Brokerage Outlook: Indiana

• Indianapolis Retail

• Indiana Industrial

• Indianapolis Office

Indianapolis Retail Holtzman Submitted by Tracey Holtzman, principal of retail sales and leasing with the Indianapolis office of NAI Olympia Partners. Posted 2-04-06. click here for retail absorption graph click here for retail rental rates graph What area is your expertise? • Indianapolis and the surrounding area What trends do you see presently in retail development in your area? • One trend we are currently seeing in the Indianapolis area is the emergence of small and first-time developers taking advantage of the opportunity to develop retail centers in a strong, high-growth retail market. This trend has created a large amount of small shop space, primarily on the north side and northern suburbs, such as Westfield, Fishers and Noblesville. The high incomes coupled with the high residential growth have created a market for retail that wasn't there just a few years ago. What retailers are new to your area? • Ashley Furniture, Crate and Barrel, Beauty Brands, Fresh Market and many others. Who are the active retail developers in your area? • Kite Realty Group, Flynn & Zinkan Realty Company and Mann Properties Please name one or two significant retail developments in your area. What impact will these projects have on the market? • Kite and Flynn & Zinkan are both developing centers at 116th and Olio in the Fishers/Geist area where there was no retail only a short time ago. Flynn & Zinkan also has developed the Kroger Supermarket-anchored Westfield Marketplace at State Road 32 and Carey Road in Noblesville, creating another retail market in an area that was once cornfields. • With Simon Property Group/Gershman Brown & Associates announcing the construction of Hamilton Town Center, a 1 million-square-foot lifestyle center to be completed in late 2007, we will see change and growth in that area in the way of the retail and residential sectors. With 146th Street due to open from Cumberland Road to Interstate 69, it paves the way for development of all kinds: residential, retail and corporate. We have seen some development in that area already with Prairie Lakes Shops (click here for picture), which is shadow-anchored by Marsh Supermarket at 146th and State Road 37. The project, along with several other retail centers in the Indianapolis market, are being developed by local developer Kevin McKasson. • Indianapolis' west side is also experiencing an influx of new retail development. Premier Properties' Metropolis, a new 850,000-square-foot lifestyle center in Plainfield, opened at the end of 2005 and includes such retailers as Barnes & Noble, Old Navy, Dick's Clothing and Sporting Goods, and Rave Motion Pictures. It includes approximately 60 retailers that are new to the west side of Indianapolis, such as J. Jill and Coldwater Creek, which have only been on the north side of the city until now. Where is the majority of development taking place? Why is this area doing well? • The Northside and Avon/Plainfield areas What area do you expect to be the next big retail development market? • Noblesville Please describe the retail leasing activity in your area. • Strong, active and growing Please give a measure of retail vacancy rates. click here for retail vacancy rates chart What types of retailers should look into your market in the coming year? What type of retail is needed? • Restaurants are needed Would you like to make any additional observations about the retail market in your area? • With the emergence of three lifestyle centers, Clay Terrace in Carmel/Westfield, Hamilton Town Center in Noblesville and Metropolis in Plainfield, which total almost 3 million square feet of new retail space, along with other smaller developments, it's evident that retail is continuing to thrive in this market and will continue to grow and improve as the economy and employment grows and improves.

