Environment and Real Estate & Retail

Stringtown-the next downtown success story?: Trio of real estate investors are betting on the burg

May 22, 2006

Drive around the roughly 50 blocks of Stringtown, a small, working-class neighborhood on the city's near-west side, and you'll come across some cute, rehabbed, two-bedroom houses for rent.

But there are also signs of neglect-boarded-up houses with siding falling off, cars up on blocks, and broken windows.

In the neighborhood just west of White River and the Indianapolis Zoo, a few real estate investors are wagering that the tight-knit district is ready to blossom. The burg stretches from the river west to Belmont Avenue, and is bordered by Michigan Street on the north and Washington Street on the south.

Investors say Stringtown's proximity to downtown, new sidewalks along the river, connections to the Central Canal, and amazing riverfront views of downtown all spell potential gentrification.

"I just don't think there are very many cities that have an amenity like the river that doesn't eventually get developed," said Rick Lux, who's buying in the area with David Lurvey via Stringtown Realty LLC.

But other factors are weighing down the neighborhood, including crime-mostly burglaries and stolen cars-and neglect by some landlords. Lurvey and Lux said they wish the city would crack down more on code enforcement, towing broken-down cars and citing people for not maintaining houses. Lux said the other big hurdle is to get more private investment in the area.

Who is buying?

Lurvey said he's amassed more than 30 homes and several lots, concentrating on the eastern edge. He's acquired a string of lots along the river and envisions tearing down some buildings to make way for waterfront town homes that would attract young professionals who work at IUPUI, the Veterans Administration Clinic or other employers on the west edge of downtown. Lurvey's also working with his sister to rehab houses in the neighborhood's interior, trying to attract a mix of family and student renters.

"It's timing," Lurvey said. "The neighborhood is just turning."

Lurvey, who calls himself the mayor of Stringtown, is backing up the talk with action. The longtime local real estate investor is moving from downtown proper into a Stringtown house he gutted and is rebuilding.

Lurvey said when he started buying five years ago, lots would sometimes go for as little as $5,000 or a home for $10,000. He'd put $30,000 worth of improvements into structurally sound houses, then put them on the rental market. He said costs have been moving up and rents in the area run in the $500 to $1,000 per month range.

According to home sales statistics from the Metropolitan Indianapolis Board of Realtors, in 2002, 11 Stringtown houses sold with the average sales price of $19,263. By 2005, the average price had increased to $32,490.

Lurvey said it was a challenge at first working with banks to get funding.

"At first everybody looked at us and said, 'Are you crazy?'" Lurvey said. "Now they're not saying that anymore."

Over the past three years, KC Cohen, who was an early investor in Chatham Arch, has accrued more than 24 homes, investing more on the western end of the neighborhood.

"The [rental] market that's there right now is a very unusual market," Cohen said. "It's a very stable population. People stay in that neighborhood their whole lives."

He said the area's appeal will be the ability to set up a Chicago-type urban environment with commercial offerings sprinkled among the residential.

"You could throw a dry cleaner on a corner where there's a bunch of houses or a little restaurant or a dentist office," he said. "You don't see that in Chatham or Lockerbie."

Other developers are also offering new residential options, mostly on the edges of the neighborhood. The H. Lauter Lofts, high-end condos listed at $105,000 to $215,000, recently opened on the south side of Washington Street, as did student studio apartments on Michigan Street.

Mixed in with the housing is the head- quarters of Goodwill Industries of Central Indiana Inc., a Cargill Dry Corn Ingredients mill, a bait shop and other light industrial shops.

Other redevelopment efforts

The West Side Community Development Corp. is active in the local housing market, too, focusing much of its effort just west of Stringtown in Haughville.

Executive Director Mark Stokes said the group works to move people from homelessness to renting to home ownership through a variety of programs. The group is building and selling about a house a month.

Despite his group's push to increase home ownership, he welcomes outside investors who are rehabbing the housing stock for rentals.

"Anytime you see investment capital flowing into the community you're working in, that's a good thing," Stokes said.

He said the city as a whole is dealing with an upsurge in burglaries, but that crime has dropped on the near-west side due to police efforts.

Alice Hatzell lives in the neighborhood and works for Lurvey showing rental houses. She said her husband was born in Stringtown and after moving to Danville, the couple came back in late 1999. Her husband wanted to return after his parents died, leaving his childhood home vacant.

"At first I said no," Alice Hatzell said. "It scared me to death."

Despite the signs for a home security system in her manicured yard, Hatzell said she hasn't had any problems since moving back and that the neighborhood is gaining some life.

"Now you see BMWs and Mercedes driving around," she said.

The Central State factor

Investors say what happens at the 160 acres of mostly vacant land at the former site of the Central State Hospital, just a half mile west of Stringtown, could also play a big role in its fate.

"In the big picture, if something positive happens at Central State, this will boom," Lurvey said. Cohen agrees, but remains doubtful that Central State is going to be developed soon.

"I've been hawking that idea for years on deaf ears," Cohen said. "What [Central State] ought to have is light commercial, multifamily and office buildings in an exceptional natural layout."

Though confident in the long-term upside of buying in Stringtown, Cohen thinks the area may take a bit longer to mature.

"It has yet to get the attention of the mainstream buyer," he said.

Kenneth Pittman, a longtime Stringtown resident who owns 25 homes, a handful of which he's boarded up, said he's heard it all before. He said the new investment in the area is a good thing, but he still thinks a turnaround is probably 10 or 15 years down the road.

Jim Thomas, a partner with Hearthview Residential Inc., said any potential town homes in Stringtown would have to compete with a lot of downtown housing opportunities by offering even lower pricing. And the neighborhood must tackle public safety issues, because single women make up a strong portion of the post-secondary student and young professional population the town homes would like to attract.

"I'm not sure how ... transitional areas are going to play for that [female] target market," Thomas said. "Personal safety ranks high on the list of their buying concerns."
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