Suburban Indy Offices Find More Buyers

INDIANAPOLIS—Like many suburban office markets, Indianapolis' may have suffered during the recession, but an improving jobs picture has made its office parks more attractive to investors. Cushman & Wakefield / Summit Realty Group, for example, has just closed the sale of Waterplace Park, a 113,546 square foot, four-building suburban office portfolio in the region's Meridian Corridor, its largest office submarket.

Keystone Realty Group, an Indianapolis-based real estate manager, sold the property, located at 8935-9011 N Meridian St. Evergreen Investment Corp., based southeast of the city in Shelbyville, bought it for an undisclosed price.

"The Meridian Corridor has absorbed a significant amount of space this year,"  C&W/Summit capital markets vice president Alex Cantu tells GlobeSt.com. Furthermore, "there is a lack of new supply on the market," and both factors have helped make properties like this appealing.

From 2000 to 2007, whenever there was a burst of absorption, one of the the region's big players, such as Duke Realty, would launch another office project, he adds. But these developers don't do many office properties these days and "that is limiting our new supply."

Tenants occupy 69% of Waterplace Park, and Evergreen considers the property, developed in 1980, a value-add opportunity. Mid America Clinical Laboratories, Omnisource, and GoldPoint Clinical Research are just a few of the occupants.

The C&W/Summit sales team representing the seller was led by Cantu and senior director Alison Melton.

“Waterplace Park's combination of high visibility, efficient floorplates and beautiful park setting located in a dynamic infill location make this an ideal value add opportunity along the increasingly popular Meridian Corridor,” adds Cantu. “Evergreen Investors will benefit from a highly stable rent roll as well as significant upside via the lease up of the remaining vacancy.”

The Indianapolis office market showed solid growth in 2014, according to a recent report from JLL. The region saw nearly 240,000 square feet in net absorption by year's end and 3.5 million square feet of investment activity. LaSalle Investment Management/Global Property Investment Fund purchased the Precedent Office Park, a 21-building office complex in the Keystone submarket. Furthermore, other class A downtown properties like the 515,000 square foot Market Tower and the 705,292 square feet Regions Tower changed hands during 2014.

“This improvement is due in part to stabilized local employment, with strong activity from companies in the high tech, business services, healthcare and legal sectors,” JLL said.

The increase in STEM employment has helped drive up rents and occupancy levels, Cantu says, and therefore, he thinks "we're going to see a pretty healthy amount of investment in Indianapolis."