by Dan Rafter
Indianapolis’ industrial market remains one of the hottest in the country. And Cassidy Turley has the numbers to prove it.
Cassidy Turley released its third-quarter industrial market update for Indianapolis, and the report is filled with good news. By the end of the third quarter, Indianapolis had already beaten its five-year absorption average of 2.7 million square feet.
During the third quarter, the Indianapolis market absorbed 1.4 million square feet of industrial space, Cassidy Turley reported.
“The Indianapolis industrial market is on an absolute tear,” said Jason Tolliver, regional vice president in Cassidy Turley’s Indianapolis office, in a written statement.
What’s behind this boom? Tolliver cites the traditional drivers of the industrial market — housing, manufacturing and warehouse all remain solid. But he also points to the growing importance of e-commerce.
“The new engine of e-commerce has shifted the market into another gear,” Tolliver said. “As a result, Indianapolis has emerged as one of the strongest markets in the United States with some of the largest e-commerce deals completed anywhere in the country.”
The Cassidy Turley report showed that nearly all industrial product types registered positive absorption in the third quarter. Demand in the modern bulk and medium distribution markets was especially strong, according to the report.
Leasing velocity was strongest in the Southwest and Northwest submarkets, though net absorption gains improved fundamentals in nearly all industrial submarkets, according to Cassidy Turley.
The overall vacancy rate for the Indianapolis industrial market stood at 5.2 percent in the third quarter, Cassidy Turley said. And that’s despite the delivery of several spec industrial projects. The vacancy rate for medium distribution products was even better, hitting 4.2 percent for the third quarter.
Cassidy Turley experts do expect the industrial vacancy rate to rise the rest of this year and into next, mostly because such a large number of speculative industrial projects are expected to hit the market. However, Cassidy Turley also predicted that asking rents for all types of industrial products should rise by at least 1.5 percent during the rest of 2014, with gains eventually hitting 2.4 percent in 2017.