INDIANAPOLIS—In the real estate world, this metro area is known primarily as an important distribution hub, and although the sector did not disappoint in 2015, in fact it had another historic year, the office market also showed signs of strength. That was one of the conclusions at Cushman & Wakefield's annual The State of Real Estate® Indianapolis event held on February 25 at the Murat Theatre at Old National Centre. About 1,200 industry, business and civic leaders also heard how the retail and multifamily markets are headed in the right direction and the strong desire among investors seeking greater yield to buy up Indianapolis-area properties. "Industrial is in some ways the new retail," Ken McCarthy, the New York-based principal economist for C&W, told the crowd. "This is the new way to get goods to people," and that has been very important to Indianapolis for years. Since 2011, when compared to all other US cities, he pointed out, "it's number ten on the total absorption scale," with 21.8 million square feet. "And the interesting thing was that during the recession, most of these cities were negative; not Indianapolis." The region had 13.9 million square feet of absorption in the recession years, making it one of the national leaders. "And it continues to boom during the recovery." Although there was some concern early in 2015 that industrial supply had outstripped demand, the market ended the year strong, with 5.3 million square feet of net absorption, according to statistics by C&W. Overall vacancy was at just 5.8% by the end of the year, lower than both the national and Midwestern averages. And during the fourth quarter, developers delivered three more construction projects, representing about 800,000 square feet of new inventory. According to C&W's senior vice president Bryan W. Poynter , ecommerce continues to drive new development and absorption throughout much of the region. He expects to see a continuation of build-to-suit activity in the region as well as an increase in speculative development of medium-sized bulk buildings. Furthermore, the explosive growth in the third-party logistics industry should continue to benefit Indianapolis, since it still has lots of available land and its central location makes it very desirable for providers. “Indianapolis is coming out of the dark ages of the recession into a renaissance of new office space and the rise of urbanism,” according to C&W managing director Jon R. Owens . Investors have started buying up and renovating older properties in the CBD that modern office users find appealing. “ Winning the war for talent is driving decisions about where employers locate, the office environments they create and the range of amenities they offer.” C&W also believes that this renaissance has spread from the urban core to the suburbs, where mixed-use developments that include restaurants, bars, clubs, food markets and public and private transportation have become the norm. The growth of the city's downtown has also helped fuel a growing multifamily market as younger workers look for spaces near their jobs. And according to senior vice president Scott Pollom , outside investors from both coasts will continue to show interest in Indianapolis properties. Furthermore, “expect to see new suburban communities with a more urban look, feel and utility complete with mixed-used developments and more transportation options.”NOT FOR REPRINT
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.