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MARKETBEAT
EconomyThe Greater Indianapolis economy is on a tear with job growth in high-wage industries well above the national average. As a result, the Indianapolis MSA unemployment rate (4.0%) continues to track lower than both the national and state averages (4.8% and 4.4% respectively in November). We expect the Central Indiana economy to remain on a sure footing in 2016 as above-average gains in high-paying professional services and consumer sectors will drive the expansion and support demand for warehousing. Advanced manufacturing should also be a steady presence as trade-related risks from a stronger dollar and slowing global growth are manageable given the small role that exports play in the local economy. Robust demand for autos also bodes well for Central Indiana. U.S. automakers capped 2015 with another solid month of sales gains, marking what was likely the biggest year ever for the industry, based on preliminary numbers. U.S. auto sales hit 17.47 million in 2015, eclipsing the old record of 17.35 million set in 2000. Analysts expect sales could go even higher in 2016 as unemployment continues to decline and more young buyers enter the market. This is great news for Indiana where manufacturing, largely related to transportation, accounts for one in four of the state’s jobs.
Market OverviewThe Indianapolis industrial market fi nished the year strong in the fi nal quarter, with overall market vacancy levels of 5.8%, staying relatively steady from the previous quarter. Net absorption levels reached 5.3 million square feet (MSF) for the year, with the Southwest (+2.9 MSF), Northwest (+799,541 SF), South (+708,265 SF) and Southeast (+480,177 SF) submarkets posting the strongest gains for the year. Submarkets with the strongest occupancy gains in the quarter were the Northwest (+533,579 SF), Southwest (+492,033 SF), and Southeast (+210,839 SF). In terms of product types, modern bulk (+3.4 MSF), manufacturing (+736,799 SF) and traditional bulk (+655,264 SF) fi nished the year with the strongest absorption numbers. With the continued absorption of quality product, look for the market to shift closer to equilibrium in terms of supply and demand.
Once again, overall vacancy in the Indianapolis industrial market continues to track lower than both the national
INDIANAPOLIS INDUSTRIAL
Overall Vacancy
Net Absorption/Asking Rent NNN4Q TRAILING AVERAGE
Market IndicatorsQ4 14 Q4 15 12-Month
Forecast
Overall Vacancy 6.0% 5.8%
Net Absorption 1.65M 1.62M Under Construction 9.69M 2.28M
Average Asking Rent $4.34 $4.45
Economic IndicatorsQ4 14 Q4 15 12-Month
Forecast
Indianapolis MSA Employment 1,007.8K 1,036.1K Indianapolis MSA Unemployment 5.4% 4.0% U.S. Unemployment 5.5% 4.8%
Net Absorption/Asking Rent4Q TRAILING AVERAGE
$3.20
$3.40
$3.60
$3.80
$4.00
$4.20
$4.40
$4.60
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2011 2012 2013 2014 2015
Net Absorption Asking Rent, $ PSF
Overall Vacancy
0%
1%
2%
3%
4%
5%
6%
7%
8%
2010 2011 2012 2013 2014 2015
Historical Average = 6.1%
Industrial Snapshot Q4 2015Indianapolis
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MARKETBEAT
Industrial Snapshot Q4 2015Indianapolis
and Midwestern averages. Through year’s end, vacancy rates in all submarkets have fallen to sub-10% levels, with North (1.8%), Southeast (2.3%) and Northeast (2.5%) being the tightest. Among industrial product types, manufacturing (2.8%), traditional bulk (4.0%) and medium distribution (5.0%) have the lowest levels of vacancy.
During the quarter, three construction projects were delivered, representing approximately 800,000 SF of new inventory. John Morrell Food Group completed its $43.5 million distribution center in Greenfield, which will bring 260 new jobs to the area by the end of 2016. Subaru completed a 247,500-SF expansion at 945
Monument Drive in Lebanon, while Duke Realty completed a 145,800-SF speculative expansion of 1551 South Perry Road in Plainfield. Currently, there is approximately 2.2 MSF of industrial product under construction, with 1.4 MSF of speculative development and 800,000 SF of build-to-suit construction. 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.
