Commercial Real Estate and Carmel and Office Complexes and Hamilton County and Development/Redevelopment and Real estate deals and Real Estate & Retail

Browning acquires 43 homes for $100 million mixed-used development in Carmel

June 15, 2009

Residents of North Meridian Heights in Carmel watched for years as development inched closer to their neighborhood of 1950s ranch-style homes on spacious lots. St. Vincent Carmel Hospital opened to the north, upscale condos sprouted to the east, and a $100 million office, hotel and retail project called Meridian & Main began taking shape to the south.

Feeling surrounded, a group of homeowners last year asked officials with Meridian & Main developer Browning Investments whether they were interested in buying the homes.

Browning Vice President Jamie Browning was ready to listen, particularly after hearing that more than half the owners would consider a deal.

Now, after 14 months of discussions, Browning has reached terms with the owners of 43 of the neighborhood's 49 homes, paying a 30-percent premium to appraised market values. The locally based developer paid $80,000 to $200,000 for each home site, for a total of 17 acres, he said.

The residents moved out this year, and Browning plans to demolish the homes in the next few weeks to make way for a second phase of Meridian & Main that will cost another $100 million. All told, the development will span 36 acres sandwiched between U.S. 31 (Meridian Street) and 131st Street (Carmel's Main Street) and feature more than 600,000 square feet for a variety of uses.

A few holdouts on the edges of the second phase won't stop the development of medical offices and possibly service retail, Browning said. Work on the development itself is scheduled to begin in early 2011.

The acquisition of large numbers of individual homes for a redevelopment is unusual in Indiana because land here isn't exactly scarce, and it's much easier for a developer to buy land from one owner as opposed to negotiating with several. But the Carmel site was compelling because few undeveloped parcels remain along the corridor.

A series of planned transportation improvements also proved important. The intersection of 131st Street and U.S. 31 will be a major junction as U.S. 31 becomes a limited-access highway, making travel between Interstate 465 and 131st Street much quicker.

Carmel also is widening 131st Street to connect downtown Carmel with The Village of West Clay.

"In the middle of this recession, we're fortunate to be getting this quality of investment in the heart of Carmel," Carmel Mayor James Brainard said of Browning's plans. "The project fits so well into our master plan, in an area that needed the capital investment."

Average assessed values in the North Meridian Heights neighborhood had been declining for several years, and only a few of the homes were connected to city sewers.

"It was just time," said Tiffany Highers, who lived for eight years in the neighborhood with her husband and son, now a 9-year-old. They since have moved to another home in Carmel.

"We just wish we could've taken the neighbors with us," Highers said. "Some had been around there from the beginning, and everybody knew everybody."

Browning bought a handful of the homes out of foreclosure; the rest of the sellers got a chance to get out for 30 percent above last year's valuation and find a new home in a buyer's market, Browning said.

"This was a fabulous opportunity to go buy another house at probably a discount from the same time a year ago," he said.

Browning is no stranger to the Meridian Street corridor in Carmel; the firm has developed more than 30 buildings with 4 million square feet of office space including Penn Mark Plaza, Fidelity Plaza and the former Thomson Consumer Electronics headquarters.

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