INDIANAPOLIS—This city and its suburbs have seen a tremendousexpansion of industrial real estate over the past few years, andnow that the recovery has gathered even more steam, the expansionseems to be accelerating. Developers of modern bulk distributionbuildings, medium-sized distribution, manufacturing and otherfacilities have launched many projects and investors have alsobegun swooping in. Granite Real Estate InvestmentTrust, a Toronto-based firm, for example, has justpurchased three industrial properties in the suburbs fromsubsidiaries of Ingram Micro Inc. for a totalpurchase price of $68.75 million.

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The portfolio includes two logistics-distribution facilities inPlainfield, totaling 1,033,520-square-feet. Granite paid $65.45million for the buildings, which also include a total of about140,000-square-feet of office space and were constructed in 2009and 1999. Ingram Micro, a global technology and supply chainservices firm, will continue to occupy the properties and willenter into leases for an initial term of 10 years. The investmentrepresents an in-going yield of about 6.5%, Granite officialssay.

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Granite also agreed to purchase 29 acres of adjacent land in theAllPoints Midwest Business Park for $3.3 million.The land will provide for up to 585,000-square-feet of newlogistics - industrial space.

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Granite will fund the investment with its line of credit andcash on hand.

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According to Cassidy Turley, a commercial realestate services provider, by the third quarter the industrialsector here had already surpassed the five-year annual absorptionaverage of 2.7-million-square-feet. In the third quarter alone, themarket saw 1.4-million-square-feet of absorption and net occupancygains for the year have already hit 2.84-million-square-feet.

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“The Indianapolis industrial market is on an absolute tear,”says Jason Tolliver, regional vice president inCassidy Turley's Indianapolis office. “Thetraditional drivers of industrial space like housing, manufacturingand warehousing are solid, but the new engine of e-commerce hasshifted the market into another gear. As a result, Indianapolis hasemerged as one of the strongest markets in the US with some of thelargest e-commerce deals completed anywhere in the country.”

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Granite is not alone in making big Indianapolis purchases.Chambers Street Properties, a real estateinvestment trust in Princeton, NJ, for example, earlier this yearcompleted the $30.2 million purchase of 445Airtech Parkway, a 622,440-square-foot warehouse anddistribution property developed by Prologis/BrowningInvestments in suburban Plainfield's AirTechBusiness Park. The partners finished it in 2013, the firstspeculative industrial development in Indianapolis since 2008, andHartz Mountain Corp., a pets product supplier,quickly signed a triple net lease for the entire space.

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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.