WITH THE CONTINUED ABSORPTION OF
QUALITY PRODUCT, LOOK FOR THE
MARKET TO SHIFT CLOSER TO EQUILIBRIUM
IN TERMS OF SUPPLY AND DEMAND.
Outlook
• With the continued absorption of quality product, look for the market to shift closer to equilibrium in terms of supply and demand.
• 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.
• Expect modest rental rate growth as the market continues its streak of strong leasing velocity.
Manufacturing Employment MANUFACTURING EXPANSION SOFTENED BUT REMAINS HIGH
Source: U.S. Bureau of Labor Statistics
Source: The Conference Board
Source: Cushman & Wakefield Research
Historical Net Absorption INDIANAPOLIS IS ON TRACK FOR ANOTHER STRONG YEAR
Vacant Space by Product Type PERCENTAGE OF TOTAL VACANT SPACE 4Q15
Manufacturing EmploymentManufacturing Expansion Softened But Remains High
Source: U.S. Bureau of Labor Statistics
80
82
84
86
88
90
92
94
2010 2011 2012 2013 2014 2015
Indianapolis MSA Manufacturing Employment (Ths., SA)
Vacant Space by Product TypePercentage of Total Vacant Space 4Q15
Source: Cushman & Wakefield Research
7%
19%
10%
48%
3%
13%
Office ShowroomMedium DistributionTraditional BulkModern BulkFlexManufacturing
Historical Net Absorption Indianapolis Is On Track For Another Strong Year
Source: The Conference Board
-2
0
2
4
6
8
10
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Net Absorption (MSF)
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MARKETBEAT
Copyright © 2016 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.
SUBMARKET TOTAL BUILDINGS INVENTORY SUBLET
VACANTTOTAL
VACANTVACANCY
RATECURRENT NET ABSORPTION
YTD NET ABSORPTION
TOTAL OCCUPIED U/C
AVERAGE ASKING RENT (ALL TYPES)
Downtown 354 15,528,558 0 286,932 1.8% (41,183) 11,967 15,241,626 0 $4.98
East 636 46,062,836 297,564 2,591,086 5.6% 129,957 49,435 43,471,750 0 $3.66
Northeast 388 17,935,857 114,109 456,515 2.5% 19,032 168,193 17,479,342 0 $5.59
North 121 4,535,928 2,077 80,867 1.8% 73,549 85,900 4,455,061 0 $6.03
Northwest 489 48,178,958 1,578,855 3,311,434 6.9% 533,579 799,541 44,867,524 1,081,700 $3.78
Southeast 354 17,626,369 424,630 406,373 2.3% 210,839 480,177 17,219,996 0 $3.45
South 132 12,854,540 2,104 967,956 7.5% 43,251 708,265 11,886,584 0 $3.88
Southwest 564 69,002,984 169,724 5,125,176 7.4% 492,033 2,978,154 63,877,808 1,200,169 $3.93
West 233 17,286,037 44,000 1,198,539 6.9% 159,710 47,163 16,087,498 0 $3.87
INDIANAPOLIS MARKET TOTALS
Office Showroom 726 17,213,374 30,115 922,674 5.4% 123,999 183,479 16,290,700 0 $8.95
Medium Distribution 1,148 51,885,620 151,388 2,593,271 5.0% 42,226 159,668 49,292,349 229,500 $4.84
Traditional Bulk 152 34,826,864 199,799 1,395,103 4.0% (55,751) 655,264 33,431,761 0 $3.33
Modern Bulk 142 70,224,249 1,995,530 6,662,985 9.5% 824,043 3,425,074 63,561,264 2,052,369 $3.72
Manufacturing 779 64,870,543 234,076 1,840,475 2.8% 319,328 736,799 63,030,068 0 $3.98
Flex 228 7,030,289 22,155 504,904 7.2% 120,501 27,937 6,525,385 0 $9.03
Transport 95 2,892,344 0 54,306 1.9% (52,450) (47,500) 2,838,038 0 $3.58
