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Northern office market on upswing, downtown ‘stagnant’

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The central business district’s vacancy rate continued to hover around 20 percent through the first half of the year as occupancy fell for the second straight quarter, a trio of mid-year real estate reports show.

At the same time, the north side and Keystone Crossing submarkets are improving, bolstered by several recent office relocations to the north.

That translates into the downtown submarket having more space become available than was absorbed during the first six months of the year, according to local brokerages.

The office reports from Cassidy Turley, CBRE and NAI Meridian estimate the downtown occupancy loss at 52,000 square feet to 84,000 square feet.

“It really isn’t a large negative absorption, but the issue at hand is that there has been a large vacancy overall downtown,” said Jeff Harris, president of NAI Meridian. “If you’re not getting any positive absorption, you’re just in a static or stagnant market.”

Indeed, the central business district’s vacancy rate is nearly unchanged at 21 percent, according to NAI Meridian’s mid-year market watch.

The other two reports paint slightly better pictures, with CBRE estimating vacancy at 18.5 percent and Cassidy Turley at 19.9 percent.

“It’s just a flat market,” said Rick Trimpe, vice president of office leasing at CBRE. “But you’ve got people looking downtown. There are people kicking the tires.”

One of the biggest factors contributing to the downtown absorption decline is a large amount of office space becoming available within a single building.

Geis Properties, a division of Streetsboro, Ohio-based Geis Cos., purchased the 558,000-square-foot AT&T building at 220 N. Meridian St. from AT&T in late May.

More than 150,000 square feet already is listed with additional office space becoming available as AT&T gradually reduces its footprint in the building.

With a total of 2.1 million square feet of office inventory available for lease in the central business district, it’s going to take awhile to put a meaningful dent in the vacancy rate, Harris said.

“It’s one step forward and two steps back,” he said. “If we break even [on the absorption rate], we’re never going to stabilize.”

Meanwhile, the condition of two other large submarkets is improving. The vacancy rate within the North Meridian corridor fell from 24 percent to 18 percent within the past year, while the rate at Keystone Crossing dipped from 22 percent to 20 percent.

Tenants locating on the north side include Baldwin & Lyons, which is relocating from downtown, and Geico, which is launching a new operation. Baldwin is purchasing 111 Congressional Boulevard, a 178,963-square-foot building, and Geico leasing 109,000 square feet at 101 W. 103rd St.

The large additions to the northern submarket helped it absorb nearly 150,000 square feet of space during the first six months of the year. Keystone Crossing, meanwhile, had negative absorbtion of 54,000 square feet. That's because Sourwine Real Estate Services finished its 75,000-square-foot speculative office building last month.

The northwest submarket by far is performing the poorest, with negative net absorption of nearly 250,000 square feet, according to NAI Meridian.

The average rental rate for downtown office space increased slightly, to $18.16 per square foot, while it dropped to $16.20 in the suburbs, according to CBRE.

“It’s a very tenant-friendly market,” Harris said at NAI Meridian.
 

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  1. Hiking blocks to an office after fighting traffic is not logical. Having office buildings around the loop, 465 and in cities in surrounding counties is logical. In other words, counties around Indianapolis need office buildings like Keystone, Meridian, Michigan Road/College Park and then no need to go downtown. Financial, legal, professional businesses don't need the downtown when Carmel, Fishers, North Indy are building their own central office buildings close to the professionals. The more Hamilton, Boone county attract professionals, the less downtown is relevant. Highrises have no meaning if they don't have adequate parking for professionals and clients. Great for show, but not exactly downtown Chicago, no lakefront, no river to speak of, and no view from highrises of lake Michigan and the magnificent mile. Indianapolis has no view.

  2. "The car count, THE SERIES, THE RACING, THE RATINGS, THE ATTENDANCE< AND THE MANAGEMENT, EVERY season is sub-par." ______________ You're welcome!

  3. that it actually looked a lot like Sato v Franchitti @Houston. And judging from Dario's marble mouthed presentation providing "color", I'd say that he still suffers from his Dallara inflicted head injury._______Considering that the Formula E cars weren't going that quickly at that exact moment, that was impressive air time. But I guess we shouldn't be surprised, as Dallara is the only car builder that needs an FAA certification for their cars. But flying Dallaras aren't new. Just ask Dan Wheldon.

  4. Does anyone know how and where I can get involved and included?

  5. While the data supporting the success of educating our preschoolers is significant, the method of reaching this age group should be multi-faceted. Getting business involved in support of early childhood education is needed. But the ways for businesses to be involved are not just giving money to programs and services. Corporations and businesses educating their own workforce in the importance of sending a child to kindergarten prepared to learn is an alternative way that needs to be addressed. Helping parents prepare their children for school and be involved is a proven method for success. However, many parents are not sure how to help their children. The public is often led to think that preschool education happens only in schools, daycare, or learning centers but parents and other family members along with pediatricians, librarians, museums, etc. are valuable resources in educating our youngsters. When parents are informed through work lunch hour workshops in educating a young child, website exposure to exceptional teaching ideas that illustrate how to encourage learning for fun, media input, and directed community focus on early childhood that is when a difference will be seen. As a society we all need to look outside the normal paths of educating and reaching preschoolers. It is when methods of involving the most important adult in a child's life - a parent, that real success in educating our future workers will occur. The website www.ifnotyouwho.org is free and illustrates activities that are research-based, easy to follow and fun! Businesses should be encouraging their workers to tackle this issue and this website makes it easy for parents to be involved. The focus of preschool education should be to inspire all the adults in a preschooler's life to be aware of what they can do to prepare a child for their future life. Fortunately we now know best practices to prepare a child for a successful start to school. Is the business community ready to be involved in educating preschoolers when it becomes more than a donation but a challenge to their own workers?

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