What might make redevelopment of the former Market Square Arena site finally spring to life? The city's answer: more shopping.
When Indianapolis Mayor Bart Peterson announced Aug. 31 that the efforts of a partnership selected 2-1/2 years ago to build condominium towers on the site had failed, he gave his administration 60 days to put together another deal.
Peterson's vision: Hold onto the concept of a residential tower, but add "significantly more retail" than the roughly 75,000 square feet pitched by Market Square Partners. "There's a very strong interest in the retail potential of that area," Peterson said.
"I'm not talking about another Circle Centre mall," he added. "I'm talking about the kinds of [stores] that you might see in the suburbs."
Whether that happens depends on the outcome of talks between the city, the old development team–Market Square Partners LP, and other developers to rescue the plan to build high-rise condos on the block that's been a gravel parking lot since shortly after the arena was torn down in mid-2001.
But retail development, possibly on blocks adjacent to the main site, has emerged as a major topic of those discussions.
Retail experts said the mayor's new focus is viable.
Mark Perlstein, a partner with locally based The Linder Co., was the broker trying to line up retailers for Market Square Partners. He said there was big interest, but it was hard to sign anyone when the plan kept getting pushed back.
"As the project evolved, we lost steam on the retail," Perlstein said. "The Market Square project would serve a true void in this quadrant of the city."
Downtown does boast a couple of dry cleaners and small hardware stores, but doesn't have any big-box, mass-market retailers. Perlstein said he could easily see a grocer, hair salon, dry cleaner, restaurants and a home furnishing store leasing at the location.
"These are all retail uses that could and would survive if the project is implemented properly," he said. Perlstein said he hasn't yet heard anything on the possible new development or whether he would be involved.
A new Market Square developer wouldn't be alone in trying to lure a grocer downtown. Todd Maurer, president of Halakar Properties, said in June that he was talking to a grocer for 19,000 square feet of retail space that will be part of a 10-story housing and retail project his firm is developing at Massachusetts Avenue and New York Street.
Brian Esptein, president of Indianapolis-based Urban Space Properties, said whether at Market Square or another site, retail is needed. He gave examples of potential fits: a grocer, Bed Bath & Beyond, an office supply store and maybe a second hardware store.
"I think it could work," Epstein said. "And it wouldn't hurt to have a high-rise [full of potential buyers] right next door."
Kurt Flock of Flock Real Estate Group was the agent in charge of lining up reservations for the residential side of the Market Square Partners project. He said many people who looked at the condos asked about retail as a part of their decision.
"During the course of marketing the project, we had more than a handful of people who said if you built a Target as part of the development, we'd be happy to live on top of it," Flock said. Would-be residents often mentioned that or a Whole Foods organic grocer as stores they'd like to see close by, he said.
"Clearly, the site could accommodate a big-box retailer or grocer of some sort," he said.
Where the large retail component would go in the scheme of a new development is unclear. Market Square Partners originally pitched 75,000 square feet of retail space to be built mostly in the latter phases of the development.
The first building was supposed to be the high-rise residential tower with two mid-rise buildings following close behind. The plan included retail on the first floors of those buildings with more retail space to be added later.
In April 2005, Market Square Partners bought two separate parcels directly east of the Market Square site: the former Bank One garage at the northeast corner of New Jersey and Market streets and the mothballed Bank One operations center at the southeast corner, which could be redeveloped for retail.
The mayor hinted that a new development plan might reverse the order of what's developed, focusing first on building the retail. Peterson also emphasized the importance of the former Bank One parcels.
"We would be looking at a development plan that would incorporate one or more of those pieces in it," Peterson said. Discussions are reportedly focusing on the operations center site as the retail focal point.
Peterson said outside developers plus some groups that formerly bid on the MSA site are now involved in the talks.
John M. Bales, president of locally based Meridian Asset Development, which was part of MSA Development Group LLC, the runner-up to MSA Partners, said his group is considering jumping back into the fray. Bales said his group is considering changes to its original pitch, which called for only 25,000 square feet of retail space. Bales referred further questions to James E. Thomas Jr., a partner at Hearthview Residential Inc., who did not return calls.
Peterson said the city is open to putting some money into the project as long as it is guaranteed a return on that investment.
Besides adding more retail space, Peterson said negotiations will focus on lining up an investor who can jump-start the project's residential component. The city's goal is to eliminate the need for condominiums to be presold before financing can be secured to launch construction.
Previous sales efforts required prospective tenants to make a reservation that could later be converted into a contract that would count toward the project's presale goals. Brokers said the two-step process was onerous for buyers who could choose from a number of other downtown residential projects that were already under construction.
Peterson said if a revamped plan doesn't come together in the next two months, the city would probably scrap the idea of a high-rise and "go in a different direction."
"We probably would go back, in some sense, to the drawing board," he said.