Speculative development is almost unheard of these days, but the Fort Harrison Reuse Authority is taking the plunge as it works toward breaking ground this year on what it expects will be a 45,000-square-foot building geared toward retail and office tenants.
The estimated cost of the three-story building at the northeast corner of 56th Street and Wheeler Road is between $7 million and $9 million.
“We’ve got a lot of people here who are underserved” by retail, said Kris Butler, who lives nearby and is executive director of the reuse authority formed in 1995 to redevelop the former army base.
She said there aren’t enough dining options in the area, especially considering the number of people who live and work there. “I can’t take my kids to the two restaurants in the area because they are both pubs,” Butler said.
Butler became convinced a speculative building was warranted after Donna Hovey, a retail broker for CB Richard Ellis, was hired to gauge interest in such a project.
“We hired Donna to bird-dog for us and find out who might want to go into our first mixed-use project. She found a bunch of tenants but we had no building,” Butler said. Café Patachou, Key Bank and Chase Bank are among those that have expressed preliminary interest, according to a fact sheet distributed by the reuse authority.
Office space is also in short supply in the immediate vicinity. The reuse authority is negotiating to lease the top two floors of the building to Yeager Properties, a local company that manages shared office suites. Butler said she regularly hears from contractors who want office space near the mammoth Defense Finance and Accounting Service Center on East 56th Street.
Convinced of the demand for office and retail space, the reuse authority in December approved spending $100,000 for site and design work. Shawn Curran Architects was hired to design the building, which will have up to 10,000 square feet of retail space on the first floor.
The building will be developed by Browning Investments, which advises the reuse authority on master planning for the base redevelopment. The reuse authority will retain ownership, but Butler said her group plans to sell the building once it’s built and fully leased.
Jacqueline Haynes, a retail broker and vice president at Cassidy Turley, is among those who think the building is warranted.
“This is a unique trade area that will be attractive to specialty restaurants and boutique retailers,” said Haynes, who thinks the redevelopment of Fort Benjamin Harrison into a neighborhood where offices, retail and housing are in close proximity to one another will be a draw.
Haynes said that for the first time since the economy tanked a few years ago, local and regional retailers are in expansion mode—an attitude adjustment that bodes well for the Fort Harrison project.
Tim Norton, executive vice president of Summit Realty Group, was similarly upbeat about the demand for office space. It’s rare to find a big office user these days, but the demand could be significant for the small suites that a company like Yeager offers.
The project is to be financed through the sale of revenue bonds. The reuse authority, a quasi-government agency, will pay off the bonds using property tax money captured in a 2,500-acre tax-increment financing district set up at the same time the reuse authority was created.
Butler said the reuse authority has sold about $37 million in bonds for various projects in the last 15 years. About $10 million in bonds have been repaid using captured tax proceeds.
Most of the projects those bonds have paid for—including a new 56th Street bridge and about $10 million in infrastructure projects completed last year—were meant to encourage developments like the mixed-use building and a variety of other projects that are in the works.
Those include a 224-unit apartment project being developed by J.C. Hart Co. adjacent to the site of the proposed mixed-use building and a 45-unit apartment building for seniors being developed a few blocks west of the Hart project.
The developer of the senior housing, Miller Valentine Group, bought the 1.5-acre site of its project from the reuse authority Dec. 30. Hart is buying its 6.6-acre site from the reuse authority for $1.2 million and has an option on two smaller parcels where it might build more housing.
Area residents aren’t the only draw for retailers. The 1-million-square-foot defense finance center employs 5,000 people and a new campus of Ivy Tech Community College has an enrollment of about 7,000 students. In 2007, the reuse authority partnered with the Department of Defense and other branches of the federal government to build a new commissary that draws 35,000 military families a year from across the state.
The Ivy Tech campus, a YMCA branch, the Lawrence Government Center and numerous other businesses are within a 120-acre area bounded by 56th and 59th streets and Post and Lee roads that is known as Lawrence Village at the Fort. The reuse authority’s goal is to make Lawrence Village a mixed-use, pedestrian friendly district comparable to Broad Ripple or Fountain Square.
The retail/office building the reuse authority is developing is within a 50-acre section of Lawrence Village divided into nine building sites that are still for sale. The sites, which range in size from 1 to 20 acres, are listed for between $125,000 and $250,000 an acre. Speculators aren’t welcome. The reuse authority dictates that buyers begin development within a year of purchase and finish development within two years of purchase.
Those sites are all that remains of the 500 acres turned over to the reuse authority in 1995, when the 2,500-acre military base closed. About 1,700 acres of the base were conveyed to the state for Fort Harrison State Park and Golf Course. The federal government retained about 250 acres.