TOTAL 3,271 249,012,067 2,633,063 14,424,878 5.8% 1,620,767 5,328,795 234,587,189 2,281,869 $4.45
Select Deliveries 4Q 15
Select Lease Transactions 4Q 15PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET
710 South Girls School Road, Indianapolis 904,254 Confidential Renewal Southwest
1551 Opus Drive, Plainfield 400,359 OHL Renewal Southwest
4925-4945 West 86th Street, Indianapolis 309,600 Heartland Food Products Group Extension Northwest
500 South Enterprise Boulevard, Lebanon 306,397 Aurora Parts and Accessories Renewal Northwest
7901 West 21st Street, Indianapolis 299,000 Venture Logistics Renewal West
7635 Winton Drive, Indianapolis 237,476 CEVA Logistics Renewal Northwest
650 Commerce Parkway East Drive, Greenwood 235,000 Nestle Waters Lease South
800 Commerce Parkway Drive West, Greenwood 208,737 Arbonne International Renewal South
2370 East Perry Road, Plainfield 176,000 Best Choice Products Lease Southwest
5110-5188 West 74th Street, Indianapolis 151,200 Trends International Renewal Northwest
9910 North by Northeast Boulevard, Fishers 143,920 Newgistics Renewal Northeast
800 Commerce Parkway Drive West, Greenwood 141,000 Amcor Plastics Renewal South
PROPERTY SF TENANT DELIVERY SUBMARKET
3217 Distribution Way, Greenfield 419,052 John Morrell Food Group (BTS) 4Q 15 East
945 Monument Drive, Lebanon 247,500 Subaru (Expansion) 4Q 15 Northwest
1551 South Perry Road, Plainfield 145,800 Speculative (Expansion) 4Q 15 Southwest
Industrial asking rents converted to NNN
Industrial Snapshot Q4 2015Indianapolis
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Trevor KirshResearch Analyst
+1 317 639 0487
Joshua Graham Research Intern
+1 317 352 5438
About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people
work, shop, and live. The firm’s 43,000 employees in more than 60 countries provide deep local and global
insights that create significant value for occupiers and investors around the world. Cushman & Wakefield is
among the largest commercial real estate services firms with revenue of $5 billion across core services of
agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services,
investment & asset management (DTZ Investors), project & development services, tenant representation, and
valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
INDUSTRIAL SUBMARKETS INDIANAPOLIS
Industrial Snapshot Q4 2015Indianapolis
DOWNTOWN
SOUTH
SOUTHWEST
WEST
NORTHWEST
NORTH
NORTHEAST
EAST
SOUTHEAST
IMS
IndianapolisInternational
Airport
74
Greenfield
Anderson
Pendleton
Martinsville
Franklin
Whiteland
Greenwood
Mooresville
Plainfield
DanvilleAvon
Brownsburg
Zionsville
MeridianHills
Lawrence
Beech Grove
Indianapolis
Southport
Fairland
Shelbyville
Fishers
Carmel
NoblesvilleLebanon
Speedway
31
65
44
135
6739
142
42
39
40
267
36
236
39
136
39
52
267
65
465
865
52
465
31
421
31
37
69
36
67
70
7065
74
465
36
40
70
40
26767
52 3674
37
144
135
31
144
37
44
32
39
47
52
65
65
421
421
38
38
19
32
31
32
38 9
9
67
3613
69
234
32
40
70
952
465
7467
40
421
465
40
52
70
9
44
74
213
DOWNTOWN
SOUTH
SOUTHWEST
WEST
NORTHWEST
NORTH
NORTHEAST
EAST
SOUTHEAST
