Ballard plans new redevelopment effort for Market Square site

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Indianapolis Mayor Greg Ballard is expected to unveil a new effort to redevelop a downtown parking lot that previously was home to Market Square Arena.

Ballard, in his annual State of the City speech scheduled for Friday afternoon, plans to call for new proposals for the northern 1.96 acres of the site directly east of the Indianapolis City Market at the northeastern corner of Market and Alabama streets.

The city expects the proposals to include a high-rise building with a major retail component. One of the key considerations will be a commitment from a "significant" retailer unique to downtown, according to a fact sheet provided by the city.

Other factors include "maximization" of the project's density and "minimization" of taxpayer contributions in the form of TIF revenue or other incentives.

Deron Kintner, executive director of the Indianapolis Bond Bank, said the city wants something well beyond four stories of apartments over one level of retail at the site, which has an appraised land value of $5.6 million.

Ideally, the city hopes to have 200 to 300 residential units that would be visible from the interstate, Kintner said.

“We need to enhance the skyscape. That’s a hope, again,” he said. “Being the former Market Square Arena site, it’s got some history.”

Market Square Arena was built in 1973 for $23 million and served as the Indiana Pacers’ home before it was imploded in 2001. Major events at the arena included Michael Jordan’s first return from retirement in 1995 and Elvis Presley’s final live concert in June 1977.

"It has been nearly 36 years since 'Elvis left the building.' It is time for the MSA space to make its architectural mark again on our city, to bring new residents and retail to the near-east side, and to put that prime piece of real estate back on the property-tax rolls," Ballard plans to say in his address, according to an excerpt provided to IBJ.

The area is now segmented into parking lots from Washington Street north to Wabash Street. City officials hope a project on the northern half will help generate demand for future development on the southern half.

Ballard’s push is the latest among several attempts by the city to develop the key piece of real estate.

In 2004, the city approved a $140 million development on four acres at the site that included twin 29-story towers with 450 condominiums, 175,000 square feet of retail and 700 parking spots. But the project went through several changes and eventually fell through after the developer failed to secure bank financing because it did not pre-sell enough condos.

The city received two more proposals in 2007 that ranged between $130 million and $150 million. The deals crumbled after negotiations with then-Mayor Bart Peterson’s administration over incentives.

Little progress has been made with the Market Square Arena site since then, thanks in part to a sour economy.

Developers told the IBJ in January that the area could have suited a potential new soccer stadium. But Ballard’s plans to split the MSA site would prevent that from happening in that location.

Mike Wells, president of REI Real Estate Services LLC in Carmel, said it seems like the city made the right move by dividing up the land into several lots, which total 10 acres.

“I think what they’re doing makes a lot of sense. The bigger deals are much harder to put together,” Wells said. He noted an abundance of other sites in town, including the former General Motors plant property next to White River State Park, that could house the soccer stadium.

Combined with other projects proposed in the area, such as the $30 million Artistry project in the former Bank One Operations Center and the  $17 million transportation hub—values of the remaining Market Square property will likely increase and lure a retailer, Kintner said.

He said the city would like a big-box retailer next to the City-County Building. He did not list any specific chains but said Target is the “more common one” that downtown residents mention.

“We haven’t spoken directly to any retailers. We don’t have any preconceived notions,” Kintner said. “We do have an idea that space could be beneficial by providing the day-to-day amenities to people who live in and around downtown.”

Also included in Friday’s speech, Ballard plans to discuss the Neighborhoods of Educational Opportunity reform initiative, as well as an ordinance to more strictly regulate panhandling.

The State of the City address is scheduled for 1 p.m. at The Alexander hotel, 333 S. Delaware St.


