Jason Tolliver

    INDIANAPOLIS – The Indiana commercial real estate market has shown resilience in the face of recent economic distress and will continue to do so, according to new report released by Cassidy Turley at its “The State of Real Estate” event on Thursday. 

  While the economic omens look good for slow, steady growth in 2013, the federal government holds the key to state and local improvement.
   ”We have ‘March Madness’ coming up – with government decisions due on the debt ceiling, sequestration cuts, and the debt cap,” Jason Tolliver, Director of Research at Cassidy Turley, tells  GlobeSt.com in an interview. “All of these are making the market take a wait-and-see approach until they get some fiscal clarity from Washington.”
   Cassidy says the state’s industrial sector has shown the most resiliency with many new projects taking place all across Indiana, which shows demand will likely continue throughout the year.
   Tolliver attributes this to Indiana’s perfect location as a hub for shipping and to a rebound in manufacturing. 
   Cassidy’s report sees a murky outlook for the office market sector in the second half of the year, which will depend on how the policymakers in D.C. handle economic policy. 
   But so far in 2013, the office market has been “a pleasant surprise,” Tolliver says, adding that while vacancy rates remain stubbornly high, he is seeing positive absorption and the beginning of growth.
   In the retail market, Cassidy sees reasons for cautious optimism in 2013, with growth occurring at both the high- and low-ends of the retail spectrum, strengthening market fundamentals, and a more savvy shopper .
   Tolliver says location has been a driving force in retail, especially in the Indianapolis area where some venues are up to 96% occupied.
   And high-end properties are fairing the best. “There has been strong demand for prime Class A buildings and competition for space,” he says.
   The lower end of the market, however remains problematic, with no consensus on what to do about development as “they are not sure whether it’s over-developed or under-demolished,” according to Tolliver.
   The capital markets are providing the most vexation for Indiana commercial real estate as is true in the rest of the country.
   But the report sees reasons for some confidence in the year ahead, with the availability of loans and recapitalization taking place as well an increase in total transaction volume. 
   ”There is tremendous demand for loans,” says Tolliver, “but banks are reluctant to loan, except for Class A properties.”
   He says until fiscal guidance is provided by Washington, banks will remain cautious, being the slow spoke in the wheel of market growth. He said both Wall Street and Main Street are growing used to a dysfunctional Congress but expect an 11th hour deal to avert disaster.
   Looking further out, Tolliver sees health care real estate as an engine of expansion over the long term as the Baby Boom generation hits retirement. Many of the ancillary health services that are currently provided onsite will be moving out to new space. This is already happening with hospital services such as billing and other back office functions. This trend will continue and many health service providers will be looking to buy or lease space in the years ahead.
   Indiana Gov.-elect Mike Pence is schedule to speak at Thursday’s event, which is being held Butler University. Pence is slated to be sworn in to office on Monday, Jan. 14.
   To see a copy of Cassidy Turley’s  full report, go to:   www.cassidyturleyreport.com