Things are getting hot and heavy down in Indianapolis – if commercial/industrial property is your thing, that is. Central Indiana has always been attractive for its connectivity and logistics amenities, but these days our warehousing and distribution offerings are about a sexy to developers as supermodels in swimwear.

In fact, we’re setting records for how many heads we’ve turned. Companies are checking us out and lots of them have been swiping right, so to speak.

 

A Threesome, Indiana’s On Top

Earlier this year, data was released that reflected where Indiana stats on the hot-or-not scale for commercial property. For the warehousing and distribution sectors, we ranked hot-hot-hot.

Avison Young, a global commercial real estate services firm headquartered in Toronto, Canada, published its 2020 Commercial Real Estate Forecast Report using an array of international datasets as sources. The report described several of the top trends that will be impacting commercial property markets this year and provide an outlook for key market regions.

Indiana ranked as one of the standout cities in the Midwest, in the top three alongside Minneapolis, MN and Columbus, OH for record-setting development and leasing of warehousing and distribution space.

“Indianapolis continues to see robust growth in its industrial sector with over 10 million square feet of new inventory being added in 2019. Remarkably, over 95% of this new inventory was immediately absorbed leaving the year-over-year vacancy just 40 basis points higher at 5.9%,” the authors said.

 

Insatiable Desire

A 95% immediate absorption rate is a very successful turnout, which must mean several factors are behind the desire among warehousing companies. Understandably, e-commerce is a really big part of the demand – but it’s not all about getting products to customers quickly. It’s actually a two-way street. The need for customers to return items to companies is just as important.

“The volume of online purchasing has in turn led to a rise in reverse logistics, and therefore an increase in the number of ‘return centers’ needed to handle the return of merchandise,” authors said. “Indianapolis is uniquely positioned to capture its share of industrial demand from these current trends. Total competitive industrial inventory now exceeds 270 million square feet.”

 

Hottest Commercial Property Trends for 2020

Avison Young authors used a blend of several dozen international sources to compile its list of the top commercial property trends of 2020. Some you’d expect – like the way automation is making big changes in the distribution markets and how modern talent attraction/retention efforts have reshaped modern office settings. Other trends were surprising to consider – such as the impact of geopolitics, the contraction of globalization, and even concerns surround the legalization of marijuana.

The top trends for 2020 listed by researchers were:

1. Low inflation and low interest rates –
   A slowing economy will impact occupier demand.
2. Global politics –
   The rise of populism and political extremism is succeeding in redirecting the global political agenda, creating uncertainty.
3. Deglobalization –
   Multinational companies are rethinking global footprints.
4. Resilient buildings –
   Climate change mitigation strategies are on the rise to make buildings more resilient against extreme weather.
5. Socially responsible investing – Vibrant and successful developments in neighborhoods
6. Reinvention of the retail sector – Retail is becoming more immersive and integrated, to hold the public’s attention.
7. Future flexibility – Flexible offices will remain one of the hottest growth areas this year.
8. Augmented intelligence – Job and task transformations created by technology.
9. Talent Attraction – Flexible space, work from anywhere trends, and teaming spaces are impacting office demand.
10. Automation in warehousing and logistical challenges – Demand for more technology infrastructure in warehousing is on the rise.
11. Opportunities and challenges of cannabis legalization – Social easing of cannabis legislation has led to policy changes worldwide.

 

Shipping Out the Sexy

The report mentioned that Indiana’s warehousing and distribution property market is likely to remain robust even throughout possible economic downturns, which is reassuring given all that’s happened over the last few months. We have what companies are seeking, and they’re turned on by what they find here in Indiana. Given the data, we can expect that to continue.