by Dan Rafter
Bob Smietana doesn’t consider the 220,000-square-foot spec building that HSA Commercial Real Estate recently built in the Indianapolis suburb of Plainfield, Ind., to be a risk: The industrial market in Indianapolis is tight. And his company isn’t alone in addressing this demand with spec industrial construction.
As Smietana, vice chairman and chief executive officer with HSA says, the time was right for the spec industrial building at Plainfield’s busy Gateway Business Park.
“We saw a gap in the market,” Smietana said. “And this building helps fill that gap.”
The gap to which Smietana refers? There aren’t many new industrial spaces available to tenants looking for 50,000- to 200,000-square-foot spaces.
That’s because many of the new industrial spec buildings in the Indianapolis market are large projects, often totaling 1 million square feet of space. The developers of these buildings are not eager to break their buildings into 200,000-square-foot chunks of space. They’d rather lease them out to one or two larger tenants.
HSA’s spec building — Gateway Industrial 3 — provides an opportunity for smaller tenants to move their businesses to a smaller yet modern space.
The new industrial building sits on 13 acres immediately southwest of the Indianapolis International Airport. It features 32-foot clear heights, 24 truck docks, four drive-in doors and 155 parking spaces. HSA partnered with Boston-based Great Point Investors LLC to develop the building.
Interest has been strong for the building, Smietana said. HSA is fielding proposals for 200 percent of the building’s remaining space after having already signed a lease that will fill a quarter of the development. Smietana says that the entire building should be leased by the fourth quarter of this year.
Smietana says that there are plenty of reasons why the Gateway Business Park is so busy today. The entire space was master-planned to become a modern industrial park. And because it sits on the west side of Indianapolis’ airport, it provides tenants with easy access to the airport’s cargo area. New buildings in the park generally receive a 10-year graduated tax abatement, which has encouraged developers to target the park for new buildings.
“Indianapolis, basically the entire state of Indiana, is a very pro-business state,” Smietana said. “The state is attracting regional tenants when these tenants have choices. It pains me to say this as a resident of Illinois, but Indiana is winning the battle for regional tenants that have a choice to locate in either Illinois or Indiana. Indiana has been winning more times than Illinois has been lately.”
HSA has a long history with the Gateway Business Park, owning 50 acres of land in it. The company has already built three industrial buildings here, all of which are 100-percent leased.
HSA is far from alone, of course, in adding spec industrial space to the Indianapolis market. This market remains one of the strongest when it comes to this type of property.
But Smietana says that the number of spec industrial developments hasn’t overwhelmed the demand.
“We still have some runway left,” Smietana said. “The amount of leasing activity in this market is still strong.”