The vacancy rate in larger office buildings in Lake and Porter counties ended 2015 where it began the year, with about 14 percent of available square feet unused, according to a report by the Merrillville firm Commercial In-Sites.
The study of 23 large office buildings, prepared by principal broker David Lasser, showed 187,515 square feet available for rent at the turn of the year, out of nearly 1.4 million total rentable square feet.
"That's a healthy number that still creates enough space for people to move around in the market and grow," Lasser said. "It should be a number that stimulates new building."
Lasser said a report on fourth-quarter 2015 vacancies in the Chicago suburban market by CoStar, a commercial real estate information company, showed a similar rate of 14.5 percent.
Slightly more than half the available space in Commercial In-Sites' end-of-year "snapshot" was in two buildings: the Twin Towers at 1000 E. 80th Place, and the Chase Bank building at 8585 Broadway, both in Merrillville.
Those are also the two largest office buildings. The Twin Towers had space open up in recent years when White Lodging moved to new headquarters in Merrillville, and 8585 Broadway has seen the departure of Everest College and reduction of space used by Chase Bank.
Larger buildings tended to have higher vacancy rates. The third largest building on the list, The Crossings of Schererville at 833 W. U.S. 30, has the third highest vacancy, at 19 percent.
Lasser said renovations there, and a restaurant building on the site at U.S. 30 and U.S. 41, indicate a healthy future for it. The restaurant opening there is a Burgerhaus. A Jimmy John's and another business are also opening there.
In general, Schererville and Valparaiso appear to be thriving, he said. Schererville's vacancy rate is about 12 percent; Valparaiso's 7 percent.
Meanwhile, construction began on a three-story, 36,000-square-foot building in the Oxbow Landing development near Interstate 94 and Kennedy Avenue in Hammond.
Lasser said it is the first speculative building of three or more stories to be built in the area in eight years. It is also the first Class A office space ever to be built along the Borman Expressway in Lake County.
Relatively low vacancy helps spur construction, Lasser said, and rising rents also indicate a tightening market. Average full-service gross rental rates are $22.33 per square foot in larger office buildings, according to Lasser's calculation, up from $21.71 per square foot last year.
The increase marked a change from a downward trend in recent years.
In addition to moves and expansions within the market, Lasser said, "2015 saw an increase in tenants that are new to the Northwest Indiana market, partly relocating from Illinois."
Seven buildings were fully occupied at the turn of the year. Lasser said that number is the same as last year, though the mix of buildings is different. Prominent examples are the Geminus Corporate Center on Louisiana Street in Merrillville, and the Fifth Third Bank Building in downtown Valparaiso.