Market Square Arena and Marsh and Commercial Real Estate and Franchises and Mixed-Use and Retailers and Retail Development and Development/Redevelopment and Real estate deals and Retail and Real Estate & Retail

Specialty grocer on wish list for MSA development

July 18, 2013

The 43,000-square-foot retail space that’s part of a planned 28-story downtown apartment tower might finally help attract a national, specialty-type grocer to the city’s core.

City officials on Wednesday announced the $81 million project from developer Flaherty & Collins Properties, which is slated to be built on a portion of the former site of Market Square Arena at Alabama and Market streets.

Flaherty & Collins CEO David Flaherty said his company is in discussions with various retailers interested in the space, which likely would house an anchor tenant and two or three smaller shops. Specialty grocers such as The Fresh Market Inc. and Whole Foods Market Inc., in addition to Earth Fare and Fresh Thyme, are high on the wish list to occupy the anchor space.

“We’d love to have a Whole Foods, or a Whole Foods-type tenant," said Flaherty, noting that he hopes to have leases signed by the end of the year. He declined to name firms in negotiations.

Deputy Mayor for Economic Development Deron Kintner echoed Flaherty’s sentiments, saying that the city has “one or two in mind”—referring to The Fresh Market and Whole Foods—that it would prefer occupy the anchor space.

“I think it’s a current segment that we don’t have covered,” he said. “The urban grocer segment is something that could fill a niche downtown.”

The apartment-and-retail development will be backed by a combination of public and private funds, with the city agreeing to contribute $17.8 million from a bond sale and land appraised at $5.6 million. The developer is slated to break ground next spring with completion by late 2015.

Besides Flaherty & Collins, four other teams submitted bids to the city for redeveloping the Market Square Arena space, including Keystone Group and Cleveland-based Forest City Enterprises Inc.

Paul Okeson, vice president of Keystone, said the city made it clear during the process that it wants an urban grocer to occupy the space.

“We called around to [the grocers] to gauge interest, and the response was pretty positive,” Okeson said. “I can’t imagine it would be too hard to secure a deal at this point.”

Downtown for years has been served by just one supermarket, a Marsh at 320 N. New Jersey St., which the company converted from an O’Malia’s Food Market after purchasing the homegrown grocer in 2001.

Now, downtown could have as many as three supermarkets, if in fact one commits to the MSA project.

A Marsh grocery store will be a part of Flaherty & Collins’ Block 400 project, which calls for 487 apartments, a parking garage and additional retail space on properties bounded by Michigan Street, Capitol Avenue, Vermont Street and Indiana Avenue. The project is under construction.

So can downtown support that many groceries, even with the recent onslaught of apartment projects that will bring more residents to the area? At least a couple of local retail brokers think so.

“We’ve seen tremendous residential growth in the downtown, and I feel that there is enough population in the downtown and the nearby neighborhoods to support an additional grocery,” said Bill French of Cassidy Turley.

Gary Perel, a retail broker at Newmark Knight Frank Halakar, said Fresh Market or Whole Foods would seem like a “logical” fit for the F&C project, and that it should “garner definite interest from both.”

Greensboro, N.C.-based Fresh Market has local stores at 5415 N. College Ave. and 2490 E. 146th St., with another slated to open in at 116th Street and Cumberland Road in Fishers in early November.

Frank Swiss, a local retail broker who represents Fresh Market, said the company in the past hasn’t really considered a downtown location because the area has lacked quality housing.

But now, he said, the grocery at some point likely will consider a downtown location.

“We are looking throughout Indianapolis and other parts of the state to place a few more stores,” he said, adding that Fresh Market is very selective in its locations. He declined to say whether Fresh Market was specifically considering the Flaherty & Collins project.

Austin, Texas-based Whole Foods has locations at Nora Plaza and in Carmel. The firm is represented locally by Bryan Chandler, a principal at Eclipse Real Estate, who also declined to gauge his client's interest in the project.

Overall, Flaherty & Collins’ MSA plan calls for 300 luxury apartments, 500 parking spaces and 43,600 square feet of ground-floor retail space. It would feature a rooftop pool, a green sky window on the tower roof, and apartments with floor-to-ceiling windows and panoramic views of the city renting for between $1,300 and $2,400 per month.
 

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