Office Market Snapshot (3Q12)

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  • 1. Office MarketSnapshotIndianapolis, IndianaThird Quarter 2012 Copyright aboveallphoto.com 2010
  • 2. Office Market Snapshot Indianapolis • Third Quarter • 2012 Market Tracker Vacancy Net Absorption (Qtr) Net Absorption (YTD) *Arrows indicate Qtr-Qtr trend 19.7% 57,000 SF 222,000 SF Overview Vacancy in the Indianapolis multi-tenant office market remained relatively unchanged in the third quarter of 2012 at 19.7% but remains 40 bps below the rate in effect a year prior. A lack of permanent hiring within professional and business services, accompanied by pervasive uncertainty, continued to mute the pace of growth. The latest employment figures continue to suggest that commercial real estate fundamentals will stay on a course Indianapolis Office of slow, bumpy improvement. The Central Business District (19.1%) continued to track 3Q12 3Q11 lower relative to vacancy than the Suburban market (20.1%) but that gap is tightening.Vacancy 19.7% 20.1% Submarket variations in vacancy included Fishers (13.9%), Keystone (16.3%), Northwest CBD 19.1% 16.7% (17.9%), East (18.8%), Downtown (19%), North/Carmel (19%), Midtown (20.7%), South Suburban 20.1% 22.0% (23.1%), Northeast (24.7%) and West (35.1%).Net Absorption (Qtr) 57,000 125,000 The Indianapolis multi-tenant office market posted 57,016 SF of occupancy growth during CBD 38,000 -112,000 the third quarter of 2012, thereby increasing overall net absorption for the year to 222,421 Suburban 19,000 237,000 SF. Through September the Suburban market has grown by 253,288 SF, while the CentralNet Absorption (YTD) 222,000 -84,000 Business District has given back 30,867 SF. Submarket variations in year-to-date net absorption included West (-49,080 SF), Northwest (-43,556 SF), Downtown (-30,867 CBD -31,000 -185,000 SF), Midtown (0 SF), East (+1,917 SF), Fishers (+7,807 SF), South (+24,639 SF), Northeast Suburban 253,000 101,000 (+32,514 SF), North/Carmel (+123,665 SF) and Keystone (+155,382 SF).Numbers are rounded to the nearest thousand. Forecast Vacancy Rate Vacancy Rate •  ffice sector fundamentals are improving, albeit slowly. The pace of growth rests upon O 22% sustained labor market improvements in the form of permanent hiring, particularly in the 20% Historical Average professional and business services. Expect modest gains in absorption over the next 18% few quarters with gains accelerating in 2013. 16% •  xpect multi-tenant office vacancy to remain elevated for the balance of 2012 and most E 14% likely 2013. Year-over-year vacancy comparisons will continue to show incremental 2005 2006 2007 2008 2009 2010 2011 2012 improvements, but notable quarterly improvements will remain slow. •  sking rents will continue to hold steady, with downward pressure of an elevated vacancy A Net Absorption Net Absorption rate and slow rebound in labor markets continuing to make it a tenants’ market. 450 325 S •  peculative multi-tenant office development is beginning to return to the market for theSquare Feet (000s) 200 first time since the recession. Expect broader development to return to the market in 75 -50 another 18 to 24 months but not at the levels previously witnessed. -175 -300 -425 2007 2008 2009 2010 2011 2012 cassidyturley.com
