A Bloomington company that revived a former Thomson Consumer Electronics/RCA plant in that city is taking a shot at redeveloping
one of the largest industrial eyesores in Indianapolis, also a former RCA complex.
Pinnacle Properties plans to spend $20 million redeveloping the 13-building property northwest of Sherman Drive and East Michigan Street.
Most of the 1.25 million square feet is vacant, covered by a leaking roof and pocked with broken windows. Former RCA employee parking lots are covered with weeds and potholes.
"We're pretty familiar with all the challenges and issues that come with redeveloping a site like that," said Peter Dvorak, president of Pinnacle, which owns more than 4 million square feet of commercial properties in Indiana, Illinois and four other states.
Pinnacle's plans call for the 50-acre Indianapolis property--known in recent years as Sherman Park--to be subdivided into nine parcels, with eventual uses including office, manufacturing and distribution. Some of the existing buildings would be torn down, and the northwest corner of the property would become a neighborhood park.
Dvorak said he expects to close on the property in the next few months. He said he has letters of intent from several companies interested in leasing space, including call centers and light-manufacturing operations that want from 30,000 square feet to 100,000 square feet.
Dvorak figures redevelopment of the business park, which will get a new name, will take two to three years to complete.
The property originally was developed in the 1920s as the headquarters for RCA. In 1986, RCA was acquired by General Electric Co. A year later, GE sold the former RCA to Thomson Consumer Electronics, now called Thomson Multimedia.
Pinnacle knows how to pull off industrial redevelopments, but the company is taking on a big one in Indianapolis, said Terry Busch, a senior vice president in the local office of Los Angeles-based brokerage CB Richard Ellis.
Compared with the rotting RCA complex in Indianapolis, the Bloomington facility was a gem--newer, better-suited for distribution uses and without the damage that comes from sitting vacant for years. The Indianapolis property also just lost its largest tenant, the city's departments of metropolitan development and public works.
"This will take more money and more creativity," Busch said.
Sherman Park has been in receivership since a bankruptcy auction in December 2006 failed to produce a buyer. Pinnacle made its offer to the receiver, locally based Harshman Property Services LLC. The price for the property is included in Pinnacle's estimated $20 million investment, Dvorak said.
At its peak in the 1950s, the plant employed 8,200 people, many of them producing TV components. But Thomson, which owns the RCA brand, sent those jobs to Mexico over the years. In 1994, the company moved its headquarters from the Indianapolis plant to Carmel.
The biggest blow came in the late 1990s, when Thomson moved its injection-molding operation--and the last of its jobs at the plant--to Mexico. At the time, Thomson still occupied more than half the facility.
It was more than the owner of the park at the time, Sherman Park LP, could overcome. The owner, a partnership led by local attorney Cliff Rubenstein, struggled to attract replacement tenants, lost others to bankruptcy, and eventually declared bankruptcy itself.
One of the tenants Rubenstein's group signed on is Custom Interiordynamics, a commercial woodworking operation with nine employees that took 30,000 square feet in the park in 2003.
"We saw this as an area to be redeveloped," said Richard DeLaCruz, the company's owner. "The rent is affordable, obviously, and it's close to the city."
The company's lease has expired, but DeLaCruz is working with Pinnacle on a deal to keep it in the building. He's encouraged by the company's promises, particularly its pledge to replace the roof.
"We've heard good things," he said.
Some of the other tenants include powder coating and computer recycling operations and the Hoosier Veterans Assistance Foundation. The park's largest tenant, the city departments, left late last year for space in another building south of downtown. The city had occupied about 50,000 square feet.
In leaving, Department of Metropolitan Development officials cited ownership instability and structural issues.
Dvorak said Pinnacle got involved too late in the game to influence the city's decision. Now, he's looking for other forms of city involvement in putting the deal together. For one, the plant is in an enterprise zone, which means tenants are eligible for tax credits.
Pinnacle executives met with city officials late last year to discuss possible incentives, said Angie Nussmeyer, a spokeswoman for the Department of Metropolitan Development.
No offers have been extended, but tax abatements or a new tax-increment-finance district are possibilities that likely will be discussed with the new mayor, Greg Ballard, and his team.
"DMD made a commitment to the neighborhood to make sure that site was developed," Nussmeyer said. "There is a lot of positive momentum occurring on the near-east side. We want that to continue."
It won't be easy. Pinnacle faces more obstacles with the Indianapolis RCA redevelopment than it did in Bloomington--even though that plant is much larger, with 2 million square feet spread over 200 acres.
It's tougher to get financing these days, and Bloomington typically is much more aggressive than Indianapolis with incentives, said Sam Smith, CEO of Indianapolis-based Resource Commercial Real Estate.
But if any company could pull it off, Pinnacle would be the one.
"It's an opportunistic play that could make some sense," he said.