City's industrial market fared better than most in 2009

Back to TopCommentsE-mailPrintBookmark and Share

The Indianapolis industrial real estate market didn’t escape the recession unscathed last year, but the sector outperformed most other cities and took less of a hit than in the last recession, according to 2009 market reports compiled by a pair of commercial real estate brokerages.

Locally based Summit Realty Group and the local office of CB Richard Ellis both issued reports on the Indianapolis industrial and office markets this month.

Summit reported vacancy in the industrial sector increased for the year, from 9.2 percent to 10.6 percent. The company said that, though the rate grew, it compares favorably to the 5-to10-percentage-point increases in most U.S. markets.

CB Richard Ellis pegged industrial vacancy at 9.7 percent, just a point higher than at year-end 2008.

Contributing to the higher vacancy rate were business consolidations caused by the recession, the addition to the market of speculative space—almost all of which was planned and started in 2008, and the completion of build-to-suit projects that caused some large tenants to vacate existing buildings.

CB Richard Ellis noted that occupancy growth for the year of 2.2 million square feet—though less than half the growth in 2008—exceeded predictions for the year. And the growth compared favorably to the 2002 economic downturn, when occupancy in the market fell by nearly 1 million square feet.

Both reports noted that vacancy rates stabilized in the most recent quarters, leading both firms to forecast slow but steady growth in the sector in 2010. Although more than 1.2 million square feet of speculative space was added to the market in 2009, little or no speculative development is expected this year, which should lead to lower vacancy rates.

The office market didn’t fare as well last year, and there’s not much optimism for 2010.

The vacancy rate in the downtown area jumped dramatically, from 13.5 percent at the end of last year to 19.7 percent at year-end 2009, according to Summit’s report. The huge increase was due in part to Safeco Corp. in September vacating 330,000 square feet at its former headquarters, a five-building complex at 500 N. Meridian St.
In spite of a tough year for downtown office space, there was stability at the top of the market. According to CB Richard Ellis, vacancy in Class A buildings was essentially unchanged, finishing the year at 16.6 percent. And large tenants, including Regions Bank, The Indiana Clinic and PricewaterhouseCoopers, signed leases or renewals downtown.

The tale of 2010 could be told by Eli Lilly and Co., which is considering vacating its Faris Campus, near South and Meridian streets. That would dump another 465,000 square feet of office space onto the downtown market.

The suburban office market ended the year with a 23 percent vacancy, the highest vacancy since the first half of 2004, Summit’s report said.

Vacant space available for sublease, caused by companies consolidating, is a major factor in the suburbs, according to both Summit and CB Richard Ellis. The amount of such space on the market increased from 21,000 square feet at the beginning of 2009 to 350,000 square feet by year end, the CB Richard Ellis report said.

The large inventory of space available for sublease will make it tougher for landlords to fill space that isn’t leased, but it bodes well for tenants seeking discounted rental rates.


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. I had read earlier this spring that Noodles & Co was going to open in the Fishers Marketplace (which is SR 37 and 131st St, not 141st St, just FYI). Any word on that? Also, do you happen to know what is being built in Carmel at Pennsylvania and Old Meridian? May just be an office building but I'm not sure.

  2. I'm sorry, but you are flat out wrong. There are few tracks in the world with the history of IMS and probably NO OTHER as widely known and recognized. I don't care what you think about the stat of Indy Car racing, these are pretty hard things to dispute.

  3. Also wondering if there is an update on the Brockway Pub-Danny Boy restaurant/taproom that was planned for the village as well?

  4. Why does the majority get to trample on the rights of the minority? You do realize that banning gay marriage does not rid the world of gay people, right? They are still going to be around and they are still going to continue to exist. The best way to get it all out of the spotlight? LEGALIZE IT! If gay marriage is legal, they will get to stop trying to push for it and you will get to stop seeing it all over the news. Why do Christians get to decide what is moral?? Why do you get to push your religion on others? How would legalizing gay marriage expose their lifestyle to your children? By the way, their lifestyle is going to continue whether gay marriage is legalized or not. It's been legal in Canada for quite a while now and they seem to be doing just fine. What about actual rules handed down by God? What about not working on Sundays? What about obeying your parents? What about adultery? These are in the 10 Commandments, the most important of God's rules. Yet they are all perfectly legal. What about divorce? Only God is allowed to dissolve a marriage so why don't you work hard to get divorce banned? Why do you get to pick and choose the parts of the Bible you care about?

  5. Look at the bright side. With the new Lowe's call center, that means 1000 jobs at $10 bucks an hour. IMS has to be drooling over all that disposable income. If those employees can save all their extra money after bills, in five years they can go to the race LIVE. Can you say attendance boost?