The future of office space in downtown Indy
Add Axios as your preferred source to
see more of our stories on Google.
/2023/09/05/1693937225513.gif?w=3840)
Illustration: Brendan Lynch/Axios
The COVID-19 pandemic has pushed mixed-use amenities to the top of employers' priority list when investing in downtown Indianapolis office space.
Driving the news: Of the major new developments and redevelopments underway, many have recognized that employers "need to use their real estate in a magnetic way, not in a mandate way," commercial brokerage JLL's senior managing director Matt Waggoner told Axios.
- Post-pandemic, employers are being forced to consider the "value" of the office as "something that gives the employees not just a literal place to work but something that's actually improving their life," he said.
Why it matters: Getting more employees to return to downtown office spaces is key to the area's economic success, as they also shop, eat and pay for services there.
Zoom in: The massive mixed-use Bottleworks District, for example, is "the hottest development in the city," Waggoner said. More than 90% of the office space in the second phase, which is under construction, is already committed to three tenants.
- The Stutz building's redevelopment is nearly completed and will feature new retail, food and fitness options.
- Eleven Park, the planned neighborhood and future home of Indy Eleven will include apartments, office space and retail.
- And some existing office towers — including the Salesforce Tower and the Capital Center — have invested in renovations that also added amenities for workers, Waggoner said.
Zoom out: The trend is clear beyond downtown too, he said, in places like Fishers' Nickel Plate District, Keystone at the Crossing and Midtown Carmel, which is at a 0% vacancy rate.
- It's also true nationally. CBRE told Axios' Erica Pandey that employers are adding amenities to make workers' time in the office worthwhile. Across the country, 58% were building auditoriums, 31% offered outdoor spaces, and 69% had onsite baristas or coffee shops.
Reality check: Downtown activity still lags far below pre-pandemic levels.
- "I think it'd be hard for anybody who says there's a clear path to recovery, because there's not any absolute data that would suggest that," Waggoner said.
Yes, but: "It's not anywhere near hopeless … we need people to continue to remember why they like coming downtown in the first place," he added.
By the numbers: The Indy area's total office vacancy rate is at 21%, which is higher than last year. However, 2023 data has shown some signs of life in downtown's net absorption rate — a key metric measuring newly occupied offices, minus new vacancies.
- As of May, downtown saw just about 40% of pre-pandemic 2019 levels of foot traffic — among the lowest among major metros in the country — based on mobile phone activity analyzed by the University of Toronto.
What he's saying: Despite the lagging recovery so far, Indianapolis real estate agent Tim Birky is optimistic about downtown. He cites other investments like IU Health's new downtown campus.
- "With the amount of development happening downtown right now, it surely is going to get better."
What we're watching: Mayor Joe Hogsett has made downtown's resiliency a priority and earlier this summer closed a portion of Monument Circle to add new green space.
- The city is also redeveloping part of Georgia Street to be more pedestrian-friendly as part of its South Downtown Connectivity Vision Plan.