An Indianapolis contracting company is deepening its near-north-side roots-and exploring another avenue of the real estate business-with a multimillion-dollar plan to renovate and rent out an 85-year-old building just blocks from its Capitol Avenue headquarters.
Shiel Sexton Co. Inc. has agreed to spend more than $5 million on the 60,000-square-foot brick building at 1402 N. Capitol Ave., restoring the property to its former glory and transforming it from industrial to office use.
The company also is seeking tenants for a 12,000-square-foot retail unit it plans to construct on the site and is set to take over a cityowned lot across the street, initially for parking but with long-term "pie-in-the-sky" plans for more office space.
"This is an exciting thing for the neighborhood," said Jack Leicht, president of Shiel Sexton's real estate division since retiring from Eli Lilly and Co. in 2003. "This property will look dramatically different when we're finished. It's tired. ... We're going to give it a higher and better use."
Indeed, the first tenant has already signed on. And then some.
Gregory & Appel Insurance's owners formed a partnership with Shiel Sexton's principals last fall to buy the property from heavy-equipment supplier S. Cohn & Son Inc., which is relocating to the northwest side. Terms of the deal were not disclosed.
Work is scheduled to begin in May and wrap up the following March. Gregory & Appel should be able to move into the top half of the four-story building by the time its current lease expires April 30, 2006, said agency President Daniel Appel.
"Our desire was to buy a building," he said, "ideally one that was about 30,000 square feet, something we could renovate, in a neighborhood we could enhance."
The firm has outgrown the 17,600-square-foot facility at 520 Indiana Ave. it has occupied since 1994, Appel said, and the Capitol Avenue building is a nearly perfect alternative.
"It has every element we want," he said, "except it's twice the size."
So a partnership was a natural next step. The insurance agency was looking for a new home and Shiel Sexton was looking for an opportunity to try its hand at development.
"It was almost serendipity," Appel said.
Neither he nor Leicht would disclose details of the arrangement, other than to say the firms' principals all own a stake in 1402 Associates LLC, the entity created in October to buy the property.
The owners are looking for another tenant to occupy the rest of the building.
Officials haven't decided whether Shiel Sexton's real estate arm will manage the property once construction is complete, Leicht said, but one thing is clear: The contracting company will continue to concentrate on its core business, not real estate development.
"We hope to do a project or two a year," he said. "It's not going to be a major thrust at all."
But the company doesn't appear content to simply idle, either.
The engine was primed several years ago, when Shiel Sexton refurbished the former Indiana Casket Co. facility at 902 N. Capitol before moving its headquarters there in 2000. Now the company is taking its first run at developing something it will own but not occupy.
Leicht said the 1402 property's history-and potential-made it ideal.
"There's a great old heritage around that building," he said, citing its origins as the home of Harry Stutz's HCS Motor Car Co. "We plan to restore that."
The project has been in the works for nearly a year.
Last spring, the former owner successfully petitioned for a zoning change that would allow for office use without the proscribed number of parking spaces nearby. The parking issue all but disappeared in October, when the new owners struck a deal to acquire a vacant lot across the street.
The city's Department of Metropolitan Development agreed to transfer ownership of a former brownfield property at 1401 N. Capitol to not-for-profit Near North Development Corp., which, in turn, will hand it over to the 1402 group.
"We want to get the property into the hands of a developer to do what needs to be done to benefit the community," said DMD spokesman Justin Ohlemiller. "This will do that."
All the parties have signed a formal project agreement, which calls for Shiel Sexton to spend $5.2 million on renovations. Work must begin no later than Aug. 1 and be complete by July 31, 2006.
The not-for-profit community development agency has been working for some time to find a new use for the property, now vacant after the demolition of a former Herff Jones Inc. manufacturing plant. The city borrowed about $50,000 to clean up some minor contamination on the site, and that debt will be repaid as a condition of the transfer, Ohlemiller said.
Next up is a public hearing Jan. 27 on a request to rezone a portion of the land for retail use. Leicht envisions leasing space to a handful of businesses in a 12,000-square-foot building on the northeast corner of the property, serving office workers and employees of nearby Methodist Hospital.
Near North will remain involved as the project continues, said President Amy Kotzbauer, given its stake in the neighborhood. Other revitalization efforts are in the works, she said, and may well gain momentum once the renovation gets started.
"Hopefully this project moving forward will enable the others to move forward as well," Kotzbauer said. "It is a huge boost for the area to have this type of improvement."
In fact, the 16th Street corridor just north of the site is one of several areas getting special attention from a publicprivate partnership trying to foster revitalization of older neighborhoods.
Such efforts are an indication of their growing appeal, Leicht said. And that's what the new ownership group is banking on.
"This project is going to attract someone who is not interested in going into a brand-new, steel-and-glass office building," he said. "We want to deliver a unique property that has free parking and is not too far from downtown. If we do that, we'll have a successful development."