After a slow start this year, the Indianapolis office market experienced a nice rebound with 121,000 square feet of net absorption during the second quarter. Even better is that the good news is coming out of more than one area of the metro area, illustrating a strong market across the board. Additionally, employment continues to rebound as well. The city’s unemployment rate remains at one of its lowest levels in this millennium. See some of the most interesting highlights below from the Q2 Indianapolis Office Outlook Report.
Impact of a Single Move in the CBD
Salesforce’s move to the newly minted Salesforce Tower has had a profound impact on the CBD. The company’s preference for downtown Indianapolis has prompted a wave of tech companies to follow suit. Since January 2016, 30 major employment announcements (100 jobs or more) were made throughout the MSA. If companies meet all hiring goals, it will be enough to fill Salesforce Tower, the state’s tallest building, one and a half times. This equates to 1.4 million square feet of office space, over half of which is already leased. All of these hires need space so expect to see more expansions and new leases signed in the CBD. In addition, asking rents continue to rise, so much so that the Class A annual growth rate is among the highest in the world!
Investors drawn to North Meridian/Carmel
North Meridian/Carmel is proving to be popular with investors as all four sales this quarter occurred in this submarket. This brings the year-to-date total to 12. Over half of these transactions centered around Class B product in the North Meridian/Carmel submarket. These value-add properties represent an excellent entry point to one of Indianapolis’ most desirable submarkets for investors. Why? Because demand for space in this submarket remains strong. It has the most active requirements in both number and square footage in the market.
Space is scarce in the Northwest
The Northwest submarket posted the highest total and Class A net absorption of suburban submarkets this quarter. Four of the five largest deals year-to-date in the Northwest are new deals, while most other submarkets are seeing mainly renewals.
Get all the facts and figures in the Q2 Indianapolis Office Outlook Report.