INDIANAPOLIS—In 2014, secondary office markets across the US saw increased leasing velocity and investment, something that for several years had been mostly confined to the hot coastal markets. Indianapolis was one of the cities which have begun to see big improvements this year, and in the third quarter that recovery has continued, according to new research just published by Cassidy Turley. The firm reports stronger leasing velocity and improved fundamentals in all classes of office space. Furthermore, all classes of space posted occupancy gains for the third quarter and the year.
“It was another very strong quarter for the Indianapolis office market, and I was particularly pleased to see that growth is now permeating all classes of space as tenant expansions and new leasing continue to accelerate,” says Jason Tolliver, regional vice president in Cassidy Turley's Indianapolis office. “It is also very encouraging to see that job openings in important office sectors are rising, suggesting the strong employment trends that have propelled the Indianapolis recovery will continue to strengthen.”
Tenants in the region absorbed 94,487-square-feet in the third quarter of 2014 with net occupancy gains for the year at 238,918-square-feet. “Notable leasing activity for the year has surpassed 1.6-million-square-feet with over 400,000-square-feet occurring during the third quarter,” Cassidy Turley found.
The Midtown and Northeast submarkets have seen the most growth this year. However, seven of the 10 submarkets witnessed occupancy gains in the quarter and all saw improved underlying fundamentals.
Furthermore, vacancy rates overall fell slightly and are currently just under the historical average at 18.5%. The Midtown submarket's rate was only 5.1%. At 17.2%, class C space maintains the highest vacancy rate although all classes of space saw an improvement in the third quarter.
Cassidy Turley forecasts that hiring in key office-using sectors will mean vacancy declines of 50 bps to 80 bps. “Net occupancy gains will occur in all classes of space for the first time since before the recession, and net absorption for the year will surpass the 200,000-square-foot mark for the third consecutive year. Asking rents will realize annualized gains of 1.4% in 2014 with further improvement expected in 2015.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
