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Market Report

Indianapolis Industrial Market Report

2023 Investment Forecast

User Demand Normalizes to Pre-Pandemic Levels;
Record Appreciation Provokes Deal Flow

Historically tight conditions warrant speculative builds. Over each of the past three years, metro supply increased by at least 9 million square feet, a trend that is anticipated to persist through 2023. Of this year’s delivery slate, a significant portion will come online in the Far Boone County submarket, after leasing from large-scale manufacturing and logistics firms pushed local vacancy to 1 percent in 2022. More than three-quarters of this construction has yet to be accounted for, likely prompting a near term uptick in availability here. Vacant stock at the metrowide level nevertheless entered the year at a record low, paving the way for sustained development. Waning outlooks for retail overstock and consumer demand, however, may translate to longer lease-up timelines, edging up vacancy. Marketwide, net absorption should realign with pre-pandemic norms, while Hancock County continues to outperform. Walmart’s opening of an 860,000-square-foot warehouse here is driving additional space demand from third-party logistics providers. This interest should result in continued rent growth and vacancy compression in the locale.
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