There have been a flurry of new job announcements over the last 18 months. This is encouraging news for the city of Indianapolis. Nearly half have occurred this year and eight alone since April. While these new jobs will obviously impact the local labor market, we wondered how this would impact the Indianapolis office real estate market? Read on and download the special report for more insight.
What to expect
From January 2016 to May 2017, there were over 25 major office employment announcements (100 jobs or more). By our count, thats 7,700 new jobs that will be coming to Indianapolis. We also found 600 jobs will be cut as of this writing. While we expect more to be cut and some new jobs to not come to fruition, the net growth of jobs is still positive.
Where are the jobs?
By and large, the new jobs are coming from the tech sector. Indianapolis is establishing itself as a tech hub of sorts with new and existing companies expanding in the circle city. This is largely the result of Salesforce planting their flag atop the newly minted Salesforce Tower, driving many tech companies to follow suit. In addition, most activity has occurred in the CBD with over half of new leases signed in the submarket.
What’s the impact to CRE?
To answer that, we first need to make a few assumptions. First, we assume that the job announcements come to fruition and 7,100 net new jobs will come in the next five to seven years. Second, we assume that 5 employees require 1,000 square feet of office space. After using this logic, we believe that 1.4 million square feet will be necessary to accommodate the 7,100 new employees. This amount could fill Salesforce Tower one and a half times!
The good news is that over half of the 1.4 million square feet we estimate is required has been leased. For the companies that have yet to expand their offices, the market has supply to absorb large requirements. There are several large blocks on or soon coming to market around the metro area as well as some in historically-constricted submarkets.