The Market | Indianapolis, Indiana
The market was moving forward at a typical pace and activity level through early March with some signs of weakness mainly due to high level of activity over the past three years. This changed shockingly fast about mid March due to COVID-19.
As the country’s commerce and our daily lives shut down the markets followed suit. Fast forward three months and a partial return of business activity and business openings has not had a noticeable effect on the office market activity, COVID-19 has essentially paused the office market and when it restarts is unknown.
Tenants with lease expirations approaching stayed in the market and completed deals. Tenants whose lease expirations are not imminent are holding off on any decisions to see the long-term fall out and effects. However, the complete lack of what the future holds and how businesses will keep employees safe in an office environment is still a grand experiment.
It is too early to prognosticate the future of the office environment. We should have better focus in our end of year report.
Jeff Harris, SIOR
President, NAI Cressy Indianapolis
Total Market Statistics
Metrowide Statistics | Office Leasing
Absorption: Measure of Demand in Square Footage for Office Space (All Office Space.
Total Net Absorption for All Markets Mid Year 2020: = <564,608> (increasing from <647,000> at year end 2019)
The breakdown of total absorption between the Suburbs and the CBD was:
CBD Absorption/Deliveries/Vacancy Mid Year 2020
Citywide Statistics | All Classes of Office Space
Office Space Statistical Changes First Half and Last Half and Year-Over-Year
CBD Net Absorption Mid Year 2020
Metro Indy Overview
• Fell to 21.50% in the suburbs at the end of Q2 2020.
• CBD vacancy decreased slightly to 13.80% for Q2 2020 down from 14.02% at the end of Q4 2019.
• Net absorption was weak market-wide with <595,596> sq. ft. in the suburbs and 30,988 sq. ft. in the CBD for Mid Year 2020.
Rental Rates (Building Classes A & B Combined)
• Landlord concessions such as free rent and relocation allowances should see an increase given the market-wide leasing slowdown. Still waiting to see the long-term effects of the pandemic on office space.
• We expect operating expenses to increase due to rising janitorial and security costs brought on by COVID-19.
New Construction (Building Classes A & B Combined)
• Zotec Partners began construction on a 120,000 sq. ft. office building in Carmel.
• First Internet Bank broke ground on its 168,000 sq. ft. HQ in downtown Fishers.
• Inventory of available sublease space city-wide has increased to 2.91% at mid year 2020 from 1.08% at year end 2019. We expect this type of space to expand as companies adapt to staff working remotely.
• Knowledge Services purchased the former Marsh Grocery HQ at 96th Street and I-69.
• Castle Creek I and II, a two-building 129,000 sq. ft. sale closed the first half of 2020.
Historic Net Absorption