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An Insider's Indianapolis and Beyond: Q&A with HFF's John Merrill

Wednesday, November 16, 2016

HFF Senior Managing Director John MerrillAs co-office head of HFF's Indianapolis office, Senior Managing Director John Merrill leads HFF's investment sales platform for the Indianapolis area.  Mr. Merrill has more than 20 years of experience focusing on office, industrial, medical and retail properties not only in Indianapolis but in markets across the Midwest, including Indiana, Ohio and Kentucky.  

  • What motivated you to get into commercial real estate?  I started my career as a CPA, which afforded me the opportunity to get a close look at multiple industries. I was drawn to real estate because it is a tangible product that creates an experience for the end user. I also love the fact that each project presents unique challenges and opportunities, which allows me to continually challenge myself to use my creativity to add value for my clients. Finally, I am drawn to the diversity and entrepreneurial spirit of the people in the industry. Every day I get to interact with some truly incredible people.

  • What are the markets on which you focus and why?  I focus primarily on secondary Midwestern markets, such as Indianapolis, Louisville, Cincinnati, Columbus and Cleveland. I have more than 20 years of previous work experience in all of these markets, and, as a result, have developed outstanding relationships that make it much easier for me to provide meaningful insights and add value to clients. Louisville and Cincinnati’s cultures are influenced by the fact that they are both located along the Ohio River; Cleveland’s culture is influenced by its proximity to Lake Erie and Indianapolis and Columbus are centrally located within their respective states and serve as state capitals. I absolutely love to immerse myself in the culture and history of each city in which I work. All of these markets compete with one another both economically and in collegiate and professional sports, which creates fun and exciting rivalries, but, at the end of the day, the competition makes them all stronger and more viable. While each market has its own unique culture and economic drivers, investors tend to look at them in a very similar manner so by being active in all of these markets, I am able to derive insight, which adds significant value to clients. Over time, I have noticed a tendency for professionals who work primarily in larger markets to overlook the inherent value in these secondary markets, which has hampered their effectiveness. I truly believe that my clients benefit from my genuine love and passion for each and every city that I work in.

  • Why should investors pay attention to the secondary Midwest markets?  Each of these markets exists for a reason and has stood the test of time. They are resilient, viable, growing markets filled with incredible people and businesses. They also offer much higher yields than primary and coastal markets. For the savvy investor who is willing to invest the time and energy into understanding the nuances of each market, there is the opportunity to consistently earn superior risk adjusted returns. 

  • What significant thing or things have happened in the Indianapolis market specifically this year thus far?   Salesforce moved forward with its plan to make Indianapolis a regional headquarters location, second in size only to San Francisco. Indianapolis already enjoyed a very robust tech environment, consistently ranking in the top 10 fastest-growing tech markets. The impact of Salesforce’s long-term commitment to growing in Indianapolis will provide the catalyst to drive further tech growth, which will propel the market for the foreseeable future.

  • What trends in commercial real estate do you predict will be big in 2017 and why?  Due primarily to more restrictive banking regulations, construction financing has become increasingly more difficult to obtain and more expensive. This along with increased construction costs has restricted new development and created an environment that is ripe for real rental rate growth. As investors recognize that these fundamentals have longevity, we will see increased interest and improved pricing for investments in secondary markets.

  • Does the Indianapolis and the secondary Midwest markets provide any challenges that have to be overcome? If so, what are they?  Employment growth drives real estate demand and, ultimately, real estate investment. Historically, secondary Midwestern markets have not grown as rapidly as the primary, coastal and Sun Belt markets, which tend to mitigate interest from the most aggressive capital sources. Employment growth has improved dramatically as tech companies have become more sensitive to their cost structures and millennials have recognized that they can enjoy a much higher standard of living, but changing investor perceptions takes time.

  • What exciting things are happening in the commercial real estate market right now?  As the industry has matured, become increasingly more sophisticated and has become recognized for its consistent performance as an asset class, there has been an influx of highly-educated young professionals into the industry, which I think bodes very well for the future of CRE.

  • Any advice for those considering a career in commercial real estate?  CRE can provide a very exciting, highly-rewarding career opportunity, but there are many barriers to entry, not the least of which is the fact that the sales cycle is very long. The people who I have seen have the most success find a strong mentor, work hard, are persistent and, most important, look for creative ways to add value for their clients. 

Learn more about the commercial real estate market in Indianapolis and central Indiana at ULI Indiana's Real Estate Trends in Central Indiana: Great Place to Live, Great Place to Invest conference on November 21 at The Columbia Club in downtown Indianapolis.  HFF is an event sponsor. For more information on the conference and to register, visit ULI Indiana's conference event page.

About the Urban Land Institute

The Urban Land Institute is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the institute has nearly 40,000 members worldwide representing all aspects of land use and development disciplines. For more information, please visit uli.org or follow them on Twitter, Facebook, LinkedIn, and Instagram.





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