Mixed-Use and Urban development and Real estate deals and Real Estate & Retail

VanAusdall to auction off city block

August 21, 2006

Local office equipment distributor VanAusdall & Farrar Inc. is putting an entire city block on North Meridian Street up for auction, a move that could spur development in a corridor real estate experts say is ripe for activity.

The three-acre property is between 12th and 13th streets. VanAusdall in November will move its offices and warehouses from there to a newly built, $5 million headquarters at 75th Street and Binford Boulevard.

VanAusdall two years ago put the block up for sale, with an asking price of $4.5 million. But it was unable to close a sale, despite accepting three offers that met or beat the price that later fizzled.

"We're at a point where we need to sell the property, said VanAusdall President Eric vonGrimmenstein. "We need closure."

The local office of St. Louis-based Colliers Turley Martin Tucker will run the sealed-bid auction, which closes at noon on Sept. 20.

"In my 13 years [working in Indianapolis], I've never seen a city block sold at auction," said J. Robert Getts, director of auction services for Colliers.

The block includes four office and warehouse buildings, the oldest dating to 1921. That structure includes a car-size freight elevator left over from its original use as a showroom for Connersville-based Lexington Automobile Co. None of the buildings are protected by historic covenants.

The site has drawn about 100 inquiries since it's been on the market, said the listing agent, CTMT principal Patrick Lindley.

The first party that agreed to buy the block was an investor attracted by the site's location--one block north of Interstate 65 and just east of life-sciences development along the Central Canal.

The investor was working with a company that wanted to develop the site for a medical use, but plans fell through, Lindley said.

The second buyer planned a business venture that didn't come together, he said. The third planned a mixed-use residential and retail project, but ultimately decided to pursue a different opportunity.

Lindley said the site also drew interest from developers pursuing hotel and retail projects.

Under the terms of the auction, VanAusdall has the right to reject all offers. If it accepts an offer, the buyer must close Nov. 1 and take possession Dec. 1.

"This certainly isn't a fire sale," Getts said. "This is all about timing."

Buildings near the block have a hodgepodge of uses. Some serve as apartments. Others house such retail businesses as a storage facility and a car repair shop. WRTV-TV Channel 6 is just north of the site; WTHR-TV Channel 13 is two blocks south.

Several businesses have moved into the area in recent years. A Mike's Car Wash, for instance, opened in 2003, and a Sherwin-Williams paint store opened the following year.

Still, the area has room for improvement, said Amy Kotzbauer, president of the Near North Development Corp., a community development corporation.

"The section between the interstate and Fall Creek does have some inconsistent development patterns--residential with light industrial and office," Kotzbauer said. "It's a little hit or miss."

She noted that a number of buildings in that corridor have had vacancy problems, such as the former WXIN-TV Channel 59 offices at 1440 N. Meridian St., which have been empty a few years.

In April, the city and Local Initiatives Support Corp., a community-development organization, identified the stretch as a "focus corridor." This fall, businesses and residents will begin discussing development ideas for the area, some of which could qualify for city or LISC financial support.

Figuring out viable development opportunities for the area could be tricky.

Jeff Harris, president of Meridian Real Estate, said the best use for the VanAusdall block might be to tear down existing buildings and construct a large office development. But with downtown's office vacancy rate around 15 percent, that option's "not too cost-effective," he said.

And the property might be a bit too far north to join the downtown condo craze, he said.

"People who want to live downtown want the ability to walk to the entertainment areas," he said.

Owners of apartment buildings in the area say they'd like to see green space, a restaurant or other retail options.

"It would be helpful for us if there were more for kids to do in the area," said Jerry Haley, asset manager for Jacksonville, Fla.-based Finlay Development LLC. The company owns the Stonegate Apartments at 1226 N. Illinois St.

Next door is the Victoria Apartments, which owner and landlord Doug Huntley renovated about 10 years ago. Since then, it's enjoyed 100-percent occupancy "almost all the time."

"There's really not a nice lunch or dinner restaurant or coffee shop in walking distance," Huntley said.

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