  • 3. Total Indianapolis Multi-Tenant Office Vacancy ReleaseIndianapolis Area • Third Quarter • 2012 Submarkets Total Vacancy Rate Vacancy Rate Vacancy Rate Inventory (SF) 3rD Qtr 2012 2nd Qtr 2012 3rd Qtr 2011 Downtown Office Space 9,576,325 19.0% 18.4% 17.2% Midtown Office Space 837,573 20.7% 20.7% 10.2% CBD Totals: 10,413,898 19.1% 18.6% 16.7% Suburban Office Space North/Carmel 6,430,616 19.0% 19.4% 20.5% Keystone 3,962,330 16.3% 16.6% 22.9% Fishers 678,647 13.9% 14.2% 14.6% Northeast 3,089,123 24.7% 25.6% 25.8% East 238,130 18.8% 18.8% 19.6% South 819,802 23.1% 23.4% 24.7% West 1,111,764 35.1% 33.3% 31.1% Northwest 3,228,289 17.9% 16.9% 18.4% Suburban Totals: 19,558,701 20.1% 20.2% 22.0% Total Indianapolis: 29,972,599 19.7% 19.6% 20.1%Office Market Statistics – Inventory 3rd Quarter 2012Office MarketStatistics –Vacancy, 3rd Quarter 2012 Office Market Statistics: Inventory, 3rd Quarter 2012 Office Market Statistics: Vacancy 3rd Quarter 2012 Indianapolis SubmarketShare of Inventory Indianapolis Submarket Share of Inventory Indianapolis Submarket Share of Vacancy Indianapolis Submarket Share of Vacancy Downtown Downtown West 36% 32.8% 3.6% South Midtown West 2.6% Midtown 2.8% 6.4% 4.9% South East 3.1% 1% East Northwest 0.7% Fishers 10.4% Northwest 1.5% Keystone Fishers 9.4% Keystone 10.5% 2.2% Northeast 12.8% 10.0% Northeast 12.5% North/Carmel North/Carmel 20.0% 20.8%Source: Jason W. Tolliver, J.D. Cassidy Turley Market Research One American Square, Suite 1300 Indianapolis, IN 46282 317.634.6363 cassidyturley.com
  • 4. Multi-Tenant Office Vacancy and Absorption by Submarket and Class Absorption Multi-Tenant Office Vacancy andIndianapolis Area • Third Quarter • 2012 Indianapolis, Indiana 3rd Quarter 2012 by Submarket and Class 3rd Quarter Vacancy % Net Absorption Inventory Vacant 3Q 2Q 3Q Quarter YTDSUBMARKETS SF SF 2012 2012 2011 SF SFDOWNTOWN Class A 5,922,508 1,246,472 21.0% 20.3% 20.0% -41,387 -118,418 Class B 3,755,626 589,692 15.7% 15.2% 11.9% 79,655 103,384 Class C 913,849 176,449 19.3% 19.2% 18.4% -701 -15,833 TOTALS 10,591,983 2,012,613 19.0% 18.4% 17.2% 37,567 -30,867MIDTOWN Class A 406,060 121,369 29.9% 29.9% 8.2% 0 0 Class B 224,059 18,761 8.4% 8.4% 8.4% 0 0 Class C 207,454 33,000 15.9% 15.9% 15.9% 0 0 TOTALS 837,573 173,130 20.7% 20.7% 10.2% 0 0CBD TOTALS Class A 6,328,568 1,367,841 21.6% 21.0% 19.3% -41,387 -118,418 Class B 3,979,685 608,453 15.3% 14.8% 11.6% 79,655 103,384 Class C 1,121,303 209,449 18.7% 18.6% 17.9% -701 -15,833 TOTALS 11,429,556 2,185,743 19.1% 18.6% 16.7% 37,567 -30,867NORTH/CARMEL Class A 3,981,461 702,981 17.7% 18.4% 20.5% 30,075 156,492 Class B 2,108,166 474,458 22.5% 22.2% 21.4% -7,066 -43,364 Class C 340,989 47,226 13.8% 13.8% 14.0% 0 10,537 TOTALS 6,430,616 1,224,665 19.0% 19.4% 20.5% 23,009 123,665KEYSTONE Class A 2,626,617 418,920 15.9% 16.8% 24.1% 21,703 143,347 Class B 1,335,713 225,032 16.8% 16.4% 20.6% -6,233 12,035 TOTALS 3,962,330 643,952 16.3% 16.6% 22.9% 15,470 155,382FISHERS Class A 319,650 22,894 7.2% 7.2% 12.7% 0 18,857 Class B 358,997 71,490 19.9% 20.5% 16.3% 2,009 -11,050 TOTALS 678,647 94,384 13.9% 14.2% 14.6% 2,009 7,807NORTHEAST Class A 873,818 284,494 32.6% 33.8% 33.5% 10,772 10,669 Class B 1,798,603 418,190 23.3% 23.6% 24.4% 5,591 15,474 Class C 416,702 59,272 14.2% 17.1% 15.7% 12,144 6,371 TOTALS 3,089,123 761,956 24.7% 25.6% 25.8% 28,507 32,514Source: Jason W. Tolliver, J.D.Cassidy Turley Market ResearchSource: Jason W. Tolliver, J.D. One Indiana Square, Suite 1300Cassidy TurleyIN 46282Indianapolis, Market Research One American Square, Suite 1300 317.634.6363Indianapolis, IN 46282 317.634.6363 cassidyturley.com
  • 5. Multi-Tenant Office Vacancy and Absorption by SubmarketVacancy and Absorption Multi-Tenant Office and ClassIndianapolis Area • Third Quarter • 2012 Indianapolis, Indiana 3rd Quarter 2012 by Submarket and Class 3rd Quarter Vacancy % Net Absorption Inventory Vacant 3Q 2Q 3Q Quarter YTDSUBMARKETS SF SF 2012 2012 2011 SF SFEAST Class B 160,000 27,683 17.3% 17.3% 16.9% 0 -683 Class C 78,130 17,170 22.0% 22.0% 25.3% 0 2,600 TOTALS 238,130 44,853 18.8% 18.8% 19.6% 0 1,917SOUTH Class A 239,480 37,214 15.5% 19.0% 18.0% 8,365 10,906 Class B 398,376 107,473 27.0% 26.0% 30.1% -3,872 7,681 Class C 181,946 44,894 24.7% 23.3% 21.6% -2,500 6,052 TOTALS 819,802 189,581 23.1% 23.4% 24.7% 1,993 24,639WEST Class A 266,074 131,021 49.2% 44.7% 27.6% -12,185 -61,110 Class B 598,565 207,367 34.6% 32.0% 34.6% -15,791 -976 Class C 247,125 52,299 21.2% 24.4% 26.5% 7,885 13,006 TOTALS 1,111,764 390,687 35.1% 33.3% 31.1% -20,091 -49,080NORTHWEST Class A 1,757,744 253,434 14.4% 12.9% 13.9% -26,418 -29,513 Class B 1,470,545 323,411 22.0% 21.7% 23.8% -5,030 -14,043 TOTALS 3,228,289 576,845 17.9% 16.9% 18.4% -31,448 -43,556SUBURBAN TOTALS Class A 10,064,844 1,850,958 18.4% 18.7% 21.3% 32,312 249,648 Class B 8,228,965 1,855,104 22.5% 22.2% 23.4% -30,392 -34,926 Class C 1,264,892 220,861 17.5% 18.8% 18.8% 17,529 38,566TOTALS 19,558,701 3,926,923 20.1% 20.2% 22.0% 19,449 253,288ALL INDIANAPOLIS Class A 16,393,412 3,218,799 19.6% 19.6% 20.5% -9,075 131,230 Class B 12,208,650 2,463,557 20.2% 19.8% 19.9% 49,263 68,458 Class C 2,386,195 430,310 18.0% 18.7% 18.4% 16,828 22,733 TOTALS 30,988,257 6,112,666 19.7% 19.6% 20.1% 57,016 222,421 Source: Jason W. Tolliver, J.D. Cassidy Turley Market ResearchSource: Jason W. Tolliver, J.D. One American Square, Suite 1300Cassidy Turley IN 46282 Indianapolis, Market Research One American Square, Suite 1300 317.634.6363Indianapolis, IN 46282 317.634.6363 cassidyturley.com
  • 6. Indianapolis Officeoffice Market statistics Market Statistics Third Quarter 2012Indianapolis Area • Third Quarter • 2012 North/Carmel Fishers Inventory 6,430,616 SF Inventory 678,647 SF Vacant SF 1,224,665 SF Vacant SF 94,384 SF Vacancy Rate 19.0% Vacancy Rate 13.9% YTD Net Absorption 123,665 SF YTD Net Absorption 7,807 SF Northwest Inventory 3,228,289 SF Keystone Inventory 3,962,330 SF Vacant SF 576,845 SF Vacant SF 643,952 SF Vacancy Rate 17.9% Vacancy Rate 16.3% YTD Net Absorption -43,556 SF YTD Net Absorption 155,382 SF Northeast Inventory 3,089,123 SF Vacant SF 761,956 SF Vacancy Rate 24.7% YTD Net Absorption 32,514 SF Midtown Inventory 837,573 SF Vacant SF 173,130 SF Vacancy Rate 20.7% YTD Net Absorption 0 SF West East Inventory 1,111,764 SF Inventory 238,130 SF Vacant SF 390,687 SF Vacant SF 44,853 SF Vacancy Rate 35.1% Downtown Vacancy Rate 18.8% YTD Net Absorption -49,080 SF Inventory 10,591,983 SF YTD Net Absorption 1,917 SF Vacant SF 2,012,613 SF Vacancy Rate 19.0% YTD Net Absorption -30,867 SF South Inventory 819,802 SF Vacant SF 189,581 SF Vacancy Rate 23.1% YTD Net Absorption 24,639 SFAbout cassidy TurleyCassidy Turley is a leading commercial real estate services provider with more than 3,600 professionals in more contact Informationthan 60 offices nationwide. The company represents a wide range of clients—from small businesses to Fortune Jason W. Tolliver, J.D.500 companies, from local non-profits to major institutions. The firm completed transactions valued at $22 billion Research Directorin 2011, manages 455 million square feet on behalf of institutional, corporate and private clients and supports One American Square, Suite 1300more than 28,000 domestic corporate services locations. Cassidy Turley serves owners, investors and tenants with Indianapolis, IN 46282a full spectrum of integrated commercial real estate services—including capital markets, tenant representation, T: 317.634.6363corporate services, project leasing, property management, project and development services, and research and F:317.639.0504consulting. Cassidy Turley enhances its global service delivery outside of North America through a partnership with Copyright © 2012 Cassidy Turley.GVA, giving clients access to commercial real estate professionals in 65 international markets. Please visitwww. All rights reserved.cassidyturley.com for more information about Cassidy Turley. cassidyturley.com