A real estate development executive who’s been in the business for three decades says Indiana’s industrial warehousing and distribution market is the hottest he’s ever seen it, Inside Indiana Business reports.
Indiana’s status as the Crossroads of America and its high concentration of manufacturing have sustained a steady flow of demand for distribution space, but local industry leaders say, currently, “vacancy is almost nonexistent.”
John Phair, president and chief executive officer of South Bend-based Holladay Properties, a real estate management and development company, told the publication that the industrial warehousing and distribution market is “at the top of the food chain” in real estate.
Holliday Properties oversees about 75 commercial properties in Indiana and the Midwest, including AmeriPlex at Indianapolis.
“In other words, if you compare it to apartments, hotels or office buildings, industrial warehousing and distribution is the best investment today,” Phair was reported as saying. “For every building that’s under construction, there’s a tenant waiting to move in.”
He says distribution centers growing both in size and number, observing that about 15 years ago, a typical center would be between 100,000 and 200,000 sq. ft. Today’s centers now average 600,000 sq. ft. or more.
“In all the markets we’re in, there’s a fair amount of space that’s come on the market in the last three to four years—I’m talking millions of square feet—yet vacancy is almost nonexistent,” Phair said. “New buildings are being absorbed just about as fast as they’re going up.”
AmeriPlex has about 1.6 million sq. ft. of space is under construction, and “basically, all the buildings at the park are full or nearly full.”
Indianapolis-based business consulting firm Ginovus LLC says, due to Indianapolis’ central location and interstate system, it has the most of the state’s warehouse and distribution activity.
Ginovus Managing Director Larry Gigerich says Indianapolis and Columbus, Ohio are the two most sought-after markets for distribution space. He told Inside Indiana Business that both markets are “very tight,” with high occupancy levels and very low vacancy rates for class A and B buildings, which have 30-foot ceilings and other required specifications for a modern distribution facility.
“Because you don’t see a lot of vacant, available class A or class B space in the market today, that’s driving speculative development by developers for the first time in a number of years,” says Gigerich. “For the first time in almost a decade, companies construct speculative buildings knowing they don’t have a tenant signed to a lease today, but because the market’s so active, know they’re going to find someone to utilize the space very quickly.”
However, there are several 30 to 50-year-old class C warehouse buildings that don’t meet modern standards and so need to be repurposed or torn down.
Phair cautions the rapid growth of Indiana’s distribution industry creates an ongoing challenge for the state’s infrastructure to keep pace; he believes communications, road networks, interstate systems and interchanges are critical.
“If we continue to invest in those things, I think we’ll be just fine. If we fall behind, and it starts to take longer to distribute, get our trucks on the roads and traveling on good systems, that’ll be a problem,” says Phair. “Today, we’re in pretty good shape, but boy, we can’t stop investing. A lot more goods can be distributed than used to be…we support that with a strong infrastructure network that we’ve invested in. We need to continue investing in that, and we’ll continue to be a leader.”
From Holladay Construction Group
World Connect 3
Location: 5424 Exploration Dr., Indianapolis, IN 46241
Project type: Industrial Spec
Size: 620,935 sq. ft.
Scope: $17.6 million
Owner: Molto Properties
Architect: American Structure Point
Project manager: Brian Egler, regional vice-president
Start sate: March 1, 2017
Estimated completion date: January, 2018
“Our Indianapolis team is building a distribution warehouse located at Site Three on Exploration Dr. in the growing AmeriPlex Development adjacent to the Indianapolis Indiana International Airport. The structure is a one story pre-cast concrete and steel structure with environmentally conscious site development including wetlands, and sustainable landscaping embracing the building and car and truck parking areas.”