HEARTLAND SNAPSHOT, OCTOBER 2005

Indianapolis Industrial Market

There is continued demand for bulk warehouse space in Indianapolis' industrial market, according to Criss Horton, principal with Indianapolis-based NAI Olympia Partners. “Distribution requirements are getting larger with expansion capabilities that allow buildings to double in size,” he says. A trend toward shorter-term leases, or options to terminate early based on losing customer contracts, also is being seen, primarily from third-party logistic companies (3PL). Large tracts of ground to accommodate 800,000 square feet to 1.5 million square feet have become limited, and the cost on recent land transactions have increased. Construction prices are approximately 25 percent higher than they were a year ago, and vacancy sits at 8 percent.

“Historic healthy absorption in the Indianapolis and surrounding markets will force users to look for sites further away from the Indianapolis area as good sites are hard becoming hard to find,” Horton says. Browning Investments' acquisition and planned development of 1,100 acres known as Central Logistics on the west side of Indianapolis between Hendricks and Avon will be a major consideration for users, with infrastructure and buildings expected to be ready sometime in 2007.

Plainfield continues to dominate market activity. OPUS North, for example, recently acquired 78 acres in Plainfield and is developing new 400,000-square-foot and 321,000-square-foot bulk facilities. “Factors that contribute to Plainfield's success include its location being eight miles from Interstate 465 and the airport off Interstates 70 and 267, tax abatement, infrastructure, employee amenities and an established industrial market,” Horton says. “Activity will more than likely move toward the northwest side of Indianapolis in the Whitestown and Lebanon area due to larger tracts of land being available.”

The Alter Group, a 50-year-old development company based in Skokie, Illinois, recently entered Indianapolis' industrial market with its purchase of an approximately 25-acre site in Plainfield. The company plans to deliver a 440,000-square-foot front-load distribution facility by next May. Rosemont, Illinois-based Verus Partners, another new developer to the market, is looking to break ground on a 624,000-square-foot industrial facility in Whitestown next spring. “Additionally, the company is looking to develop two 90,000–square-foot mid-size industrial buildings on the northeast side of Indianapolis in the Saxony development,” Horton says.

Property owners in Indianapolis' industrial market are trying to attract owner-user occupants or third party warehouse providers that are able to make a long-term commitment, according to Horton. “They want companies that are looking to make a significant investment in the facilities,” he says.  

Several major tenants are absorbing large amounts of industrial space in Indianapolis. Some of these tenants include             Case New Holland, which occupies approximately 1.1 million square feet in Lebanon; Person Education occupies approximately 1 million square feet in Lebanon; a CTI warehouse provider for John Deere has 1 million square feet in Plainfield; Redcat Logistics is servicing Brylane for 775,000 square feet in Plainfield; Logisco and Belkin have 800,000 square feet in Plainfield; and Becton-Dickinson is absorbing 653,000 square feet.  

Keep an eye out for the northwest submarket to heat up in the near future. “The area has available ground with a commitment from municipalities to provide utilities and general infrastructure and good interstate access,” Horton says.  

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