Indianapolis Industrial Sector Fell Short in 2024
In 2024, Indianapolis’ industrial sector struggled, with most metrics falling below the national average. The metro recorded the lowest annual sales volume and least amount of square footage delivered among its peers.
Despite these setbacks, there was a notable increase in the under-construction pipeline, which reached 4.5 million square feet as of January. The jump marked a significant increase from the previous January, when a single project measuring 300,000 square feet was underway.
Projects, such as Ely Lily and Co.’s campus at the LEAP Research and Innovation District in Lebanon, Ind., are helping to sustain the market’s pipeline. In May, the company announced an additional $5.3 billion investment, building on the $3.7 billion already committed.
Later in the year, the firm revealed plans for the $4.5 billion Lily Medicine Foundry, the first facility to integrate research and manufacturing. These developments are keeping the market afloat and demonstrate a commitment to innovation and growth.
Smallest development pipeline among peer markets
Indianapolis’ industrial sector had nearly 4.5 million square feet under construction at the end of 2024, according to CommercialEdge data. These projects accounted for 1.2 percent of the market’s total inventory, slightly below the national average of 1.7 percent.
Compared to its peers, Indianapolis had the smallest amount of space underway. Phoenix ranked first with 22.3 million square feet, followed by Dallas (18.9 million square feet) and Houston (12.4 million square feet).
Early last year, Simtra BioPharma Solutions announced an expansion exceeding $250 million for its sterile fill/finish manufacturing campus in Bloomington, Ind. The new 150,000-square-foot facility is expected to be operational by this summer.
Another facility that is expected to come online this year is Sephora’s build-to-suit distribution center in Avalon, Ind. Developed by VanTrust Real Estate, the 746,672-square-foot facility broke ground last year and is part of the firm’s Avon Landings Commerce Park.
Completions remain below national figures
In 2024, Indianapolis had 6.1 million square feet in industrial completions across 13 properties, accounting for about 1.6 percent of total stock. This figure was below the national average of 1.9 percent.
Among its peer markets, Indianapolis had the least amount of new industrial space delivered last year. Phoenix led with 36 million square feet, followed by Dallas with 27.6 million square feet and Chicago with 14.9 million square feet.
Deliveries are expected to remain steady in 2025, as 4.2 million square feet of industrial space broke ground last year and are slated for delivery.
This quarter, Ambrose Property Group completed Building III, a 233,000-square-foot facility in Whitestown, Ind., within the Indianapolis Logistics Park Northwest. The first phase of the campus will comprise three buildings totaling more than 700,000 square feet.
Indy asset prices less than half the U.S. average
In 2024, the Indianapolis industrial real estate investment volume amounted to $320.7 million in sales from the 46 assets totaling 4.4 million square feet that changed hands. This placed the metro behind all its peer markets.
On average, Indianapolis assets traded for $73 per square foot, significantly lower than the national average of $167 per square foot. The Bay Area recorded the highest sale prices nationally at $414 per square foot, followed by Orange County ($314 per square foot) and Los Angeles ($294 per square foot).
In January, Libitzky Property Cos. acquired Park 130 @ Whitestown Building 3, a 319,336-square-foot facility in Whitestown, for $28.4 million. Sold by EQT Exeter, the property houses a distribution center operated by Frito-Lay.
Vacancy rates continue to rise
As of January this year, Indianapolis’ average industrial vacancy rate stood at 9.1 percent, marking a 650-basis-point increase from the previous year. This rate was also 1.1 percent higher than the national average. Among its peers, Orange County (5.0 percent) posted the lowest figure, followed by Atlanta (7.2 percent) and the Inland Empire (7.9 percent).
In May, Cummins Inc. leased a 1.1 million-square-foot building at Mohr Logistics Park, a 475-acre industrial campus. Mohr Capital completed the building in 2023.
As of January, the average listing rate within the Indianapolis metro was $4.9, notably lower than the national average of $8.4. Among peer markets, Orange County ($16.6) had the highest rate, trailed by Los Angeles ($15) and the Bay Area ($13.5).
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