Indiana Industrial Castell Submitted by Jeffrey Castell, principal and senior vice president of industrial services with the Indianapolis office of Colliers Turley Martin Tucker. Posted 3-31-06. What area is your expertise? • central Indiana What trends do you see presently in industrial development in your area? • Continuation of speculative bulk warehouse space construction with tax abatement in the "ring" counties surrounding Marion. What type of industrial product is doing well in your area? • Bulk warehouse space remains the industrial market driver, comprising more than 80 percent of new construction and absorption. Who are the active industrial developers in your area? Browning/ProLogis, 501,000 square feet spec (Whitestown) Browning/ProLogis, 811,000 square feet spec (Plainfield) Lauth Property Group, 506,000 square feet spec (Brownsburg) Lauth Property Group, 668,000 square feet spec (Greenwood) Duke Realty Corporation, 650,000 square feet spec (Plainfield) Opus Corporation, 320,000 square feet spec (Plainfield) Panattoni Development Company, 500,000 square feet spec (Plainfield) Please name one or two significant industrial developments in your area. What impact will these projects have on the market? click here to view industrial construction chart • The aforementioned speculative bulk warehouse construction is indicative of the central Indiana industrial market. Examples of recently completed projects include Becton Dickinson & Company (650,000-square-foot build-to-suit in Plainfield), Caterpillar Logistics Services (457,000-square-foot speculative facility lease in Greenfield's Mount Comfort Commercial Park) , Epson America (750,000-square-foot build-to-suit in Plainfield) and Brightpoint (322,000-square-foot spec facility in Plainfield). Where is the majority of development taking place? Why is this area doing well? • The speculative bulk warehouse construction dominating the central Indiana industrial market is occurring predominately in the "ring" counties surrounding Marion, including Hendricks, Boone, Hancock and Johnson. Ten-year real property tax abatement afforded by communities located in the aforementioned counties provides an integral component in the competitive pricing landscape. What area do you expect to be the next big industrial development market? Why? • Those communities taking an aggressive stance by offering economic incentives (including real property tax abatement) and proactively developing ready infrastructure will be the future beneficiaries of industrial development in central Indiana. Specifically, markets like Whitestown, located between Indianapolis and Lebanon at the interchange of Interstate 65/State Route 267, are poised for explosive growth in the near term. Please describe the industrial leasing activity in your area. • Industrial leasing activity fueled the central Indiana industrial market continuation of growth with more than 1.2 million square feet of positive absorption during the first quarter and nearly 3 million square feet of new construction. Modern bulk drove the market, accounting for all the new construction and virtually all the net absorption. Nonetheless, overall vacancy increased from 6.8 percent at year-end 2005 to its current level of 7.5 percent. This comes as no surprise, as we reported previously that nearly 2 million square feet of speculative construction would be added to the market in early 2006. Please describe the industrial sales activity in your area. • Industrial sales demand has remained solid with requirements outpacing inventory available for acquisition. Consequently, we are seeing a continuation of the trend toward land acquisition and new construction by owner/occupants. Please give a measure of industrial vacancy rates. Please give a measure of available sublease space. • Once again, the overall industrial vacancy rate is 7.5 percent at the end of the first quarter. Differing product types and the corresponding vacancy rates vary as follows: office showroom, 9 percent; medium distribution, 6.3 percent; traditional bulk, 7.9 percent; modern bulk, 11.4 percent; manufacturing, 4.6 percent; and flex, 19.4 percent. The current central Indiana inventory of approximately 219.16 million square feet offers 16.4 million square feet of vacant space. What impact do current interest rates have on the industrial market? What predictions do you have for interest rates and their effect on the industrial market in 2006? • The prevailing market sentiment anticipates interest rates to continue their moderate climb in the near term, leveling out during the second half of 2006. The primary wild card in this equation appears to be the impact of oil prices. What industries do you expect to expand in 2006 to absorb a great deal of industrial space? What areas will be affected? • The industry having the most dramatic impact on the central Indiana industrial market is logistics. Central Indiana has been the beneficiary of both internal distribution network realignment and third-party outsourcing, resulting in the absorption of large (400,000-800,000 square feet) blocks of immediately available modern distribution space. Outlying areas affording modern space with real property tax abatement, available for immediate occupancy, will continue to benefit from growth and realignment in the logistics industry. Would you like to make any additional observations about the industrial market in your area? • 2006 has seen "carry over" benefit from transactions inked in 2005. Otherwise, market activity has moderated from the torrid pace experienced in 2005 and following the postponement of many occupancy decisions in the prior 2 years, leading to the realization of the pent-up demand during 2005.

