The Mandate
An institutional industrial developer with a 14M-square-foot operating portfolio engaged Feasibility Study Consultant to prepare a third-party feasibility study supporting a Conventional financing request for a project located in Marion County, Indiana. Total project capitalization fell within the $25M-$50M band. The capital provider, a life insurance company, required documentation consistent with current program review standards. The analytical question put to the team: Did Indianapolis MSA last-mile distribution demand and sub-15% submarket vacancy support a speculative 180,000-square-foot delivery.
Engagement Scope
- Primary market area defined as a n/a drive-time
- Comparable supply set of 17 properties
- Demand model framework: last-mile distribution demand and submarket-absorption build
- Financial projection horizon: 10 years
- Site inspection completed; operator interviews where applicable
- Primary data collection through field reconnaissance and third-party market data
Methodology Applied
Primary Market Area
The PMA was defined as a n/a drive-time from the subject site, calibrated to the demand catchment behavior typical of industrial assets in Indiana. The boundary captured the population, employment, and competitive supply base relevant to the subject's operating thesis.
Supply and Demand Reconciliation
The comparable supply set comprised 17 properties operating within the PMA or in directly substitutable submarkets. Demand was modeled using a last-mile distribution demand and submarket-absorption build approach over a 10 years horizon. The reconciliation tested whether incremental supply, including the subject, could be absorbed within the projection window without compromising stabilized occupancy assumptions.
Capture Rate Calibration
The subject's capture rate was calibrated against the absorption capacity of the PMA. The analysis concluded that PMA absorption capacity exceeded subject build-out by a factor of 1.8 across the projection window, with a stabilized capture rate of n/a.
Exhibit 1: Comparable Supply Set, Indiana PMA
[Table or chart rendered in delivered report.]
Exhibit 2: Demand Projection Summary, 10 years Horizon
[Table or chart rendered in delivered report.]
Exhibit 3: Subject Capture Rate vs. PMA Absorption Capacity
[Table or chart rendered in delivered report.]
Analytical Conclusions
- Indianapolis last-mile submarket vacancy stood at 4.8% with 1.4M square feet of trailing-12 absorption.
- Comparable speculative deliveries cleared 92% of pre-completion lease-up within 14 months.
- Achieved rents of $7.40 to $8.20 per square foot triple-net cleared the lender's assumed basis.
- Stabilized debt yield of 8.4% cleared the lender's 7.5% threshold.
Deliverable
The delivered report ran 152 pages with 36 exhibits distributed across nine analytical sections, plus appendices documenting comparable supply data, demographic inputs, and financial projection assumptions. The document was prepared to the documentation standards of the life insurance company. The corresponding Conventional review framework guided exhibit selection and supporting documentation.