INDIANAPOLIS, March 7, 2008 — A relatively healthy local economy will boost the Indianapolis office market this year, placing downward pressure on vacancy and sustaining modest rent appreciation, according to the 2008 National Office Report by Marcus & Millichap, the nation’s largest real estate investment services firm. Office-using employment growth is accelerating, led by the expansion of major insurers Hartford Fire Insurance and Selective Insurance. Additionally, companies such as AT&T and Affiliated Computer Services are choosing to locate some of their customer support positions in Indianapolis.
Also included in the report is the firm’s annual National Office Index (NOI), a snapshot analysis that ranks 43 office markets based on a series of 12-month forward-looking supply and demand indicators. Indianapolis moves up six places this year to No. 34.
“Investors will remain interested in the Indianapolis office market this year due to favorable cap rates and a positive economic outlook,” says Greg A. Moyer, regional manager of Marcus & Millichap’s Indianapolis office.
Following are some of the most significant aspects of the Indianapolis Office Research Report:
Employers are expected to expand payrolls 1.1 percent in 2008 with the addition of 10,000 positions.
Developers will deliver 200,000 square feet of office space in the metro this year, representing a 0.7 percent increase to inventory.
Vacancy is expected to shed 20 basis points to reach 14.4 percent in 2008.
Asking rents are forecast to end 2008 at $18.10 per square foot, while effective rents reach $15.18 per square foot, gains of 2.1 percent and 2.5 percent, respectively.
Investors with a penchant for repositioning assets may want to target Class B properties in the North/Carmel submarket, where Class A vacancy is particularly tight and construction costs limit new development, generating spillover demand.
In the 2008 NOI, Seattle moved up three places to secure the No. 1 spot, surpassing last year’s leader New York City, which slipped to No. 2. Boston moved up two spots to No. 3, while San Francisco jumped 12 places to the No. 4 position. Los Angeles slipped two spots, coming in at No. 5.
For a copy of Marcus & Millichap’s National Office Report and the complete NOI rankings, visit www.MarcusMillichap.com.
With more than 1,300 investment professionals in offices nationwide, Encino, Calif.-based Marcus & Millichap Real Estate Investment Services is the largest commercial real estate brokerage in the nation focusing exclusively on real estate investments. In 2007, the firm closed $20.7 billion in transactions. Founded in 1971, the firm has perfected a powerful system for marketing properties that combines product specialization; local market expertise; the industry’s most comprehensive research and analysis capabilities; state-of-the-art technology; and established relationships with the largest pool of qualified investors nationally.