Two massive developments with sizable retail components along the Interstate 69 corridor in Hamilton County are helping to spur the construction of several nearby distribution centers.
The light industrial space rising near Fishers and Noblesville is unlike the monstrous warehouse projects prevalent west of Indianapolis in Plainfield and popping up within the Anson project near Whitestown. They instead are mediumsize warehouse or showroom space meant for small businesses expected to populate Hamilton Town Center and Saxony at the Exit 10 and I-69 interchange.
The $135 million Hamilton Town Center is the retail portion of the 3,000-acre Noblesville Corporate Campus district and is under development by locally based Simon Property Group Inc. and Gershman Brown & Associates. The center should be open by the spring of 2008.
Commercial development, meanwhile, will constitute roughly 1 million square feet of the $500 million, 725-acre Saxony multi-use project in Fishers led by Toledobased Republic Development Corp.
The twin projects helped occupancy of industrial space in the northeastern submarket grow by 426,000 square feet in 2005 and 392,000 square feet in 2006, according to a recent Colliers Turley Martin Tucker market report. Meanwhile, industrial vacancy rates in the submarket have dropped from 7.2 percent to 5.2 percent.
Moreover, five developers, including locally based Patrick R. Verble & Associates Inc. and Mann Properties, have a combined 486,000 square feet of industrial space under construction.
What is striking about the number is that it nearly matches the 515,000 square feet of light industrial space completed in that part of Hamilton County during the previous three years combined, the Colliers report said.
Basic demand for smaller space may be driving the growth more so than the nearby retail development, said Bart Book, manager of industrial services for the local office of St. Louis-based CTMT. A decade spent fixating on large, bulk distribution centers is to blame, he said.
"They've been the darling of our market for over 12 years now," Book said. "During that time, these midsize buildings have been few and far between."
Chicago-based Verus Partners LLC is developing a pair of warehouses on a spec- ulative basis inside Saxony on 13 acres of land it purchased from Republic. The first of the two 89,000-square-foot distribution centers should be completed in May, while construction on the second is set to begin by the end of the year.
The development is much smaller than Verus' other two area projects: a 624,000-square-foot, $20 million distribution and office building in Boone County's Perry Industrial Park, and an 800,000-squarefoot building on 175 acres east of AirTech Park in Plainfield.
Yet it's equally prominent within the developer's portfolio, said Tom Theobald, senior vice president and regional partner at Verus' Indianapolis office.
"Growth tends to follow interchanges," he said, "and we believe we're at the front end of what we think will be dynamic growth at Exit 10."
Indeed, the open-air Hamilton Town Center measures 950,000 square feet, making it twice the size of Simon's upscale shopping development Clay Terrace in Carmel.
146th Street a big factor
Expected to buttress the growth is the extension of 146th Street from State Road 37 to Interstate 69. The extension, which will run from S.R. 37 southeast to Greenfield Avenue, just before it meets the Exit 10 interchange on I-69, is vital to Noblesville's Corporate Campus project north of 141st Street.
With much of the retail planned for the eastern portion of the extension and a large cluster existing nearby on S.R. 37 to the west, city planners are hesitant to add more. But the extension certainly will bring traffic to the area, said Jeremy Woods, senior director of industrial services at locally based Summit Realty Group, which brokered the property Verus purchased.
"The 146th Street extension is going to be a huge catalyst," Woods said. "That will open up huge possibilities where people from Westfield and Carmel can get to their businesses without going down through Castleton."
Unlike Plainfield and Whitestown, the I-69 corridor is ripe for smaller distribution space largely due to its proximity to major residential areas, industry experts say. Those areas, such as Geist, often contain company executives who might want to relocate their businesses from, say, Park Fletcher or Park 100 to be closer to home.
Another contributor to the trend is that the city of Noblesville is making property attractive by offering tax abatements spanning two years to 10 years, said Chris Hamm, the city's economic development director. Noblesville is following Plainfield's lead, which has provided abatements on spec projects.
"We understand that we have to be aggressive in regard to our incentives to be able to compete in a very competitive market," Hamm said.
Other projects under way include smaller ones from Mann Properties and Patrick R. Verble. Mann is constructing a 31,000-square-foot building at S.R. 37 and 141st Street that is nearly finished. Mann is marketing the property as flex space and hopes to rent at least half of it for office use, to increase rent rates, said Brian Dell, Mann's sales and leasing executive.
The project follows a similar one by Mann at S.R. 37 and 131st Street that is almost always 100-percent leased. The success prompted the developer to build another, even before Simon began eyeing the area for a large outdoor mall. Interest so far has been tepid, though, due to what Dell sees as oversaturation.
"We wanted to put another project on the ground, and Hamilton Town Center and the 146th Street extension made [the idea] sound better," Dell said. "The only downfall is that everybody else had the same idea."
Verble is nearing completion on two of four buildings on 12 acres at 126th Street and Promise Road near I-69 that are roughly 23,000 square feet each. They will accommodate mixed-use tenants as well, but the difference is that Verble is selling instead of leasing the space. For the entrepreneur who is looking to move out of the garage, as little as 900 square feet is available.
Several prospects are eyeing the property, Verble said. One contract has been signed and two more are in final phases.