office market finished 2016 with strong occupancy growth in the CBD, while the suburbs saw continued investment. Thanks to a burgeoning tech scene, downtown Indianapolis achieved more than 100,000 square feet of occupancy growth this year. This is the highest one-year total in more than a decade. Meanwhile, investment in suburban Indianapolis increased over previous years as several office properties traded hands.
More companies relocating from suburbs to downtown
This year, nearly 170,000 square feet was leased by tenants new to the CBD. This total is more than the past two years combined. With more companies looking to relocate from the suburbs to downtown, it is no surprise that the CBD posted the highest level of net absorption in the market this year. It was also one of the only submarkets to see vacancy decrease since last quarter. This trend will surely continue as almost 150,000 square feet in active requirements of current suburban tenants are looking to move downtown.
CBD, Keystone see greatest occupancy growth
Occupancy growth this quarter was limited as a result of a few large tenants vacating their space for owner-occupied locations. Most notably was Roche Diagnostics bringing employees located in 10300 Kincaid Drive in the Northeast submarket back to its headquarters. This created nearly 200,000 square feet of newly vacant space. The CBD, Keystone, and North Meridian/Carmel all finished off 2016 with positive net absorption. The CBD showed the greatest amount of absorption with over 50,000 square feet for the quarter and 100,000 square feet for the year.
Investors focus on northern suburbs
Six million square feet of office space traded hands this year, resulting in almost$600 million in sales activity. Three sales closed this quarter, and unlike previously this year, all occurred in the suburbs. In North Meridian/Carmel, Northpoint Center and Pennwood I & II were sold to Tryperion Partners and Kimmel Square, LLC, respectively. Nearby in Keystone, Haverstick I & II were acquired by Priam Capital. In total, 23 sales transactions occurred this year with several more set to close in early 2017.