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Indianapolis Industrial Market Report | Q3 2022

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Record Leasing Levels Keep Pace with New Construction

The U.S. economy is showing some signs of slowing down amidst red-hot inflation, which reached a 41-year high of 9.1% in June. Against this backdrop, the Fed raised the federal funds rate by 75 bps for a third-consecutive month in September, leading to an effective rate of 3.08%. Despite these efforts and six consecutive months of slowing, annual inflation stands at 8.2% as of the end of 22Q3. Leading economic indices signal the economy falling into a recession, even amidst a strong job market. These factors have yet to slow the Indianapolis industrial market. New leasing activity is up 3.9% from last year and led to net absorption of 12.2 MSF. While the 6.5 MSF of new speculative deliveries in 22Q3 caused vacancy to rise, the 4.8% direct vacancy rate remains below the 10-year average.

Key Takeaways

  • Strong tenant demand puts new leasing activity on track to surpass the record levels achieved in 2021.
  • Average asking rental rates grew 5.5% from 22Q2 to surpass $5.00 triple net for the first time in the Indianapolis market.
  • YOY net absorption gains are outpacing the national average.
  • New construction starts are slowing as winter approaches, but there is still 28.6 MSF of product underway moving into 22Q4.

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Indianapolis Industrial Market Report | Q3 2022

Download Report