Indianapolis Industrial Lease Deals Take Longer to Close as Tenants Grow More Cautious

Written by:

Rudi Davis

Date:

17 Mar 2026

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Industrial real estate deals are taking significantly longer to close than before the pandemic. Tenants now spend well over a year evaluating and negotiating leases that previously wrapped up in a matter of months. Billy Powers, Associate Vice President at Colliers in Indianapolis, attributes the slowdown to tenant caution following recent oversupply and costly sublease losses. The result is a more deliberate approach that is reshaping how landlords and brokers manage deal flow and expectations across the industrial sector.

Tenants Take Longer to Decide

Many industrial occupiers are extending their internal approval processes, adding more steps and decision-makers before committing to a lease. Powers notes that groups are “kicking around deals for much longer than a year” as they work to right-size commitments and avoid repeating mistakes made during the pandemic rush. This trend extends beyond smaller operators. National tenants with large real estate teams are also taking longer to sign, signaling a broad industry shift.

The pandemic-era boom saw companies scramble to secure space, often leading to overcommitment. When demand normalized and vacancy rates rose, many tenants were left with excess space and were forced to sublease or negotiate early lease terminations, sometimes at significant financial loss. The wave of sublease listings that hit industrial markets during this period directly impacts how tenants approach new deals today.

Instead of rushing to secure space, tenants now conduct detailed analyses of their operational needs, market selection, and lease terms. Powers says tenants are “getting very granular with their decision making and making sure they have all the facts.” This shift is evident in Indianapolis and other markets, where large transactions have been under negotiation for more than a year as occupiers work through internal reviews and long-term strategy assessments.

The extended timelines reflect a desire to avoid being caught with surplus space or locked into unfavorable leases if market conditions change. As Powers notes, “people just don’t want to have that happen again,” so tenants are scrutinizing every detail before committing.

Fixed-Rate Renewals Disappear for Tenants

Longer decision cycles are especially apparent in negotiations over renewal options. In the past, landlords commonly offered fixed-rate renewal options, allowing tenants to lock in predictable rent increases, typically three to four percent annually, throughout the renewal term. Now, most landlords insist on fair-market-value resets at renewal, citing the rapid rent growth of recent years.

Fixed-rate renewals once protected tenants from sharp rent hikes. They have become rare as landlords work to avoid being locked into below-market agreements. “Landlords now are typically only willing to agree to renewal options at fair market rates,” Powers says. The shift is a direct response to recent rent surges that quickly outpaced fixed increases.

The loss of predictable renewal terms complicates financial planning for tenants. Companies must now model scenarios in which future rent could rise sharply, making long-term occupancy budgeting more difficult. This added uncertainty is prompting tenants to spend more time analyzing deals and negotiating protections, which further lengthens the deal cycle.

When tenants negotiate fixed-rate renewals, they often make concessions elsewhere, such as agreeing to longer initial lease terms or accepting higher base rents, to compensate landlords for the risk of missing future rent growth. These more complex deal structures add negotiation stages, increasing both the time and effort required to finalize leases.

Slower Closings Drag Absorption Rates

The industry-wide shift toward slower, more cautious decision-making is affecting market absorption rates and landlord strategies. Deals that remain in negotiation for a year or more keep space off the market but do not count toward reported leasing activity. This creates a lag in official absorption statistics. This disconnect can make demand appear weaker than it is, as tenant interest does not show up in the data until leases are signed.

Landlords now must exercise greater patience and maintain active engagement with potential tenants. Properties may remain vacant longer, even when there is genuine interest, as occupiers move through extended internal reviews. Prolonged vacancies can increase carrying costs for owners and, in some cases, prompt landlords to offer concessions or more flexible terms to accelerate the process.

Powers believes the move toward more thorough due diligence is ultimately positive for market stability. When tenants align space commitments with actual operational needs, they are less likely to overcommit and add to future sublease inventory. This should reduce volatility and lead to steadier, more sustainable demand, even if it slows the pace of individual transactions.

Brokers Adapt to Complex Deal Cycles

Brokerage firms like Colliers are adjusting by setting clear expectations about deal timelines and supporting tenants through more complex approval processes. This includes providing detailed market data, arranging site visits, and helping tenants assess how each property fits their operational requirements. Brokers also play a larger role in structuring lease terms that address tenant concerns around flexibility and future rent risk.

Landlords and brokers willing to accommodate longer timelines and provide the information tenants need are better positioned to close deals. The emphasis has shifted from speed to thoroughness, with both sides recognizing that careful evaluation reduces the risk of costly mistakes.

Longer Due Diligence Becomes Standard

The shift toward longer decision cycles in industrial leasing is a lasting change, not a temporary response to recent market disruptions. With tenants determined to avoid the pitfalls of the past few years, thorough due diligence and risk management have become standard practice.

This new environment means industrial deals will continue to take longer to close, and landlords must adapt to slower absorption and more complex negotiations. While this can create short-term challenges, the shift is likely to produce a healthier, more stable market over time, one where tenants are less exposed to sudden swings in demand and landlords can plan for steadier occupancy.

In today’s industrial real estate market, patience, transparency, and a willingness to navigate longer, more detailed negotiations are essential for all parties. Those who adjust stand to benefit as the market rewards informed, strategic decision-making over speed.