INDIANAPOLIS—Since the recession, this metro region had developed into one of the hottest distribution markets in the nation. But recently, some observers worried that developers had put up so many new distribution buildings, many on a speculative basis, that supply and demand had gotten somewhat out of whack. But it looks like users absorbed a lot of space here in 2015, and have helped narrow the gap that had developed between supply and demand, according to a new market beat snapshot from Cushman & Wakefield. In fact, in 2016 the firm expects to see more speculative development.
Net absorption reached 5.3 million square feet for the year, the firm found, and the vacancy rate, after briefly exceeding the historical average of 6.1%, sank back to just 5.8%. Modern bulk buildings accounted for about 3.4 million square feet of the total absorption. “With the continued absorption of quality product, look for the market to shift closer to equilibrium in terms of supply and demand,” the firm said.
In the last quarter of 2015, developers completed three more construction projects, and added about 800,000 square feet to the region’s inventory. John Morrell Food Group completed its $43.5 million distribution center in suburban Greenfield, and Subaru completed a 247,500 square foot expansion at 945 Monument Dr. in Lebanon, while Duke Realty completed a 145,800 square foot speculative expansion of 1551 S. Perry Rd. in Plainfield.
Currently, developers have about 2.2 million square feet of industrial product under construction, and 1.4 million sqaue feet of that is speculative. “Moving forward, expect to see a continuation of build-to-suit activity in the region, as well as an increase in speculative development of the medium distribution product type.”