Indianapolis’ Industrial Deliveries Slow as Investment Activity Rises

Indianapolis’ industrial market posted steady performance through October, supported by ongoing development activity and a sharp rebound in investment sales.

The construction pipeline remained moderate compared to national levels, but the metro continued to attract large-scale projects that highlight its role as a regional distribution hub. Industrial deliveries slowed considerably from last year’s heightened pace, reflecting a normalization in new supply, while investor activity accelerated, nearly doubling year-over-year.

According to Yardi Matrix data, both development and sales trends point to continued interest in the metro’s strategic positioning within the Midwest.

Construction activity advances with new large-scale projects

Indianapolis had 5.3 million square feet of industrial space under construction across 19 facilities, accounting for 1.4 percent of total stock—slightly below the 1.8 percent national average. Among peer markets, Phoenix (4.4 percent) and Dallas (3.2 percent) posted larger pipelines, while Chicago (1 percent), New Jersey (1 percent) and Kansas City (1.1 percent) recorded smaller totals.

Year-to-date through October, the metro broke ground on 11 facilities totaling 2 million square feet, according to Yardi Matrix data.

One of the largest projects underway is VanTrust Real Estate’s 746,672-square-foot build-to-suit facility for Sephora in Avon, Ind. The 61-acre development will serve as the retailer’s Midwest distribution center and is scheduled to come online this year, marking the second collaboration between the companies.

In April, National Refrigerants began construction on Mount Comfort Logistics Center VI, a 506,000-square-foot facility in Greenfield, Ind., slated for completion next year.

Deliveries decline sharply from last year’s pace

As of the end of October, Indianapolis delivered 1.5 million square feet of industrial space across six properties, representing 0.4 percent of total stock—well below the national average of 1.2 percent. Deliveries were down significantly from the same period last year, when nearly 6.3 million square feet across 14 properties came online.

Among peer markets, Chicago (6.2 million square feet), Atlanta (5.4 million square feet) and New Jersey (4.3 million square feet) recorded smaller volumes, while Dallas (16.6 million square feet) led completions.

Ambrose Property Group delivered Building II and Building III, two 233,000-square-foot facilities within Indianapolis Logistics Park Northwest in Whitestown. Located in the Boone County submarket, the projects received $56.2 million in construction financing from Horizon Bank in 2024.

Sales surge as pricing remains below national levels

Indianapolis’ investment sales volume reached $546.8 million year-to-date through October. Nearly 9.4 million square feet of Indianapolis industrial space across 50 properties changed hands, nearly doubling the $290.4 million recorded during the same period last year.

Pricing averaged $91.79 per square foot, below the national average of $136.41 per square foot. The metro posted one of the lowest averages among peer markets alongside Kansas City ($83.61 per square foot) and Chicago ($86.94 per square foot), while New Jersey led at $228.47 per square foot.

DHL Supply Chain sold Building 5, a 979,264-square-foot industrial facility within the 2.4 million-square-foot Whiteland Exchange Business Park in Whiteland, Ind. CapitaLand acquired the asset for $115.8 million, according to Yardi Matrix.

In March, Sealy & Co. purchased NorthPoint One, a 182,000-square-foot Class A facility in Westfield, Ind., from Holladay Properties. Located at 20099 N. East St., the building is part of the more than 300-acre NorthPoint Business Park, which includes sites suited for life sciences, retail, distribution and advanced manufacturing uses.

Vacancy rises above national average, rent growth remains modest

Indianapolis’ industrial vacancy rate reached 10.8 percent as of October, above the 9.6 percent national average, Yardi Matrix data shows. In-place rents averaged $5.04 per square foot, up 3.5 percent year-over-year, while newly signed leases averaged $4.73 per square foot.

Among peer markets, Columbus (13.1 percent), Denver (13.4 percent) and Memphis (12.5 percent) had higher vacancy levels, while markets such as Kansas City (4.9 percent) and Nashville (7.7 percent) remained tighter.