INDIANAPOLIS—Cheap land, a central location and a dense transportation network has made Indianapolis one of the hottest markets for distribution buildings in the US. Developers have 11 buildings, which will total about 6.5-million-square-feet, either under construction or in the planning stages, according to JLL. But current tenant demand remains strong enough to fill even that much space.
The average vacancy rate for bulk distribution space throughout the Indianapolis market was 6.1% at the end of 2013. And the Chicago-based firm’s researchers found fifteen tenants looking for spaces ranging from 100,000-square-feet to 800,000-square-feet, a total of about 7-million-square-feet of space. This would more than fill the 2.5-million-square-feet of spec space recently delivered or under construction and the other 4 million-square-feet of space still in the planning stages.
“The scarcity of large blocks of industrial space in Indianapolis is creating a healthy spec development market that is balanced by growth in demand for spaces of 100,000-square-feet or larger,” says Steve Schwegman, an executive vice president with JLL. “This activity demonstrates the overall strength of Indianapolis and its position as a leading global supply chain and logistics market.”
The southwest side of Indianapolis, including suburbs like Plainfield, has seen the most development. The five speculative buildings under construction or recently delivered, all on the southwest side of Indianapolis, are:
- GreenParke One, a 770,000-square-foot project owned by Welsh Property at 3747 Plainfield Rd.
- Airwest 14, a 476,000-square-foot building by Opus and Northwest Mutual at 2201 Reeves Rd.
- World Connect at Ameriplex Building 2, a 462,000-square-foot building by IDI at 9040 Orly Rd.
- 2450 Stanley Rd., a 450,000-square-foot building owned by TDC
- Airwest 12, a 448,000-square-foot building by Opus and Northwest Mutual at 2301 Reeves Rd.
Prologis, Duke Realty and IDI have proved the viability of spec projects over the past 12 months. Chambers Street Properties, a real estate investment trust in Princeton, NJ, for example, just completed the $30.2 million purchase of 445 Airtech Parkway, a 622,440-square-foot warehouse and distribution property developed by Prologis and Browning Investments in Plainfield’s AirTech Business Park. The partners finished it just last year, the first speculative industrial development in Indianapolis since 2008, and Hartz Mountain Corp., a pets product supplier, quickly signed a triple net lease for the entire space.