Indy Industrial Market Will Have Big Fourth Q

INDIANAPOLIS—The industrial market here has had a remarkable run in the past few years, but recently the pace of leasing fell off just as vast amounts of new spec space began to come online. But a major new lease by one of the metro area's top users, and several others that landlords will probably complete later this year, means the market will likely end 2015 with a burst of activity.

OHL, one of the largest 3PL companies in the world, has just signed a lease for an additional 321,627 square feet in the Indianapolis market, according to JLL officials. The company's decision to fully occupy 1251 S. Perry Rd. in suburban Plainfield expands its footprint here to more than three million square feet.

“It seems significant that OHL has continued to grow in what has been a somewhat stagnant market,” JLL's executive vice president Steve Schwegman tells GlobeSt.com, as it shows that the demand for local product has not abated. Earlier this year, for example, JLL, along with CBRE and ProVenture, closed two leases for OHL: a new lease for 450,000 square feet with TDC at 2450 Stanley Rd. and a 400,225 square foot renewal with Duke Realty at 2425 Perry Rd., both in Plainfield.

Schwegman and senior vice president Matt Dickerson represented the landlord, KBS Realty Advisors, in OHL's latest transaction. OHL was represented by ProVenture, CBRE and a JLL team of Jess Andrews, Andrew Morris and Schwegman.

The KBS building is a state-of-the art, modern distribution building in the heart of the Plainfield submarket. Its features include a cross-dock layout, 36' clear height, a climate-controlled warehouse, secured truck courts and abundant parking. The building was formerly leased by Ingram Micro.

“Nobody can really put their finger on why leasing deals slowed,” Schwegman adds. Developers began launching a lot of specs in 2013 and 2014 and for a time landlords were getting a lot of deals signed. “But they have not filled up as fast as everyone thought they would.”  

However, a couple of months with low absorption numbers are not unheard of here if the large distributors decide to take some time and mull over the various options. “This has just been one of those years,” Schwegman says.

Furthermore, in addition to this new OHL lease, Schwegman knows of two other deals that he is very confident will get signed this year and account for about one million square feet. These transactions would go a long way toward putting the metro region's industrial market back on track. “It would be a phenomenal quarter. It would be one of the best quarters we've had in several years.” In fact, he says these new leases should give developers enough confidence to launch additional specs in 2016.

And 2016 could shape up as a great year. Distributors all across the US continue to expand with no slowdown in sight and with its central location, Indianapolis should expect to get its share of that business, especially since it has a number of modern distribution spaces ready to go. “All things being equal,” Schwegman says, “markets with space available will win the deals.”