The Indianapolis industrial market wrapped up a record-breaking year with 1.2 million square feet of absorption in the fourth quarter. This brings the year-end total to eight million square feet, the highest level of occupancy growth the market has ever achieved in a single year.
Net absorption reaches new historical high
The Indianapolis industrial market wrapped up a record-breaking year with 1.2million square feet of absorption in the fourth quarter. This brings the year-end total to eight million square feet, the highest level of occupancy growth the market has ever achieved in a single year. This growth was far reaching as every industrial property type achieved positive absorption this year. Ten of the 11 tracked industrial submarkets grew in 2016. The Northwest was the lone exception. Look for the market to continue growing next year as speculative construction will bring several more quality options to the market at competitive pricing.
Speculative construction dominates construction landscape
Historic levels of net absorption combined with low vacancy (6.0 percent) led to an influx of speculative development this year. Only 1.6 million square feet of speculative space was delivered in 2016. Another 4.6 million square feet remains under construction with an additional 1.6 million currently slated to break ground in 2017. Demand for this space is evident as nearly 60.0 percent of the speculative space completed in 2016 has already been leased. Restricted availability also led to a rise in build-to-suit and owner-user construction as 2.1 million square feet was completed this year while 1.8 million square feet remains in the pipeline.
Sale activity doubles over previous year
Nearly 70 industrial sales closed in 2016. This more than doubles last year when only 30 sales transactions occurred. Investors, in particular, noticed Indianapolis’ high level of occupancy growth and low vacancy. Investment activity accounted for 62.0 percent of all sales transactions closed this year. Look for investor interest to remain high in 2017 as Indianapolis continues to be a major player in the emerging e-commerce industry.
Download the complete Industrial Outlook report for details on all of the different submarkets.