by Dan Rafter
We’ve written a lot about the boom in spec industrial development in Indianapolis. And that’s good news. But the better news is that Indianapolis’ industrial sector isn’t the only one that’s seeing more activity today. Josh Caruana, regional manager with the Indianapolis office of Marcus & Millichap Real Estate Investment Services, said that real estate deals are occurring at a faster clip in all of the region’s sectors.
“We are seeing an across-the-board uptick in activity,” Caruana said. “Without question, activity is on the rise here.”
Caruana, of course, is far from alone. Matthew Deahl, an office and industrial specialist with Marcus & Millichap, agrees with his co-worker that Indianapolis is in the middle of a solid commercial recovery, one that is touching all commercial sectors.
“Apartment deals are taking place at a high velocity compared to two-and-a-half years ago,” Deahl said. “And as far as industrial goes, Indianapolis is a distribution hub, so industrial is coming back strong, too. Those two sectors are leading the way.”
For Deahl, then, it’s not surprising that so much new spec industrial facilities are coming to the Indianapolis area.
“We have a bit time need in this market as far as industrial space goes,” Deahl said. “The Midwest in general has gotten healthier when it comes to industrial. That’s led to an increase in spec development in many Midwest markets. Tenants in Indianapolis are demanding larger spaces. They want 250,000 square feet or more. That has led developers to propose larger spec developments that they think they can fill rather quickly.”
Caruana points to pent-up demand among developers as one of the reasons why industrial and other deals are happening at a faster clip in Indianapolis today.
“A lot of developers had been sitting on the sidelines for the last two or three years,” Caruana said. “They now see an opportunity as a result of the improving economy. We are now even seeing multi-tenant retail developments come back into favor. Investors are more comfortable with this product because of the financing that is available to them. There is still obviously some uncertainty in the market. And the government shutdown hasn’t helped. But investors are still making decisions to put their money in our market.”
What is leading this surge of new development and investment in Indianapolis and its suburbs? Both Caruana and Deahl say that Indianapolis is a financially stable city and that Indiana is a business-friendly state.
Both factors have encouraged developers to target this key Midwest city, they say.
“Especially compared to our neighbor states of Ohio and Illinois, our government has taken a very stable, sound fiscal approach to running the state,” Deahl said. “Our state government has done very well in helping our developers succeed.”
“We have a very business-friendly environment here,” Caruana said. “There has been a concerted effort on the part of local and state government officials and businesses to make this a very business-friendly state. Maybe that’s why Amazon has decided to continue locating distribution hubs here to the tune of millions of square feet. And maybe it’s why tech companies that are relocating out of other major markets are finding that Indianapolis is a great location to do business in.”