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'Architecturally significant' Cummins HQ likely won't scrape downtown skyline

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Cummins Inc. is promising to build an “architecturally significant” office building on the remaining available land at the former Market Square Arena site but one that will be much smaller than what’s planned to the north.

The Columbus, Ind.-based diesel engine maker announced Wednesday morning that it will build its global distribution headquarters on the two remaining MSA parcels, located on the block east of Alabama Street and between Market and Washington streets. The $30 million development initially will house about 225 employees—100 from existing multi-tenant office space downtown and 125 from Columbus, with space for up to 400.

Cummins downtown HQ mapLater Wednesday, Cummins spokesman Jon Mills declined to provide details on the scope and size of the building. Besides office space, it will feature ground-level retail space below a parking garage.

Based on Cummins' plans, real estate brokers told IBJ that its office-space needs likely would amount to no more than eight stories.

That would be less than a third of the height of what Flaherty & Collins Properties has proposed just to the north across Market Street. It plans to break ground in May on an $81 million, 28-story apartment project with 300 luxury apartments.

“Regardless of the size, I think it will be something that the city will be proud of,” Mills said at the press conference.

The Cummins Foundation has a long history of commissioning architecturally significant buildings in Columbus, considered one of the world's meccas of modern architecture. The structures include the Miller House in Columbus, the home of former Cummins chairman J. Irwin Miller.

Ross Reller, director of land services for Colliers International’s Indiana Region, welcomed the announcement, regardless of how tall the building might be.

“I think anytime you can get a Fortune 500 company to commit to having a major presence in downtown with world-class architecture, it bodes well for our skyline,” he said. “I don’t understand people who say you have to go tall. There’s no empirical evidence that the market is demanding more office space downtown.”

Cummins currently leases about 31,000 square feet of space downtown between the OneAmerica Tower and Capital Center North. The company’s lease expired recently at OneAmerica. But Cummins negotiated a short-term, two-year extension with OneAmerica, helping it to move forward with the decision to build new office space.

Cummins’ lease at Capital Center also expires in two years, Mills said.

Construction on the new building is expected to begin within the year, with completion in late 2016.

“It was great that we were able to get the extension,” Mills said. “Obviously, we don’t have to move people now.”

Real estate sources said OneAmerica initially wanted to lock Cummins into a longer, five-year extension before relenting with a two-year extension.

“They wouldn’t want to be thought of as being the last impediment to a deal like this,” Abbe Hohmann, president of Site Strategies Advisory LLC, said of OneAmerica. “They also have a building that is one of the two most desirable buildings [along with Chase Tower] downtown.”

The OneAmerica Tower is nearly fully leased, somewhat of an anomaly in a downtown where Class A office vacancy is above 20 percent.

IBJ first reported in June that Cummins was scouting downtown locations to construct a new office building and reported in September that the company was eying the Market Square Arena site.

Deron Kintner, the city’s deputy mayor of economic development, said at the press conference that the city began discussing potential sites with Cummins last spring. Talks became more serious after the city’s selection of the Flaherty & Collins project, he said.

“As far as I’m concerned, I feel like we hit a grand slam with these two projects,” Kintner said.

Mills said Cummins considered other locations and even other cities but wanted to remain in Indianapolis, in part because of the easy access to Indianapolis International Airport. The former Market Square Arena site’s close proximity to the Cultural Trail made it attractive to the company, he said.

The retail space built into the project should get a boost from increasing development activity in the area, real estate brokers said. Besides Flaherty & Collins’ project, Milhaus Development  has built 258 apartments to the east as part of the first phase of Artistry, and last month the city unveiled plans for a $20 million transit hub to be built on a surface lot across Washington Street from the City-County Building.

The city has made no secret of its desire to lure a large retailer such as Target downtown, and the Cummins project might represent its best hope.

But Target’s local leasing agent said it’s doubtful the retailer would consider the site.

“The time is not right for them right now,” said Adrian Brown of Gershman Partners, citing a lack of density despite the slew of downtown apartment projects. “Someday I think they’ll come downtown, but it’s not right now.”

Cummins will purchase the four-acre site from the city for $4.3 million. The city said it will invest $3.3 million in infrastructure improvements and parking on the site, and abate 70 percent of the development’s property taxes for 10 years.

 

