Commercial real estate around the state.

• Author: Mayer, Kathy
• Position: Commercial Real Estate - Industry Overview

No Lowe's, Meijer, Outback or Lone Star steakhouses, Holiday Inn Express or Fairfield Inn near you?

Chances are one's coming soon. That's because Indiana is the hot new target for these growing regional and national retailers, restaurants and economy hotels.

They're springing up all around the state in newly built commercial projects. Some are stretching cities' business districts to new outer limits as they buy farmland well beyond the edge of town, prompting a new string of development in their path. Others are clustering near interstates in high-traffic areas.

Regardless of location, the quantity of development on the commercial side leans heavily toward retail establishments.

Office development, on the other hand, remains leaner as companies continue "right-sizing" to smaller, better-utilized spaces, and lenders insist on either build-to-suit or preleased deals, developers report. Only a couple of spots break that trend, yet those are significant, such as Trammell Crow Co.'s $12 million project in South Bend.

Enthusiasm and prospects for a stepped-up market are high among the state's commercial real-estate brokers and developers, who hint that the next few years may reverse the state's 25-percent decline in non-residential construction experienced from 1989 to 1993.

Checking in around the state, reports of new developments include a fully preleased, eight-story office complex under construction in Fort Wayne; South Bend's major Trammell Crow project; and heavy retail activity in Indianapolis, Lafayette and Mishawaka.

EVANSVILLE

Calvin Dentino, manager of the commercial real-estate division of Citizens Realty & Insurance, feels Evansville held stable while the rest of the country experienced troubles, and now the slowdown is hitting.

How soon the market will flush out remains to be seen. "We might be in a critical period. It might be that the supply is preceding tremendous demand, or we may have a high vacancy rate for a while," he says.

Some artificially low lease rates have resulted from a four-story spec office building that went through bankruptcy and another that was acquired at a reduced price, Dentino reports. "The vacancies are creating some good deals for renters of both office and retail space.

"The range is too fluid to give a rate," he says. "With rates being what they are, it should be attractive for businesses to move in. We've experienced a lot of displacement as people move for lower rates. They're jumping to pick up on the lower rates."

Downsizing in Southern Indiana...