Despite giving the appearance of a flat market, Indianapolis saw vast differences from one submarket to another, both in terms of direct vacancy and absorption. Are tenants favoring any particular Indianapolis submarkets? To answer the question, we dug into office migration data from 2019, based on leases signed during the year. Here’s what we found:
- The Indy CBD led the area with the most inbound migrations. Seven tenants responsible for 143,402 sf moved downtown, averaging about 20,486 sf per transaction. 28 other tenants stayed in their existing spaces downtown and renewed and/or expanded, while 24 tenants moved within the CBD submarket. Only two tenants left downtown for the suburbs, and both moved to the Northwest submarket.
- North/Carmel lost the most tenants. The North/Carmel submarket saw the most tenants leave in 2019, with nine businesses totaling 92,762 sf, or an average of about 10,000 sf per deal. The CBD, Fishers, Northwest and Keystone submarkets each took two of North/Carmel’s former tenants. Despite the outgoing tenants, the submarket still saw positive absorption for the year, with 75,224 sf of direct net absorption.
- Moving is easier when you’re staying close to home. Among all the options available to a tenant with an upcoming lease expiration – renew, move to a new submarket, stay in the same submarket – moving but remaining close to home appears to be popular. We captured 77 tenants who moved their offices but stayed in the same submarket of Indianapolis – that’s approximately 40 percent of all new leases signed. The number jumps to over 49 percent when you remove tenants who expanded in their current buildings.
- Plenty of new tenants are moving into the market. 2019 saw 41 new office locations added – meaning tenants were new to the market or adding an office within the market. The most popular submarket for this phenomenon was North/Carmel, where 11 new tenants signed leases totaling 70,232 sf. Northwest accounted for seven new tenants and 66,911 sf, while Keystone added another seven new tenants at 96,444 sf. The downtown submarket led in terms of square feet of new tenants because of a couple large deals but only saw four new tenants.