Empty buildings, closed businesses disguise strength of Indy real estate

INDIANAPOLIS, Ind.-- Beneath the Arts Garden at the heart of downtown Indianapolis plywood covers the two-story windows of the recently-shuttered Colts Grille, while just a couple blocks down Washington Street, large "CLOSING" and" GOING OUT OF BUSINESS" signs announce the pending demise of Carson’s, the anchor store of Circle Centre Mall.

Despite the eyesore of failure and other empty storefronts that dot downtown, analysts said recent vacancies in the city’s core present opportunities for new businesses, offices and restaurants to locate at the center of the action in Indianapolis.

“There will always be stores that go out as they don’t respond to the market needs but there’s plenty of people anxious to come back into our market,” said Todd Maurer, President of Halakar, a property management and brokerage firm specializing in downtown commercial real estate postings. “The downtown market in the last 18 months to 24 months has exploded. Office vacancy is at the lowest rates we’ve seen. A lot of that’s driven by Salesforce and all the tech companies coming in to support Salesforce and just general growth across the economy.”

Salesforce moved to Indianapolis a year ago, taking over the former Bank One Tower.

Maurer said the impending move of the downsized Angie’s List from its near eastside headquarters has also put more pressure on the downtown office market as some businesses are rethinking the possibilities of locating in traditional retail storefronts.

“I strongly believe that we’re going to see our downtown office market continue to grow and with officer users coming in and taking these unique spaces that are different from traditional office spaces,” said Maurer while standing in front of 44 East Washington Street, an office building listed for more than six months that recently closed for $1.1 million. “As we stand here today on East Washington Street we’re seeing an area that has traditionally been slow to develop really starting to develop and really starting to get a lot of activity here and these storefronts will start to fill up.”

A storefront that will soon need filling is the 145,000 square feet of the soon-to-be shuttered Carson’s at Circle Centre.

Area Manager Audrie Thompson of Circle Centre Partners, owner of the mall which is operated by Simon Properties, recently announced the site would undergo a “multi-million dollar” renovation which will include a revamped food court, updated restrooms and improved signage and seating.

“As downtown has grown and evolved and the demographic with it to be almost equal parts of a visitor from out of state for conventions to meetings to resident of downtown which has become more young millennial residential demographic or a daytime worker, meeting the needs of all of those demographics have changed, so what you’re going to see the future of Circle being is really an evolution into a combination of traditional/non-traditional retail as well as other non-traditional retail uses,” said Thompson without addressing plans to replace Carson’s.

Last year, Circle Centre Mall reported 95 percent occupancy rate which has fluctuated with the closures of some retail stores offset by the openings of several restaurants and bars.

While downtown residents, landlords and business owners will watch with interest the future of the Mall and the Carson’s replacement, Downtown Indy Inc. has a more immediate challenge at hand as it attempts to inject new interest in its proposed Economic Improvement District (EID) for the Mile Square.

The petition, which needs 51 percent approval of all 1,200 property owners downtown and approval by owners representing 51 percent of all the assessed value downtown, is six months into its campaign and still well short of the majority it needs to seek City County Council approval.

“We’re showing about 43 percent of downtown property owners within the Mile Square have demonstrated support by signing a petition,” said Bob Schultz of Downtown Indy Inc. “That represents about 36 percent of assessed value.”

The EID would raise approximately $3.16 million a year to provide for maintenance of downtown along with improvements such as Wi-Fi on Monument Circle, new signage, bike racks and public restrooms along with strategies to address homelessness and marketing, expenses the city won’t pay for.

Schultz said downtown condominium owners and large office property owners have endorsed the EID while hotels and apartment complexes, some of them built with tax abatement incentives, have not responded to the campaign.

“We don’t only want to look at what our downtown is today in maintaining that safe and beautification story,” said Schultz. “What does it need to be five years from now? Ten, twenty, thirty years from now?”

Flaherty & Collins, builder of the nearly completed 360 Market Street near the City County Building refused comment on support of the EID, preferring to follow the lead of the Indiana Apartment Association.

IAA President Lynne Peterson issued the following statement about the proposed EID:

Downtown Indy’s proposed Economic Improvement District (EID) has not demonstrated a real need for this new tax that will have an impact on affordability of rental properties within the mile square. The Downtown Indy EID petitions were sent over five months ago, and they have failed to gain the support needed. IAA has expressed concerns with the Downtown Indy proposal and question if organizers appropriately gauged community support prior to petitions being sent. Similar efforts to establish Economic Improvement Districts around the state have received overwhelming support and have been able to wrap up their petition drives in much shorter amounts of time. It is disappointing that Downtown Indy has yet again extended their deadline to achieve a minimum level of support within a small area of the city.

Schultz said DII recently released a pair of mailers to downtown property owners addressing many of IAA’s criticisms of the EID.

The proposal needs resolution by late spring or early summer to either move forward with Council approval or be withdrawn for future consideration.