IBJNews

Northern office market on upswing, downtown ‘stagnant’

Back to TopCommentsE-mailPrintBookmark and Share

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.
 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
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
ADVERTISEMENT

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?

ADVERTISEMENT