The Indianapolis office market saw a rise in leasing activity and new construction this year.

1. Active office requirements by industry
Source: JLL Research
Speculative office projects currently under construction
Source: JLL Research
Several office properties traded this year
Source: JLL Research
Tenant demand remains solid heading into 2016
Today’s strong business climate has several local companies in expansion mode.
This is driving the need for additional office space. Nearly 150 office transactions
totaling almost 2.5 million square feet closed this year (this data includes leases
of 5,000 square feet or greater). Of this total, 45.0 percent of companies are
growing, 39.0 percent remain stable and only 16.0 percent are shrinking.
Currently, there remains approximately 120 tenants actively in the market for 2.2
million square feet of space. Of this total, 44.0 percent are looking to expand
their footprint while only 8.0 percent plan to downsize, thus creating a continued
healthy environment for the commercial real estate market in Indianapolis.
More office construction on the horizon
Phase II of Milhaus’ mixed-use Artistry project in downtown Indianapolis was the
only new speculative office construction completed in 2015. Much more is on the
way as we are currently tracking over 200,000 square feet of speculative office
development due for delivery in 2016. Roughly 20.0 percent of this total is
preleased. This will mark the highest level of spec construction since the
recession. We are likely to see even more speculative construction in 2017 as
the first buildings of the Midtown Carmel office project are completed.
Approximately 250,000 square feet will be delivered although most or all of that
total is expected to be pre-leased prior to completion.
Investment activity continues
Investors remained high on Indianapolis in 2015 as several significant
transactions closed this year. The biggest of which was also the only one that
involved a foreign investor. Group RMC, based out of Canada, closed on a
Castleton Park portfolio comprised of approximately 700,000 square feet of
primarily Class B office and flex product on the northeast side of Indianapolis.
Meanwhile, Minneapolis-based Onward Investors completed three separate
transactions in Indianapolis this year acquiring College Park Plaza, Disciples
Center and most recently River Road I & II. All told, 19 investment transactions
closed in 2015.
Leasing activity and new construction on the rise
2,257
Office Insight
Indianapolis | Q4 2015
31,845,766
Total inventory (s.f.)
-33,682
Q4 2015 net absorption (s.f.)
$18.89
Direct average asking rent
330,250
Total under construction (s.f.)
15.9%
Total vacancy
150,270
YTD net absorption (s.f.)
0.6%
12-month rent growth
50.0%
Total preleased
Project Size Delivery
River North at Keystone 102,000 Q1 2016
Lakeside Green Business Center 61,050 Q2 2016
Fidelity Keystone II 29,200 Q1 2016
Marietta on Mass 25,500 Q3 2016
0
10
20
30
40
Professional
and business
services
Creative Science and
technical
Nonprofit Finance
Shrinking Stable Growing
#ofactivetenants
$221 million
Total dollar amount of office investment sales that
occurred in Indianapolis in 2015

2. Current conditions – submarket Historical leasing activity (s.f.)
Source: JLL Research Source: JLL Research
Total net absorption (s.f.)
Source: JLL Research
Total vacancy rate (%)
Source: JLL Research
Direct average asking rent ($ p.s.f.)
Source: JLL Research
687,985
-263,361
86,722 111,480
290,860
431,653
233,769
150,270
-400,000
-200,000
0
200,000
400,000
600,000
800,000
2008 2009 2010 2011 2012 2013 2014 2015
$18.20
$18.51 $18.44
$18.23
$17.96
$18.22
$18.77 $18.89
$16.00
$18.00
$20.00
2008 2009 2010 2011 2012 2013 2014 2015
17.7%
19.0% 18.8% 18.6%
17.6%
16.5%
16.2%
15.9%
14.0%
15.0%
16.0%
17.0%
18.0%
19.0%
20.0%
2008 2009 2010 2011 2012 2013 2014 2015
Landlordleverage
Tenantleverage
Peaking
market
Falling
market
Bottoming
market
Rising
market
Indianapolis
Non-CBD
3,010,781
1,538,661 1,630,041 1,499,520
2,412,058
0
1,000,000
2,000,000
3,000,000
4,000,000
2011 2012 2013 2014 2015CBD
©2015 Jones Lang LaSalle IP, Inc. All rights reserved.For more information, contact: Mike Cagna | mike.cagna@am.jll.com | +1 317 810 7358