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Report paints brighter picture for retail

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After a dismal couple of years in the retail sector, a rosy report from the real estate investment firm Marcus & Millichap says vacancy rates and tenant concessions in Indianapolis are falling while rents and sale prices are poised to rise.

The report predicted retail spending in the market would continue growing, fueled by the addition of 16,000 jobs in the metro area, including 4,000 highly paid positions in the professional and business-service sectors.

That should fuel enough retail leasing activity to pull the vacancy rate down from 12.4 percent at the end of the first quarter to 11.9 percent by the end of the year, Marcus & Millichap said.
 
Asking rents will tick up less than a percent this year, to $14.26 per square foot, but effective rents will grow by 1.6 percent, to $12.13 per square foot. That’s a reflection of landlords granting fewer concessions to tenants. Concessions as a percentage of asking rent are predicted to fall to 14.9 percent this year in what would be the first year-over-year reduction in concessions in almost a decade, the report said.

Recent growth in the retail sector hasn’t yet caused a big bounce in sales of retail properties, Marcus & Millichap said. Buyers are back in the market, attracted by retail sales growth and low interest rates, but a lack of quality listings has suppressed sales.

The report predicts the supply of listings will grow as sellers try to take advantage of renewed interest among buyers.

Jordan Klink, an investment specialist with the local office of Marcus & Millichap, said the rising gas prices that crimped consumer spending after data for the report was finalized shouldn’t dramatically affect the local retail landscape.

Klink said the demand for properties among investors continues to be high in spite of fuel prices, which have trended down in recent weeks.

“Owners are evaluating and believe this is the time to get in,” he said.

Marcus & Millichap recently listed a 10,600-square-foot retail center that is 100 percent leased even though it commenced construction in 2009 during the depths of the recession. The Meijer Shops of Carmel at 1430 W. Carmel Drive is getting interest from regional and national investors because it’s in the strong Carmel submarket, Klink said.

Reports that characterize an entire market are useful to a point, but retail remains very location specific, said Scot Courtney, president of the local office of Lee & Associates.

Carmel and other submarkets, such as Castleton, Clearwater and Keystone, are a good reflection of the ongoing recovery, Courtney said. “If you compare what was happening 24 months ago to today, it’s a different world.”

Courtney agreed that concessions for tenants are beginning to soften. “Incentives are still stronger than they’ve been in a long time. It’s still a tenant’s market, but the market is improving from a landlord’s perspective.”

He said gas prices aren’t affecting the retail real estate market yet, but there is concern. “We’re going to be a lagging indicator on that,” Courtney said, noting that if the fuel price spike is short-lived, it’s less likely to take a bite out of the retail real estate recovery.

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  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?

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