  • You Mean To Support The Pacers?
    Joe, if the city had any sort of true track record of directing "extra" tax revenue toward either basic city services or redevelopment of poor neighborhoods, I could see some merit to your argument. However, for the most part, the city uses TIFs, etc., as giant revolving slush funds to subsidize yet more development projects built by politically connected developers generally in areas that are the least in need of any sort of subsidy. And, any remaining "extra" money generated by TIFs or through accounting sleight of hand is shoveled over to the billionaire-owned professional sports teams (i.e. the Colts and Pacers) or other politically connected private parties to subsidize their business enterprises. Indianapolis is the city that never has money to adequately fund road repair, street cleaning and snow plowing, parks, schools, police, a bus system, libraries, etc. But, if a developer needs a tax break or a loan or the Colts or Pacers need money, well gosh, then the city always has some cash to hand out. So, if all these subsidies and tax breaks, etc, are supposed to be legitimate investments that eventually generate a return to fund services for the ordinary city residents, when the hell will this ever happen? The Indy development racket has been going on for decades--downtown redevelopment schemes date back to the 1950's/1960's, TIFs were first created in the early-mid 1980's, etc. Meanwhile, city services continue to decline and much of the city outside of a few affluent neighborhoods and the very downtown core continues to struggle. Detroit may be much farther along in the process of deterioration, but there are several troubling indicators that Indianapolis is following in that city's general direction. The focus should be on schools, crime, workforce development, infrastructure maintenance and repair, and other pressing needs--not on funding luxury apartment on Lilly's campus or subsidizing sports teams owned by billionaires.
  • Chris
    I get your point, but you can also argue that this project will generate more long-term return for the city to support other deserving areas.
    • Joe, You Missed the Point
      Joe, you missed the point of my comment. Regardless of whether it is tax breaks, loans, or other subsidies, the issue is that the city should be funding basic government services BEFORE it engages in funding private development (if it is even going to fund private development at all). AND, if the city is going to fund private development, then it should subsidize it in parts of the city that face long-term fundamental challenges to attracting private development, like poor neighborhoods, not on funding an upscale apartment and commercial project on the private parking lot of a downtown Fortune 500 company.
    • Chris
      I didn't say there were no better projects out there. I think this particular project will be net positive (financially) for the city in the long run. It also brings more density and residents downtown. That's my judgement based on available facts. Does it really matter if the city shells out money through tax breaks or pays cash directly or guaranties loans? I can't see the difference. All three can be good or bad. Tax break or tax deduction is the same as government cutting you a check (subsidy like any other). Instead I would focus on individual projects and actual performance.
      • We'll see...
        More nonsensical hype from an administration in denial and a bunch of salespeople who depend on government largesse to make a living. I'm not buying any of it. Nordstrom is still empty. You folks all told us that it was going to be filled before the Super Bowl. Still laughing at that. These are rental units. Once the Fed money pumping stops, all the new residents are going to be new ex-residents. Downtown Indy is laughable. Keep pumping boys and girls. Keep pumping.
      • Priorities
        The market was not "wrong" about City Way. Credit was tight for much discussed and well-documented reasons. Also, you are conflating the residential component with the still uncompleted and more risky commercial component and overlooking the special arrangement the city entered where the developer can default on any part of the development, even if the rest is very successful (such as the "100% occupied" apartments). There is also the issue that the loan is paid back over several years and circumstances can change markedly from what they are now. Finally, while many cities do give tax breaks etc. to developers, it is indeed very rare for a city to play bank and lend money outright. And if the city has $98 million to play bank, then why lend it to a big developer for a project on Lilly's campus, instead why not use the money to get a developer to build something in an area that really needs economic development--like the Meadows. Or why not use the money to finance infrastructure improvements for the whole city? The question is not is downtown a better place for tourists, developers and big corporations than it was 30 years ago, but rather are the neighborhoods (and the schools, parks, streets, etc) where most people live better than they used to be 30 years ago, and in many cases, the answer is a resounding "no." Indianapolis is the same place where the City-County Council and the Mayor cannot even push through a measure to front a measly $3 million to help get a grocery store in a poor neighborhood. But, if you are Simon, or Irsay, or some big developer, well, they'll find the money for you. Indianapolis is always crying poverty when it comes to basic city services or assistance for troubled neighborhoods, but if you are a big bucks developer (and/or campaign contributor to the Mayor or members of the City-County Council) than the city is happy to open its (i.e. the taxpayers') wallet.
      • Fred
        I am going to disregard the fact that pretty much every big city in US does the kind of thing that Ballard did with the CityWay (and no, I am not a Ballard fan, but this one is one of a few good things he did), and ask you a simple question: If markets are always right, how come that they were wrong about CityWay? Assuming that anyone reasonable would agree that close to 100% occupancy at this point is a success. Or maybe markets were not wrong, just frozen due to other factors. Or maybe some market participants are often wrong (airlines, car manuf., banks, mortgage lenders, etc.) It's tiring to listen to the same old "free markets and no government is solution to all of our problems". There are actually a few countries in the world that would be considered to have a version of capitalism with super low taxes and low government involvement like Pakistan and India...and trust me, it doesn't work well.
