December 16, 2019 — The Indianapolis industrial market continues to see strong momentum, heading into 2020, with sales increasing by 83.5% over the past four quarters, ending with Q3 2019, according to an Avison Young Investment Review. Among the key drivers of activity are e-commerce, logistics and consumer goods companies looking for modern and efficient space in Central Indiana.
The market had $1.65 billion in industrial sales over the past four quarters, including $478.6 million in the third quarter. Average price per square foot has also increased significantly over the past year, increasing 22.7% to $55 per square foot. Portfolio sales volume rose significantly with $1.14 billion in sales over the past four quarters, ending with Q3 2019. This represents a 122.5% increase year-over-year. Individual property sales increased by a more modest 32.3% to $515.3 million year-over-year. Avison Young analyzed research from Real Capital Analytics (RCA) in writing the investment review.
One new portfolio on the market is a two-building, 606,384-square-foot warehouse/distribution portfolio in the Indianapolis market. The portfolio is part of Whiteland Exchange, a 2.4 million-square-foot speculative industrial development being built on a 167-acre site in Whiteland, IN.
Avison Young Principals Erik Foster and Mike Wilson, based in the company’s Chicago office and leaders of the firm’s national industrial capital markets group, are representing the seller, Jones Development. The team is working in conjunction with Avison Young Principal Sean McHale and Senior Associate Peter Seoane, based in the Indianapolis office,
Jones Development is a full-service real estate investment and development firm based in Kansas City, MO. The firm has multiple industrial developments around the country.
“Indianapolis continues to attract institutional investors due to the strength of its industrial market and ability to support national and regional distribution and logistics operations,” comments Foster. “This development is strategically positioned to fill demand for modern buildings with institutional features. This portfolio offers investors a unique opportunity to gain an early entry into this master planned development.”
The RCA data also showed REITS and other listed investors leading the way in buying Indianapolis industrial properties, making up 50.5% of buyers in 2019. Institutional investors bought 30.9% of all industrial properties, and private investors made up 10.5% of buyers. Private investors made up 35.1% of all sellers, with institutional investors selling 30.7% of Indianapolis industrial assets. Cross-border investors sold 20.2% of Indianapolis industrial assets so far in 2019.
Among the top industrial buyers in Indianapolis over the past 24 months were Blackstone, with $462 million across 15 properties; ILPT REIT with $320.9 million across eight properties; and Prologis, with $285.9 million across seven properties.
Construction on the Whiteland Exchange buildings started in June, with completion slated for Q1 2020. The development is located at I-65 and Whiteland Road, along the I-65 distribution corridor in Johnson County, which has experienced strong industrial demand and absorption over the past several years.
The county is the 5th fastest growing county in Indiana and has a strong labor force within a 30-mile radius.
Building 1 includes 437,328 sf, with 36-foot clear height ceiling, cross dock configuration with 44 dock doors, and 50’ by 60’ bay spacing. Building 2 include 169,056 sf with 32-foot clear height ceilings, rear load configuration with 16 dock doors, and 50” by 54” bay spacing.
The industrial park is being built in stages over the next several years to support market demand, with additional buildings planned in varying sizes.
Whiteland Exchange is located near the convergence of several major interstates including I-65, I-69, I-70 and I-74. More than 50% of all U.S. businesses and 75% of the U.S. and Canadian populations are within a one-day drive of the site.