Indianapolis Office Submitted by Darrin Boyd, principal/senior vice president with the Indianapolis office of Colliers Turley Martin Tucker. Posted 12/19/07. Boyd What area is your expertise? • I specialize in landlord representation, building sales and tenant representation in the Indianapolis and surrounding Central Indiana region. What trends do you see presently in office development in your area? • Medical space has developed at a very rapid pace, single-story garden office space has been prevalent and new Class A space with Interstate 465 frontage and signage has been very successful in new lease-up. Who are the active office developers in your area? • In addition to Duke Realty and Lauth Property Group, who have developed the most office product over the last 5 years, Shamrock Builders, Opus, Panattoni Development Co., J. Greg Allen Builder and Edgeworth Laskey Properties are all currently active. Please name new significant office developments in your area. What impact will these projects have on the market? • The Northwest submarket is undergoing growth with over 300,000 square feet of new construction underway which includes Duke Realty’s 154,000-square-foot Woodland Corporate Park VI and Lauth’s 151,000-square-foot Intech Three. The North/Carmel submarket currently has four multi-tenant projects underway totaling 200,000 square feet, including Panattoni’s 142,000-square-foot project at 1320 City Center Drive. Edgeworth Laskey Properties is currently building the 151,000-square-foot Lake Point Center 5 in the northeast submarket. The Keystone submarket will soon have Duke’s 120,000-square-foot River Road Two. Lauth's Meridian Corporate Plaza Three Building features 135,000 square feet. Lauth just completed construction of its 135,000-square-foot Meridian Corporate Plaza Three Building at 103rd and College. Duke has continued its successful Parkwood Crossing development originally developed east of Meridian Street on 96th (which is now fully built out) by crossing over to the west side of Meridian on 96th Street to develop land it has held for many years. Duke Realty's One West features 185,000 square feet. Duke's first building at Parkwood West, One West, is a five-story, 185,000-square-foot building with 37,000 square feet floor plates. Impressively, the building was 100 percent leased upon completion. All of these projects have been asking and consistently obtaining strong rental rates in the low $20s per square foot, which are at the top of our suburban market rents. Since these large blocks of new Class A space have been absorbing at a strong space, it is older Class A and Class B buildings that will be feeling the pressure as these tenants leasing new space leave those older buildings. Where is the majority of development taking place? Why is this area doing well? • Most of the new office development activity is located very close to Interstates 465 and 69. Ease of access for employees and visitors as well as close priximity to popular housing and school systems has driven these locations. What area do you expect to be the next big development market? Why? • Northern suburban areas like Zionsville, Fishers and Noblesville are starting to see more activity and demand than 3 to 5 years ago. This is due to more housing and retail amenities being located in these northern trade areas. What areas are doing well in terms of office leasing? Which areas are struggling with office leasing? • The North Meridian and Keystone Crossing submarkets continue to see the most demand and activity followed by the northeast and northwest submarkets. The east, west and south submarkets have substantially less demand and therefore tend to have higher vacancy rates than other parts of the city. Downtown has seen no new construction of office product with vacancies lower than in the suburbs. Please give a measure of office vacancy rates. CLICK HERE for vacancy rate chart What impact do current interest rates have on the office market? What predictions do you have for interest rates and their effect on the office market in the next year? • The tightening of credit across the country will make it more difficult for most to move ahead with new or planned office developments. Developers will still see opportunities in selected areas for certain niche product types like medical projects and life sciences. I believe there will be pressure to lower interest rates from all industries and from consumers. The Fed will watch inflation very closely and is very concerned about it, but may abandon the fight over inflation and continue to lower interest rates to try and fend off a potential recession. There is the possibility of stagflation — a possibility Alan Greenspan alluded to in his latest book, “The Age of Turbulence” — when slow growth, rising unemployment and inflation all strike at the same time. What is the status of job growth/(un)employment rates and what bearing will it have on the office market? • Economic expansion and job creation are critical to sustaining positive trends in our office market. Inflationary fears, especially with increased prices for fuel, challenge companies to maintain profit growth. Additionally, consumer spending and confidence are critical elements to the market. Is there any type of office tenant absorbing a majority of space? What industries do you expect to expand in the next year to absorb a great deal of office space? What areas will be affected? • Indianapolis has a great deal of large insurance users throughout Central Indiana. When these companies expand, our market benefits. When they contract like Conseco, for example, they bring substantial vacancy and competitive space to the market. City and state uses, medical tenants, and life sciences companies are all absorbing space at this time. Would you like to make any additional observations about the office market in your area? • The Indianapolis metropolitan economy will likely outperform the national average throughout 2008. New speculative office construction will continue to come online. Due to this, we may continue to see some increases in the vacancy rate. However, Indianapolis will continue to record solid positive absorption and average asking rates may show an increase in 2008. I do not believe we will see the same amounts of absorption and activity over the last several years as the economy and Corporate America start to take a breather after 5 to 6 years of very strong growth and expansion.