        • Sizzling
          Marshall, you didn't answer the question. If the downtown real estate market is sizzling, why do we taxpayers have to subsidize every downtown development? Why did every lender refuse to lend money for the North of South project? The reason why is that the lenders believed there was too much inventory. The fact is we taxpayers are supporting development that the private lenders will not support because it's too risky...the market isn't there. My guess is your company is profiting big time from taxpayer money and you're trying to justify taking those dollars.
        • Bid
          Idyllic, I agree "bid" is not the right term. Very, very few contracts are bid out anymore. But the term "bid" is often used for RFQs, RFPs, etc. It's a bad term, I agree.
        • Downtown Multifamily Demand
          I work as an executive for a multifamily REIT and there is a mixed back of truth here. The article that was linked directly refers to the gateway coastal markets/larger metros and many times multifamily demand in those markets can be disjointed from what is happening in more stable midwest markets. We have not quite reached the inflection point where the supply of new units coming online downtown will cause a downturn. It could be coming quickly though if there is not additional retail and amenities to support the more urban living lifestyle. Our leasing consultant friend might want to sharpen those sales skills though as concessions could move into the market rapidly. As someone who shops this market on a regular basis, I can say there is much better salesmanship on display in other sub-markets.
        • Fingernails On A Chalkboard
          It's Nordstrom. No S. Nordstrom.
        • OOPS
          Sorry, got an old article....however, at the San Diego CREF, Indianapolis was one of the markets mentioned that had seen a lot of new inventory.
        • Marshall
          Yes Marshall, I do in fact know A LOT about the downtown market. My living depends upon it too. You are seeing and feeling TODAY'S market, which I agree is hot hot hot. However, there are a huge number of units under construction and they all want rents north of $1.70 psf. What happens in 2014? Some think we are overbuilt already. Facts: In 2013 and 2014 we will bring more units to market than the previous 17 years COMBINED! Also, here's what those wacky guys at the MBA say: http://www.cpexecutive.com/regions/southeast/report-from-atlanta-banks-wary-about-overbuilding-in-key-apartment-markets/
          • Marshall
            Yes, Fred, the downtown rental market IS sizzling. As part of my job, I conduct weekly market reports, and can assure you that occupancy rates for virtually all of the properties I contact are in the mid 90' to 100 (My 163 unit property is 100% rented at the time). I talk of what I know...
          • Retail
            Nordstrom does not equal Target or any other department store downtown. I don't go to Nordstroms to get my underwear, or house cleaning goods, or food, or general housewares....if you do - then you have no problem with your bank account. Nordstroms didn't work downtown because they opened up a store at the fashion mall. So essentially, it wasn't the fault of the downtown, it was the fault of Simon of cannibalizing one mall to better the other mall. Who doesn't live in an urban environment where there is some "ugly areas". Its natural to have something like a Jail, or a court system in the downtown. lots of other big cities have to deal with it. Many more positives than negatives in this area. Don't like the jail area, don't walk by it. There isn't much over there anyway, unless you are going to virgina avenue or need to cut over to cityway.
          • High-rise living
            The City's proposal requirements make sense. A developer will need the density to spread the costs over a larger number of units, thereby avoiding public subsidies. With the growing demand for housing downtown, it is also smart for the City to encourage diversity in the housing market. We have very few options for high-rise living and the existing ones are consistently leased. Finally, a strong retailer, like Target, understands how to design and merchandise towards urban consumers. It will serve to benefit downtown residents very well.
          • No bids
            Fred, an important clarification is that Keystone won't bid, they'll submit their qualifications and letter of interest, which will be subjectively reviewed by the Mayor's Office. Marshall, we're not all the same person, and we don't all live out in the sticks.
          • Agree with me
            I agree with me that this site does have alot of potential and the focus needs to be building on that. For those people commenting about the Nordstom space, that is a totally different challenge than retail on the MSA site. Target makes alot of sense for this location where it would be a complete mistake at Circle Centre Mall. CC needs to find a unique mid to higher end department store (Bloomingdales?) that can draw traffic to downtown. It worked for years with Nordstoms and it can work again with the right anchor. The worst thing that could happen for Circle Centre would be to rush to fill the Nordstorm space and get the wrong tenant in there. Just take a look at all the other downtown malls in other cities that failed. They had anchors that shoppers could go to in the suburbs so it wasn't as much a draw. Carsons is a good anchor and I am confident Simon will land the right replacement for Nordstrom when the time is right. On the residential side, there is still a substantial demand for downtown living. Look at the Mozzo which just opened and is over 60% leased or Cityway which hadn't even finished construction and was almost 100% leased in Phase 1. The demand is there for the right product. Yes it may take some tax dollars due to the high construction costs but long term the right project should be worth it.
          • Downtown
            Gee, Marshall, so the downtown rental market and demand for commercial business is just sizzling? Really? Then pray tell why do we taxpayers have to subsidize the Market Square property at all then? The fact is we taxpayers subsidized Nordstroms with lower than market rent. That's the reason why they moved to Circle Centre. When that dried up they weren't interested in being there anymore. As far as Keystone goes, I have to question whether you know anything about development and politics in this city. Keystone has received a ton of our tax dollars, including $6.35 million to build the Broad Ripple Parking Garage which Keystone gets ownership and all profits...even though we taxpayers built it. The poster isn't out of line for thinking more of our tax dollars might go to Keystone. You can bet Keystone will bid on the project.
