Commercial Real Estate and Office Complexes and Simon Property Group and Development/Redevelopment and Retail and Real Estate & Retail

Eastgate owner plots unusual office-space strategy

August 9, 2011

The owner of the former Eastgate shopping center has begun marketing a third phase of its mall overhaul: About 225,000 square feet of emergency backup office space.

Companies will have the option of reserving "disaster recovery" office space to their specifications that would be immediately available in the event of a fire or natural disaster affecting their existing space, said Doug Theis, a vice president at locally based Lifeline Data Centers, which bought the 40-acre property in 2008.

The most likely tenants are call center operations where employees generally aren't able to work off-site in the event of an emergency, Theis said. Each tenant also would have access to data center space.

Lifeline already has opened an 80,000-square-foot data center in a former Burlington Coat Factory store and has agreed to lease about 76,000 square feet of secure space to the city's Department of Public Safety for a new emergency operations center.

The backup office space will be spread over five buildings, large enough to accommodate several small tenants or a few big ones, Theis said.

"We're offering a very simple custom solution," he said. "We've always had the hallucination there was a need for office space next to data-center space."

Backup office space is rare in the Indianapolis market, in part because there's plenty of space for lease that could be quickly customized.

An offering that's similar to the plans for Eastgate is a 200-seat office near the Lilly Technology Center at Kentucky Avenue and West Morris Street. The center is operated by Wayne, Penn.-based Sungard Availability Services.

Emergency office space operators typically book several tenants for the same backup space, assuming not everyone will need it at once, Theis said. At Eastgate, tenants will have the option of their own customized space.

Rich Forslund, a senior vice president at Summit Realty Group, applauded the effort to find a new use for the space, though he's not sure there's much demand for it. He said the space could serve as a "temporary expansion site" while a growing company looks for permanent space.

"It's a great way to absorb some product," Forslund said. "It's one of those things that's just sitting there, such a large, vacant building."

Not everyone is convinced there's a demand for office space of any kind at Eastgate.

"I just don't see where a decision-maker for a company is going to want to be at Eastgate," said Jon Owens, a senior vice president at Cassidy Turley. "There's a reason we don't have any office inventory on the east side."

Eastgate, which was built in 1957, was once among the city’s premier shopping destinations. It was enclosed around 1970 to keep up with newer malls, but its fate was sealed by the construction of Washington Square Mall a few miles to the east in 1974.

In 1982, Simon Property Group—then known as Melvin Simon & Associates—bought the property, remodeled it and repositioned it as a discount retail center. Simon sold it in 2002 to a North Carolina investor. But by then it was in need of major reinvestment that never materialized.

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