Annual Cushman & Wakefield Event Forecasts Positive Outlook for Indianapolis Commercial Real Estate in 2016


INDIANAPOLIS, Feb. 25, 2016 – Cushman & Wakefield’s annual The State of Real Estate® Indianapolis event highlighted the overall strength of the metro region’s industrial, office, multi-family and retail sectors for an audience of industry, business and civic leaders at the Murat Theatre at Old National Centre.

Highlights of the program include:


Industrial Market

According to Senior Vice President Bryan W. Poynter, SIOR, CCIM, ecommerce is one of the leading drivers of new development and its impact is widespread. Expect to see a continuation of build-to-suit activity in the region as well as an increase in speculative development of medium-sized bulk buildings. Competitively priced, shovel-ready land is needed to meet ever-increasing demand. The evolution in technology and robotics, along with explosive growth in the third-party logistics industry, will continue to significantly impact this sector going forward. The Indianapolis industrial market’s net absorption level reached 5.3 million square feet at the close of 2015 and overall vacancy continued to track lower than both the national and Midwestern averages at 5.8%. During the fourth quarter, three construction projects were delivered, representing approximately 800,000 square feet of new inventory.

 

Office Market

Indianapolis is coming out of the dark ages of the recession into a renaissance of new office space and the rise of urbanism, according to Managing Director Jon R. Owens, SIOR. The re-development of office environments is expanding and accelerating. Winning the war for talent is driving decisions about where employers locate, the office environments they create and the range of amenities they offer. Creating office space that maximizes employee engagement and talent recruitment and retention is now center stage. This renaissance is spreading out from the urban core to the suburbs, where amenity-rich mixed-use development including restaurants, bars, clubs, food markets and public and private transportation are the new normal. The workplace environment is changing, driven by the focus to attract and retain the best talent. This renaissance will continue to evolve as business leaders embrace this mindset and focus on their greatest assets – human capital.

 

Multi-family Market

In 2015, drivers for the multi-family market included big gains in jobs city-wide, the lowest homeownership rate since 1967, the evolution and growth of Downtown and additional exciting amenities and continued national recognition. According to Senior Vice President Scott Pollom, CCIM, 2016 will bring continued and expanded interest from outside investors, especially from the East and West coasts, Canada and Florida. Expect to see new suburban communities with a more urban look, feel and utility complete with mixed-used developments and more transportation options. Also expected is an influx of street-smart investors new to the market with aggressive ideas for creating value and aggressive capital to give them the clout to succeed.

 

Retail Market

The health of the market and low overall market vacancy has the city headed in the right direction. Indianapolis and Central Indiana has captured the attention of many national and international retailers looking to take advantage of this tremendous market and its amazing demographics, according to Bill French, Senior Managing Director. New retailers on the drawing board include: Ross’ opening stores throughout the market, Kohl’s opening its 36,000-square-foot concept store in Greenfield, and both IKEA and Topgolf coming to the I-69 corridor in Fishers. Kroger also has two major construction projects online on the south side of Indianapolis, in Greenwood and Franklin.

 

Capital Markets

The greater Indianapolis industrial market has experienced incredible growth over the past three years, and continues to attract investors. According to Senior Managing Director Jeff Castell, SIOR, CCIM, capital investment in the industrial market last year included 25.8 million square feet valued in excess of $1.1 billion, a 40% volume increase over 2014. Indianapolis will remain an attractive target for investors in 2016, as current owners seek to expand their holdings and new-to-market buyers, especially from outside the U.S. relish Indianapolis’s stability and transparency. In fact, the central Indiana industrial market closed 2015 with a crescendo as the Cushman & Wakefield team alone closed $50 million worth of industrial investment transactions during the month of December.

 

An insatiable appetite remains the driving force for mountains of capital seeking retail real estate. Investment once confined to Gateway cities has spread across the country to smaller metros where quality product is available. Cap rates for anchored A-plus quality product are ranging from 5.0%-5.5%, with anchored B quality in the 7% range. Additionally, the central Indiana retail market is vibrant and healthy. Statistics indicate 1.5 million square feet of retail space has been occupied since hitting rock bottom in 2010. New retail construction is expected to make significant gains in the metro area as demand is growing, and cap rates for anchored, Class A properties are around 5.0%.

 

Office market sentiments entering 2016 suggest that secondary markets, including Indianapolis, have room to run in meeting investor yield expectations, particularly Class A assets that provide improved liquidity comfort over other alternatives. Year-over-year transaction volume for greater Indianapolis office investments decreased 19%, producing $437 million in total investment sales. The overall decline was driven by two 2014 blockbuster office transactions in the Downtown submarket, the investment sales of Market Tower and Regions Tower.

 

The State of Real Estate® Indianapolis event is widely recognized and has grown to include 1,200 of the industry and business community’s top executives. Chris Yeakey, Market Leader for Cushman and Wakefield’s Indianapolis office hosted the event, and Gerry Dick, anchor and creator of Inside INdiana Business, and president and managing editor of Grow INdiana Media Ventures, LLC, served as master of ceremonies. Dick interviewed Indianapolis Mayor Joe Hogsett about the city’s opportunities and challenges, incenting employers to locate Downtown, mass transit and retail.

 

About Cushman & Wakefield Cushman & 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.

 

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