Indiana’s industrial market remains one of the state’s strongest commercial real estate sectors. With its central location and reputation as the “Crossroads of America,” Indiana continues to attract logistics, manufacturing, and distribution users. But as of Q2 2025, vacancy is tight, new supply is limited, and rents are on the rise — creating challenges for industrial tenants looking for warehouse space.

Vacancy Remains Historically Low

  • Industrial vacancy across Greater Indianapolis is holding near 4%, well below the long-term average.
  • Net absorption over the past year exceeded 8 million SF, fueled by e-commerce, third-party logistics (3PLs), and advanced manufacturing.
  • Even with a robust construction pipeline, most new deliveries are pre-leased to large national users, leaving few options for small and mid-sized tenants.

Takeaway: For industrial tenants seeking 20,000–200,000 SF, competition is fierce. Available options are often second-generation spaces or properties in secondary submarkets.

Rent Growth Pressures Tenants

  • Average asking rents climbed to $6.25/SF MG, up more than 8% year-over-year.
  • Modern bulk distribution facilities command even higher rents, while smaller light industrial and flex spaces have also seen steady increases.
  • Rising operating costs and limited new supply for mid-size users mean industrial tenants face fewer affordable options.

Takeaway: Budgeting for higher rent is essential. Tenants should plan early, compare submarkets, and negotiate concessions where possible.

Limited Speculative Development

  • Developers have slowed speculative projects due to construction costs and financing hurdles.
  • Of the 7 million SF currently under construction, more than 80% is already pre-leased to major occupiers.
  • Smaller bay speculative development is rare, further squeezing availability for growing companies.

Takeaway: Don’t wait for new product — most of it is spoken for before it hits the market. Identify second-generation space or creative flex conversions as alternatives.

The Rise of Data Centers

  • Indiana is also emerging as a hub for data center development, driven by strong power infrastructure, affordable land, and fiber connectivity.
  • Major tech users are eyeing central Indiana for large-scale facilities, which could impact land availability and utility demand in certain submarkets.
  • While data centers don’t compete directly with most industrial tenants for traditional warehouse space, they can influence site selection, infrastructure costs, and future land values.

Takeaway: Industrial tenants should stay aware of how data center projects may shape submarket dynamics, especially near major utility corridors.

What Industrial Tenants Should Do

  1. Start the search early. With low vacancy, it can take 6–12 months to secure the right space.
  2. Be flexible. Consider different building classes or slightly larger/smaller footprints to expand your options.
  3. Leverage representation. A tenant rep can uncover off-market opportunities and negotiate terms that align with your business goals.
  4. Evaluate location trade-offs. Proximity to interstates is valuable, but don’t overlook secondary corridors where costs may be lower.

Final Word

Indiana’s industrial market is strong — and that strength creates both challenges and opportunities. For industrial tenants, the key is planning ahead, staying flexible, and using expert representation to navigate a competitive environment.

📍 At Rise Realty Partners, we help industrial tenants and growing companies secure the right space at the right terms — across Indiana’s logistics corridors and beyond.