            • Response to Me
              I doubt that ANY of these negative nellies even live downtown. They don't strike me as the urban type....
            • With all due respect...
              John, you apparently know very little about the downtown rental market. The demand for downtown rental housing remains VERY HIGH... higher than in any other area of the city easily. I work in the industry as a Leasing Consultant at a large downtown property. Our occupany is, and has been for a long while, basically 100%. We have waitlists of at least 60 people each for our 1, 2 and 3 bedroom floorplans. The downtown rental market is sizzling and jail or no jail, there is no reason a well thought out project can't succeed there, especially if it includes that "unique" retail component mentioned in the story. And Rob, the Nordstrom space is more of a Simon issue than a city issue. And Rob, its not that we couldn't support Nordstrom's downtown. When it was the only Nordstrom in the city, it was a well performing store. Perhaps the city CAN'T support two Nordstroms, but that is no reflection on downtown... or the mall... or prospects for future development. And Ben, Kesytone Construction? Get over it! Why do all these comments sound like they're coming from a single conspiracy theorist?
            • negative nellies
              What a bunch of negative nellies! Instead of focusing on the bad (jail), how about the good - adjacent to the cultural trail, minutes walk to offices downtown, quick walk to Mass Ave., near the future transit center. The site is very nice, even with the current jail location.
              • Go For It!
                $65 per square foot of land, and high rise construction. Those are going to be some really expensive apartments. And, your nearest amenities are the cafeteria at the jail and the City Market. Good luck with that one.
              • Yes!
                I agree. When I first heard this story, I was like, "So ... wat about the Nordstrom space? Why do we need another major retailer if we can't support one in one of the most prime locations downtown?" If something does go here, I would hope it'd be a Target or Whole Foods -- either of which would be an asset to downtown.
              • RE: Lunkhead Leaders
                Great point. You can't subsidize demand. The jail is a significant problem. I remember reading some time ago about the concept of relocating the jail and creating a grand entrance into downtown from I-65. That is a must. WE have a vibrant downtown but you wouldn't know it driving by on the interstate. I think the current vacant retail space downtown is a problem too. Government leaders need to get out of the way and the free market figure things out. If there is a demand for that space, the free market will find it.
              • Keystone Construction
                this is nothing more than a vehicle in which to put more money in Keystones pocket
              • You Can Bet
                You can bet that we taxpayers will be out millions of dollars to some politically-connected developer as a result of this proposal. Pay to play is the Indianapolis way. John is exactly right. We can use incentives to distort the market, but there are inevitable consequences when the demand never shows up.
              • Another nordstrom
                What is the city doing about the empty Nordstrom space? A lot of the Circle Center Mall stores are on shaky financial footing, yet the city is proposing building a competing retail mall a few blocks away. I mean, really, "One of the key considerations will be a commitment from a "significant" retailer unique to downtown". So the plan is to give money to another retailer to locate downtown, and then after the commitment period, abandon that space and leave. That worked so well with Nordstroms!
                • You Can Bet
                  You can bet that we taxpayers will be out millions of dollars to some politically-connected developer as a result of this proposal. Pay to play is the Indianapolis way. John is exactly right. We can use incentives to distort the market, but there are inevitable consequences when the demand never shows up.
                • Redevelopment
                  There is one reason this site has not been developed yet...free market need. Two realities affecting developers and banks are 1)A huge number of new apartments already being developed...maybe even overbuilt already. 2) A lot of office vacancy....if you can't lease what is there, why build more. Bottom line is the City can distort the market with incentives; however, they will do so with very large consequences.
                • LUNKHEAD LEADERS
                  They no nothing about Real Estate Development and they need to stop the financial defalcations of giving cronies taxpayer assets and forcing taxpayers to "guarantee" developer debt. For those tracts to be attractive for residential units they need to remove the Court system werein the Orange Jumpsuit fans hangout. Seriously how stupid is the Mayor and Kintner? The Marion County Jail will be my view out my apartment or Condo window? How about moving the Marion County Jail and Marion County Criminal Court system out to the old airport and then consider a mass redevelopment of this area. These people are really getting paid to think like this? This property cannot be habitated by anyone with money with the nasty dirty criminal element flowing in and out of the CCC and the Marion County Jail.
                  • For the first time in a LONG TIME...
                    I'm happy to hear news of this... I'm hopeful that the vision for this particular area of downtown will be a great and admirable one that many future generations will appreciate and love. This means... NO boring, five story, block/boxy looking ugly prison/hospital styled building.

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                  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

                  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

                  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

                  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

                  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim