OUTLOOK ECONOMIC OVERVIEW
Transcription
OUTLOOK ECONOMIC OVERVIEW
MARKETBEAT OFFICE SNAPSHOT INDIANAPOLIS, IN Q3 2014 A Cushman & Wakefield Alliance Research Publication Summit Realty Group 241 N Pennsylvania Street, Suite 300 Indianapolis, IN 46204 www.cushmanwakefield.com/knowledge Y-O-Y CHANGE 18.8% 18.0% -0.8pp $17.35 $17.96 3.5% 1,550,993 1,421,917 -8.3% Direct Asking Rents (psf/yr) YTD Leasing Activity (sf) 12 MONTH FORECAST DIRECT RENTAL VS. VACANCY RATES 25.0% $18.20 $18.00 $17.80 $17.60 $17.40 $17.20 $17.00 $16.80 $16.60 20.0% 15.0% 10.0% 5.0% 0.0% 2010 A CHANGING OWNERSHIP LANDSCAPE 2011 2012 2013 DIRECT GROSS RENTAL RATE Q3 14 DIRECT VACANCY RATE OVERALL OCCUPIER ACTIVITY 2.5 2.0 1.5 For more information, contact: James Winkler, Director of Market Research (317) 713.2131 [email protected] 2010 2011 LEASING ACTIVITY 2012 2013 0.5 1.4 2 0.0 0.6 0.5 0.4 1.0 1.6 msf Several high profile buildings and portfolios have new owners since Q2 14 as investors take advantage of the growing rental rates and dipping vacancy of class A product in the suburban submarkets and opportunities in the lagging CBD. Precedent Office Park, a 21-building portfolio in the thriving Keystone Crossing submarket, was acquired by global REIT LaSalle Investments for $120 million. Keystone Crossing’s direct vacancy rate has improved by 10.8 percentage points in five years. In the CBD, locally-owned Regions Tower sold to New York City-based Nightingale Group. With less than 70% direct occupancy at the time of sale (nearly ten percentage points below the CBD’s 79.4% average), the transaction represents an out-of-state investor entering the Indianapolis market seeking an opportunistic play in the CBD. Overall, more than 3 million sf of office product totaling nearly $250 million has traded hands this year. Q3 2014 Overall Vacancy 2 The direct vacancy rate for the suburban market fell to 16.3% from 17.8% one year ago, even with the market addition of a 132,991-sf primarily vacant speculative building. Direct weighted asking average gross rental rates are rising, especially in suburban class A buildings, now up 5.1% from just one year ago to $19.48 per square foot. Q3 2013 0.2 The Indianapolis-area employment base will benefit from major new job announcements made by national corporations in Q3 14. Lowe’s Home Centers closed on the sale of Intech Twelve, absorbing 140,368 square feet (sf), with plans to use the facility for call center operations. Also, after years of sitting on the market, the former Verizon/Frontier Communications building along U.S. 31 in Westfield is being partially absorbed by Carrington Mortgage Services, expanding its operations from Fishers. These two announcements vow to add 1,360 jobs to the local base, while contributing to the 309,966 sf of year-to-date direct net absorption market wide in 2014. STATS ON THE GO 0.2 SIGNIFICANT OCCUPIER INVESTMENTS The changing of building ownership is not the only shift in the office market landscape. Carmel, a north-side suburb with an urban model, has seen its population double since 2000, and occupancy in nearby office submarkets has risen while asking rates jumped. Fishers, Ind., is following the same model with its Nickel Plate District. Broad Ripple, a neighborhood in the Midtown submarket, is proposing new office developments with high asking rates to capitalize on its existing retail and residential presence. The definition of suburbia in the area is transitioning into a collection of urban meccas in suburban areas, giving users more options with a downtown-feel outside of the CBD. 1.4 The U.S. economy marked another month of more than 200,000 jobs added to payroll in September, while the labor force participation rate fell to 62.7%, its lowest rate since 1977. The two mixed-message events resulted in national unemployment falling to 5.9%, and to 5.1% in the Indianapolis MSA. The positive news – office-using industry employment (financial services, business/professional services and information) now exceeds 30 million jobs for the first time. Locally, those industries have grown by 6,000 jobs, up 2.7% since Q3 2013. A Sentier Research study also noted Midwestern median income is now back to pre-recovery levels. OUTLOOK psf/yr ECONOMIC OVERVIEW 2014 YTD USER SALES ACTIVITY The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2014 Cushman & Wakefield, Inc. All rights reserved. 1 INDIANAPOLIS, IN SUBMARKET INVENTORY Indianapolis CBD 11,409,898 OVERALL VACANCY RATE 20.9% CBD SUBTOTAL 11,409,898 20.9% 20.6% 361,297 0 0 (53,074) (60,092) $19.16 $21.14 Airport 1,049,437 33.1% 33.1% 21,906 0 0 (16,025) (16,025) $14.37 $16.98 Carmel 644,368 22.7% 22.7% 15,638 0 0 (4,929) (4,929) $16.80 $18.75 2,160,081 22.0% 22.0% 117,108 0 0 32,992 32,992 $17.44 $18.02 752,279 18.1% 18.1% 1,400 0 0 (33,193) (33,193) $14.63 $20.00 I-69/Shadeland 2,659,344 20.5% 19.2% 72,036 39,500 132,991 32,434 10,108 $17.04 $21.63 Keystone Crossing 4,178,115 14.2% 13.7% 246,692 0 0 68,398 51,517 $19.36 $19.99 Meridian Corridor 6,391,326 11.2% 11.0% 236,713 0 0 173,663 166,761 $18.29 $20.39 Midtown 1,538,674 10.1% 8.0% 1,466 0 0 (20,516) (52,413) $15.00 $0.00 Northwest 3,813,907 15.0% 14.5% 287,136 119,000 16,880 178,878 157,311 $17.49 $19.02 South 1,176,617 22.7% 22.7% 33,910 0 0 (40,004) (37,779) $17.51 $20.11 West 854,790 32.3% 32.3% 26,615 0 0 (8,658) (2,530) $15.17 $0.00 SUBURBS 25,218,938 16.8% 16.3% 1,060,620 158,500 149,871 363,040 271,820 $17.21 $19.48 TOTALS 36,628,836 18.0% 17.6% 1,421,917 158,500 149,871 309,966 211,728 $17.91 $20.16 Castleton East DIRECT VACANCY RATE 20.6% YTD LEASING ACTIVITY 361,297 UNDER YTD CONSTRUCTION CONSTRUCTION COMPLETIONS 0 0 YTD DIRECT NET ABSORPTION YTD OVERALL NET ABSORPTION (60,092) OVERALL WTD. AVG ALL CLASSES GROSS RENTAL RATE* $19.16 DIRECT WTD. AVG. CLASS A GROSS RENTAL RATE* $21.14 (53,074) * RENTAL RATES REFLECT ASKING $PSF/YEAR MARKET HIGHLIGHTS SIGNIFICANT Q3 2014 LEASE TRANSACTIONS SUBMARKET TENANT Castleton Park 32/40/46/47/48, Indianapolis Castleton National Gov’t Services* (expansion) B College Park Plaza, 8909 Purdue Road, Indianapolis Northwest Republic Airway* (expansion) A 91,048 19845 US 31 North, Westfield Meridian Corridor Carrington Mortgage Services B 77,623 4550 Victory Lane, Indianapolis South ACS Human Services LLC* B 40,204 Keystone Office Centre, 8335 Keystone Crossing, Indianapolis Keystone Crossing Paychex, Inc. A 26,435 300 N Meridian St, Indianapolis CBD First Financial Bancorp A 18,294 Three Woodfield Crossing, 8425 Woodfield Crossing Blvd Keystone Crossing Bader Company A 13,085 SIGNIFICANT Q3 2014 SALE TRANSACTIONS SUBMARKET BUYER BUILDING CLASS SQUARE FEET Precedent Office Park portfolio, Indianapolis Keystone Crossing LaSalle Investment Management A 1,155,575 Regions Tower, One Indiana Square, Indianapolis CBD Nightingale Properties A 705,292 Lake Pointe Center III/IV, 8470/8520 Allison Pointe Blvd, Indianapolis Castleton USAA Real Estate Company A 170,147 Intech Twelve, 6620 Network Way, Indianapolis Northwest Lowe’s Home Centers B 140,368 Keystone Office Park portfolio, 3021-3105 E 98th St, Indianapolis Keystone Crossing Olymbec Corporate Group B 114,980 SIGNIFICANT Q3 2014 CONSTRUCTION COMPLETIONS SUBMARKET MAJOR TENANT COMPLETION DATE Two Concourse at Crosspoint, 10194 Crosspoint Blvd, Fishers I-69/Shadeland Speculative Q3 2014 SIGNIFICANT PROJECTS UNDER CONSTRUCTION SUBMARKET MAJOR TENANT COMPLETION DATE 5401 W 106th St, Zionsville Northwest Hat World/Lids (BTS)** Q4 2015 BUILDING SQUARE FEET (% LEASED) 150,000 (100%) Woodland Corporate Center VII, 7676 Interactive Way, Indianapolis Northwest Interactive Intelligence (BTS) Q3 2015 119,000 (100%) 11787 Lantern Dr, Fishers I-69/Shadeland Meyer Najem (BTS) Q1 2015 39,500 (55%) BUILDING CLASS SQUARE FEET 190,000 BUILDING SQUARE FEET (% LEASED) 132,991 (5%) * RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS **SINGLE TENANT OWNER-OCCUPANT - NOT INCLUDED IN CONSTRUCTION STATISTICS Summit Realty Group 241 N Pennsylvania Street, Suite 300 Indianapolis, IN 46204 www.cushmanwakefield.com/knowledge For more information, contact: James Winkler, Director of Market Research (317) 713.2131 [email protected] The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2014 Cushman & Wakefield, Inc. All rights reserved. 2