Government and Real Estate & Retail

'1-of-a-kind' Wal-Mart proposed: Michigan developer plans Carmel/Zionsville superstore

September 26, 2005

A Michigan developer plans to build a 300,000-square-foot shopping center anchored by a Wal-Mart Supercenter along Michigan Road north of 106th Street, continuing the rapid expansion of retail on the Michigan Road corridor.

Heritage RDG LLC, a Grand Rapids, Mich.-based developer new to the Indianapolis market, recently filed plans with town officials in both Zionsville and Carmel to build the center. The 36-acre parcel straddles the Boone-Hamilton county line and must be approved by local governments in both counties.

Project backers have already been in contact with city planners and will start meeting with residents in the area soon, said Heritage RDG principal Greg Brendel. Construction on the site is unlikely to start before next spring, he said.

"It's a one-of-a-kind building," he said of plans for the Wal-Mart. "It won't look like any other [Supercenters] you've seen."

The site will position Wal-Mart near its main rival, SuperTarget, which opened in 2002 on the southeast corner of 106th and Michigan Road. Since then, commercial activity has boomed along Michigan Road north and south of Interstate 465.

Arkansas-based Wal-Mart Stores Inc. has a Supercenter and a Sam's Club warehouse on 86th Street just east of Michigan Road, about two miles from the Heritage RDG site. Some local brokers said if the new Supercenter is approved, it won't necessarily spell a closure for the 86th Street Wal-Mart because of the different demographic profiles of the areas surrounding the two locations.

The northern location may be an effort to capture customers who normally shop in Carmel, they said. Wal-Mart's nearest Hamilton County location is on 151st Street in Westfield.

Representatives of Wal-Mart could not be reached for comment before IBJ deadline.

Dallas-based J.C. Penney Co. Inc. recently unveiled plans to convert a vacant Kmart store at 86th Street and Michigan Road into a 100,000-squarefoot department store, providing a retail anchor at the south end of the corridor.

In between there and the proposed Wal-Mart center, local developers Duke Realty Corp. and Kite Realty Group Trust both have retail developments planned or under construction north of I-465. About 350,000 square feet of retail is planned for Duke's West Carmel Marketplace. Marshalls, a discount retailer owned by Massachusetts-based TJX Cos. Inc., has committed to opening a store there.

Duke also has a 45,000-square-foot, $6.5 million medical office building under construction through a joint venture with locally based Bremner Healthcare Inc.

A former Dollar Inn site just south of the I-465 interchange is also slated for development. Work is about to begin there on a Homewood Suites by Hilton hotel and a Cracker Barrel, with more restaurants planned.

Much of the new commercial activity has begun since an oft-delayed road construction project at the Michigan Road and I-465 interchange wrapped up in late 2003.

"Before the road work was finished, people avoided the area," said Scott Langdon, principal of locally based Langdon Real Estate Services. He noted asking prices for land have escalated dramatically in the past few years, to more than $800,000 per acre in some cases.

"Now, unless you're a retailer, you can't afford to buy land there," Langdon said.

Retail brokers say supply of available retail sites may outstrip demand, at least until more neighborhoods are built in western Carmel. For now, retailers have their pick of several locations. J.C. Penney, for instance, considered Duke's West Carmel Marketplace before opting for the Kmart site, said Mark Perlstein, a principal at Carmel-based Linder Co. who represents the site's owner, California-based II Mart Ltd.

If Wal-Mart's plans for Heritage RDG's site are approved, that may draw other retailers to the area. Brokers say national chains, both large and small, are drawn to areas around Wal-Mart stores because of the retail traffic they spur.

Approval of the Wal-Mart plans would also be a boon for Heritage RDG, which was formed earlier this year as a joint venture between Boston-based Heritage Property Investment Trust and Grand Rapids-based Retail Development Group, a firm headed by four retail development veterans.

Heritage, a publicly traded REIT that typically buys existing centers as longterm investments, owns Speedway Super-Center and the south side's County Line Mall locally. Heritage RDG was formed to provide a development pipeline for the REIT's portfolio, Brendel said.

The joint venture picked Indianapolis as its first market because of the relatively stable economic climate and rapid growth in the suburbs, he said. Heritage RDG is also looking at sites in several other states, including Ohio, Georgia, North Carolina, Florida and California, he said.

Locally, the firm has two other suburban parcels in addition to the Michigan Road site under contract.

One, at County Line Road on the east side of Interstate 65 in Greenwood, is in the preleasing stage. Langdon, who handles leasing for Heritage RDG on the Greenwood site but not the proposed Wal-Mart site, said commercial development is expected to take off on the east side of I-65 in Greenwood in the coming years, as the city of Greenwood expands public services and roads on that side of the interstate.

Heritage RDG's other site is at Southport Road and State Road 37 in Perry Township. Brendel said there's been interest from several national retailers for that site, but the firm is waiting to hear the exact route of the planned extension of Interstate 69 south of Indianapolis before moving forward on a development there.
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