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  • Possible
    Archie, I would agree that it is not likely they would build and add floors later. However, there are several buildings downtown that have had floors added or were designed to handle additional floors. The Indiana Bell Building at 240 N. Meridian St. had floors added on twice. The Indiana Bell/AT&T building at 220 N. Meridian was designed to handle another 20 floors. I believe the Hilton (old Blue Cross/Blue Shield building) was also designed for an additional 20 floors. There are several buildings downtown that have also added 1-3 floors.
  • Not likely Budorange
    You don't build an office tower and then add floors later. Doesn't work that way.
  • CityTarget
    The CityTarget here in Portland is 89,000 square feet total and occupies space on the second and third floors. There's actually no real ground floor presence, except for some signage and a Starbucks. Not everything is one story sprawl development.
  • Building Location
    Great news about the headquarters building, I just think there are better sites for a building of this size. A 5 to 8 story building could be located more in the city center. There are plenty of parking lots that are in need of infill all around the city center. These locations would also be a plus for the mall and restaurants. These are more suitable locations. The Market Square site needs something more significant.
  • IBJ deleting anti 21C comments?
    There were a lot of negative comments about 21c here yesterday that are suspiciously absent today. What's up with that IBJ? Please don't stoop to their level. IBJ is known to have class. Don't act like those sleazy folks.
  • We don't want that 21c trash
    The actions of employees/management are a direct reflection of the hotel. Clearly, they have no class, so how could you expect the hotel to be "world class?" They are using sleazy tactics to try and get their name out because nobody actually wants them in Indy. They are creating more opponents of the hotel than supporters. I personally don't want those kind of people doing business in Indianapolis. #21cOUTofIndy!
  • Hotel
    21c doesn't own it's hotels… it only owns the art collection it exhibits. Their business model is that of a hotel management company. This requires investors to find the land, build the building and sign an agreement that gives the manager a guaranteed % of gross proceeds. I don't doubt 21c wants to be here… but it will take a major equity player to make it happen. Maybe Cummins would step up in the same way Lilly did for the Alexander?
  • 21C world class?
    I doubt that 21C could hardly constitute as World class, when they only have operating locations in the US at Louisville, Cincy, Bentonville. With projects underway in Durham, Lexington, OK City, Kansas City. That's it. Nothing more. Sure I'm sure its rated as a high hotel on experience and amenities, but I would hardly constitute it as world class when it hasn't been worldly and only has 3-4 open locations. It would be a fun niche thing for Indianapolis though. No doubt. Let's just not exaggerate. I thought the Bentonville one I stayed at was unique.
    • Low-rise Indy
      Russ Reller: "There’s no empirical evidence that the market is demanding more office space downtown.” Indeed...so why does Cummins feel the need to build a new structure when there's plenty of vacant Class A office real estate downtown? And why in God's green earth does Cummins need the entire block? Could it be because the City will bend over backwards to give Cummins whatever it needs, just to get the company to locate here, even if it's far from the highest and best use? Why not just have Cummins continue leasing space in Chase Tower, or Landmark Center, until the company is ready to construct a building suitable for a site literally three blocks away from the absolute center of the state's largest city? And the commercial/office real estate market can support it? You "go tall" because, ideally, the market for downtown real estate wouldn't permit a good IRR any other way. But this is Indy, where a three-story building constitutes a mid-rise and an eight-story building is a "grand slam".
    • 21C
      DT, garyb & Marvin are all likely the same person and likely an employee of a competitor hotel. There are so many comments by people on here about 21C because the people of Indianapolis are yearning for a world-class boutique hotel like 21C. People everywhere want the top names to be in their city, be it Nordstrom, Whole Foods, Tesla, 21C, etc.
    • Cummins
      Dollar says they build it to handle 8 more floors when needed
      • 21C
        Couldn't have said that better...Thank You!
      • Rebuttal
        regent No one said that the companies didn't know their businesses. What people are saying is that these organizations don't understand urban planning, and that's something I would agree with. Think about it for a second...in what major city can you find a new-construction three story building three blocks from the center of town? Why even come to the Mile Square in the first place...you couldn't do that in Greenwood or something?
      • Regent
        Regent, just fyi on the 21c, they have seriously been interested in putting a location in Indy for quite a while. There have been several serious discussions at various locations, only to have them fall through for reasons beyond their control. They have one in Louisville, Bentonville, and Cincinnati and they do want to add Indy.
      • Not exactly true...
        ...LHMB. The CityTarget concept ranges between 80,000 - 100,000sf and can be divided between more than one floor - far less than the 130,000 footprint you refer to.
      • Who really decides
        In the time I've been following IBJ comments, I've noticed an amusing trend. Everybody seems to forget that a company makes the decision whether to open a new location, not the city, not the county, not the local residents. Every thread includes several posts along the lines of, "This is a perfect 21C Hotel Location!!! Why don't we have one?" Or "Indy needs a Four Seasons!!!" Or "Why isn't Target opening at Market Square yet????" Very amusing, I'm sure those companies know their businesses better than the commenters do.
      • Target & Simple Question
        I wish Target would have moved into the former Nordstrom in Circle Center Mall instead of Indy Star. since it seems the regional center plan calls for more corporate buildings south of washington street wouldn't be better to have cummins build on the two open parcels at virginia, east, and south streets and leave this market square site for more mixed used residential and retail?
      • Marketability
        Target needs 130,000 sf on one level to build a store anywhere. The block bounded by Market, New Jersey, Washington and Alabama is 160,000 sf.. It is too bad Target can't be convinced to look at this site now as there may not be another opportunity in the Mile Square… ever. Does it make sense for this entire site be sold to one user? Simon built more sf on 1/3 the land area for their HQ.
      • Target
        It's funny to me how well of a branding job Target has done over the years, I remember back in the day when Target was the equivalent of a K-mart or Venture. Now everybody wants one in the toniest of locations.

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