Total net absorption across the metro equaled 322,977 square feet in the third quarter, a welcome change from the negative absorption posted in each of the previous two quarters.
1. Total jobs vs unemployment rate | Indianapolis
Source: JLL Research
Leasing activity by size
Source: JLL Research
Office construction pipeline
Source: JLL Research
Local unemployment on the decline
The Indianapolis unemployment rate decreased slightly since last month to 4.4
percent, according to the most recent estimates available from the Bureau of
Labor Statistics. Indianapolis’ total labor force once again grew to its highest
level ever recorded (1,027,150) and total employment reached a new historical
high for the third consecutive month (981,713). The most substantial monthly
gains among office sectors once again occurred in the Professional and
Business Services sector (900 new jobs) followed closely by Financial Activities
(500 new jobs).
Leasing activity on the rise
Leasing velocity increased for a fifth consecutive quarter. Already this year we
have seen more than 60 deals signed in excess of 10,000 square feet. Nearly
half of these deals are either new to Indianapolis or expansions within the market.
This activity has led to 184,000 sq. ft. of net absorption so far in 2015. As a result
of this strong occupancy growth, the overall office vacancy rate currently sits at
15.7 percent, down 1.5 percentage points from midyear. The CBD, in particular,
is enjoying a solid year with over 200,000 sq. ft. of net absorption year-to-date
thanks to deals signed by the Department of Children & Family Services,
Managed Health Services, Scopelitis and WP Glimcher among others.
New speculative office construction hits the market
Work was completed on Phase II of Milhaus’ mixed-use Artistry project in
downtown Indianapolis this quarter. The introduction of this 20,000-square-foot
office project marks the first new office space added to the market since Phase I
of Artistry was completed last year. More speculative construction is on the way
next year as work continues on River North at Keystone. PK Partners 90,000 sq.
ft. Class A development is nearly 40% pre-leased. Meanwhile, Atapco Properties
recently broke ground on Lakeside Green Business Center. This 61,000 sq. ft.
Class A office building is taking shape in the North Meridian submarket. Atapco
razed three Class B office buildings totaling 82,000 sq. ft. that had been
experiencing low occupancy in recent years to make way for this development.
Market fundamentals continue upward trend
2,257
Office Insight
Indianapolis | Q3 2015
31,845,766
Total inventory (s.f.)
322,977
Q3 2015 net absorption (s.f.)
$18.91
Direct average asking rent
263,550
Total under construction (s.f.)
15.7%*
Total vacancy
183,952
YTD net absorption (s.f.)
6.7%*
12-month rent growth
55.7%
Total preleased
*Significant alterations to our tracked inventory and methodology were made in the first quarter, rendering statistical results that diverge from the
recent historical trend.
14 10 39
-
200,000
400,000
600,000
800,000
30,000+ 20,000-29,999 10,000-19,999
Total leased Number of leases
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000 Total Employment Unemployment
Peak: 981,713 jobs
1.8%
Project Size Delivery
Interactive Intelligence BTS 112,500 4Q 2015
River North at Keystone 90,000 1Q 2016
Lakeside Green Business Center 61,050 2Q 2016
Artistry Phase II 20,220 3Q 2015