At this morning’s IBJ Power Breakfast, a panel of Indy’s Best in real estate development shared the news that our market is unique, strong and poised for very interesting changes in the next few years. The panel of experts included Rich Forslund of Summit Realty, who brought to light that Indianapolis had experienced growth in its commercial sector similar to other cities its size and larger, but the uniqueness of the Millennial economy has dramatically changed the structure of the development landscape going forward.
As the news emerges of the transition in ownership of two of the largest towers in the city, Rich pointed out that vacancy rates have reached 20% and higher in these and similar properties even while occupancy is soaring in many pockets of the city, and there are several sub-sectors that are thriving tremendously. With the advent of so many successful startups and other companies seeking more creative office environments than they have made available in the past, smaller buildings have become more attractive and investors recognize that it is also easier to fill them. Similarly, Indy’s natural geographic advantage and zeal to expand its base as a national distribution hub, makes it a ripe home for large retailers like Amazon who want to reach as many customers as possible within a day or so of an order being placed.
The above factors combine nicely with the friendly, comparative tax structures, and regulatory and legal environment offered by the city and state to attract investment from across the country and around the globe. The multi-family residential rental market here, for example, is attracting outside investment at record levels. Of course, the relative cost of real estate here compared with either coast, Chicago, or even more comparable cities like St. Louis and Cincinnati, make Indianapolis an attractive investment for value oriented investors who see a diverse urban economy, easy access by land or air to other cities and a labor market that is very favorable to that of competing markets.
The next decade appears to be very bright for Indianapolis and its suburbs and nearby neighbors. Watching as trends continue to develop and emerge will provide a helpful gauge concerning the future of our city’ commercial real estate markets.