2019-07-10_DTZ戴德梁行_Office_Q3_2018_Indianapolis_5页_430kb

Indianapolis Office Market Summary Q3 2018

Core Content

The Indianapolis office market in Q3 2018 continued to demonstrate strong performance and resilience, with positive net absorption and a steady trend in rental growth. The market attracted occupiers, maintaining its 18th consecutive quarter of positive absorption, totaling over 55,000 square feet (sf). Despite a slight increase in vacancy rates compared to the previous quarter, the market remained competitive and attractive to businesses.

Economic Indicators

• Indianapolis MSA Employment: Increased to 1.07 million in Q3 18, showing consistent growth.
• Indianapolis MSA Unemployment: Rose to 3.3%, still lower than the national rate of 3.9%.
• U.S. Unemployment: Decreased to 3.9%, indicating a strong national labor market.

The Professional and Business Services and Financial Activities sectors were key drivers of job growth, contributing over 33% of the total job additions in the MSA. This growth is expected to influence real estate decisions, particularly in terms of amenities and space requirements.

Market Indicators

• Total Market Vacancy: Increased to 16.4%, showing a slight rise from Q3 17.
• Net Absorption (sf): Reached 52,570 sf, with strong leasing activity totaling nearly 700,000 sf.
• Under Construction (sf): Increased to 602,070 sf, with two major projects announced.
• Average Asking Rent: Rose to $19.61 psf, with Class A rents at $22.11 psf.

Suburban markets saw a 3.8% increase in asking rents, while downtown rents increased by 3.0% to $21.38 psf. The combination of high construction costs and demand for premium amenities is expected to sustain moderate rent increases.

Key Lease Transactions

Key Sales Transactions

Market Trends

• The Indianapolis market showed a positive net absorption trend, with the largest transaction being a 96,000 sf renewal and expansion in downtown.
• North/Carmel submarket had the highest absorption with 40,000 sf.
• Keystone submarket had the highest vacancy rate at 17.1%, but also saw a lease transaction.
• Fishers submarket had the highest vacancy rate at 27.2%, with negative absorption.
• Downtown submarket maintained a strong presence with a vacancy rate of 14.4% and a direct asking rent of $21.28 psf.
• Class A buildings are the most prestigious, with high-quality finishes and amenities, while Class C buildings offer below-market rents to functional tenants.

Outlook

• The national labor market showed a significant trend with more open jobs than unemployed people for the second time in 20 years.
• This trend is expected to drive wage increases, influencing real estate demand for better amenities and space.
• Investment activity is anticipated to remain strong due to the stability of the Indianapolis market.
• Vacancy rates are expected to continue to decrease as demand for office space grows.

Methodology

Cushman & Wakefield's quarterly estimates are based on a competitive office inventory in the Central Indiana marketplace, excluding older buildings requiring substantial renovation. Vacant space is defined as space available immediately or imminently after the quarter ends, and sublet space is not counted as available. The data is subject to revisions based on additional information.

New Statistical Series

In Q2 2018, Cushman & Wakefield Research transitioned to a new data series, enhancing data integrity through comprehensive reviews of office inventory.

Explanation of Building Characteristics

• Class A: High-quality, well-located buildings with premium rents and amenities.
• Class B: Mid-range buildings with average finishes and rents.
• Class C: Functional spaces offered at below-market rents.

The market is showing signs of continued growth and stability, supported by strong economic fundamentals and robust leasing activity.