By Brielle Scott
At I.CON Central in Columbus, Ohio, this week, Ashley Grigsby, managing director, capital markets, Transwestern, moderated a panel of experts who broke down what’s driving investment decisions, where capital is flowing, and how debt availability is shaping the landscape.
Joining Grigsby were Rob Huthnance, president, CT Realty; Stephen Lindley, senior vice president, investments, Ambrose; Chi Osu, head of U.S. logistics development, Mapletree; and Andy Weeks, chief development officer, VanTrust.
Grigsby asked Lindley, “Are you seeing any regional differences in tenant demand and absorption here within the Midwest market that are shaping your pipeline?”
“The short answer is yes,” he laughed.
“I’ll focus on the four markets where we do spend time, which [are] Indianapolis, Cincinnati, Columbus and Louisville,” he said. Lindley emphasized that while all Midwest markets experienced a post-COVID expansion, the scale and impact varied significantly. Markets like Indianapolis and Columbus saw a surge in new supply, while Louisville and Cincinnati expanded more modestly. This led to a period of imbalance between supply and demand, which developers have been working to correct over the past two years.
“I think everyone in the room [who is] a developer has some scar tissue from the mega-bulk product over the last 2 or 3 years, and we’ve stayed away from that while we continue to churn through that supply.”
“Louisville is probably the one market in the Midwest that’s already past the rebalancing phase and back into an expansion phase,” Lindley said, adding that there are about 9 million square feet of industrial product under construction in Louisville – the No. 2 market for new construction in the Midwest behind Chicago, which has 12 million feet in development.
Indianapolis might be the most interesting market in the Midwest, Lindley said. “We were all sitting around a year ago talking about how long we thought it would get take to get through the pipeline in Indianapolis.” They guessed it would take three, four or even five years based on demand relative to supply.
Fast forward to today – there has been a massive uptick in leasing demand and activity in the Indianapolis market.
“I think Q3 stats that came out in the last 30 days showed Indianapolis was the No. 2 industrial market in the entire country from a net absorption perspective for Q3, second only to Phoenix.”
The market posted a staggering 7.5 million square feet of net absorption in the third quarter alone; “An unbelievable quarter and certainly helps to start tick off all the supply that we were inundated with in 2022 and 2023,” Lindley added.
Grigsby asked Osu, with Singapore-based Mapletree: What makes the Midwestern region attractive to foreign capital?
“We’re nationally focused, but the Midwest is a core strategic market for us,” he said. “We own 20 million square feet in the Midwest, and 10 million square feet of that is in Chicago.”
The Midwest has great connectivity, he pointed out. You can get to 60%-70% of the U.S. population within a two-day truck drive. You can get to both coasts, the Gulf of Mexico and Canada.
“On the cost side, you can deliver a bulk product at an attractive basis that will allow for rents between $5 to $8 per square foot. Contrast that to infill coastal markets, where rents would have to be double or triple that. And on the entitlement side, it’s just much cleaner here in the Midwest,” Osu said.
If you’re doing development in New Jersey, you’ve can expect 12 to 24 months to get your site plan approved. In California, that could be 3 to 5 years. In comparison, Mapletree purchased a land site in Chicago at the end of May; the groundbreaking was last week.
For foreign capital looking for connectivity, proximity to population centers, cost efficiencies, a regulatory process that’s easy to navigate, scalability, speed to market – “the Midwest checks all those boxes,” Osu said.
Turning to Huthnance, Grigsby asked, “You develop a lot of large-scale logistic parks. With current liquidity constraints, how are you financing these projects, and are you seeing any creative capital stack solutions?”
“We’re certainly aware that on the project level, there are some capital constraints in the market,” Huthnance said. Fortunately for CT Realty, 10 to 12 years ago, the company strategically purchased several large-scale land positions that they were able to have entitled at all one time.
“We’ve done that in multiple markets around the United States, and it’s proven to be successful. Our capital partners are some of the world’s largest institutions. They have very deep pockets, and they’ve been able to support our efforts in that endeavor,” he added.
“Spec development is in flux; it’s been kind of a hot topic,” Grigsby said to the panel. “How are you evaluating risk versus reward in today’s environment, and how has your appetite changed?”
“We really look at each market independently on where they are on the supply and demand curve,” said Weeks, adding that VanTrust generally tries to be as opportunistic as possible.
“Understanding where the market needs spec buildings is a big part of our business,” said Huthnance. CT Realty has spent the last year developing a proprietary AI system to help them understand from a research standpoint the supply and demand factors impacting certain markets, which has enabled the company to move into new markets and develop buildings where there is a void in the marketplace.
“We’ve seen spec development slow down broadly across various markets,” said Osu, “but we’re still doing spec.” Mapletree’s development platform is newer, he pointed out, “So we don’t have any pandemic hangovers or legacy assets dragging us down.”
“Stephen, I know you all are currently in the market raising equity… How has that fundraising environment changed?” Grigsby asked Lindley.
“This prior fund was probably the most challenging time in a long while to go fundraise,” he replied. Their institutional fund raise – a $400 million equity raise – ran from 2022 to the end of 2024.
“So you want to go do it again?” Grigsby joked.
“I guess I’m saying it can’t get any more challenging is our hope,” Lindley said, though he added that Ambrose was very happy with the outcome despite the challenges. He also said sentiment is more upbeat and positive from a fundraising perspective.
“I think that the challenges in the equity markets today are there simply have not been any trades in the last 24 months,” said Huthnance. However, interest rates are contracting a little bit, and there is a great amount of debt available to go out and purchase new assets, he pointed out.
“I believe in the first quarter and into 2026, you’re going to see some more trades,” he said. “Activity breeds activity, so I think that we’ll see a lot more capital flows coming back into the development business.”
This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON Central 2025. Learn more about JLL at www.us.jll.com or www.jll.ca.
