A group called Uptown Realty Investors led by brokers John Demaree and Bill Ehret is talking with potential restaurant tenants to anchor a new project that likely also would include apartments or condos. The plan involves the McQuat Building at 14 E. Washington St., the H&H Mart Building at 10 E. Washington St., and a vacant lot next door to the west.
The brokers began acquiring pieces of the property about a decade ago, when they bought the first two buildings, both since demolished. They added the McQuat and H&H buildings a few years later. For the last two years, the pair had been working on plans to build a 10-story office, parking and retail structure with a partner they declined to name.
That deal fell through earlier this year, thanks in large part to a deepening recession, and now the owners are hoping to land a tenant so they can redevelop the blighted stretch in time for Super Bowl festivities in 2012. The most likely scenario is a renovated McQuat building and low-rise retail or restaurant space on the vacant lot and H&H Mart parcel.
"Sure, it's a disappointment," said Demaree, 46, who with Ehret, 49, is a principal at locally based Summit Realty Group. "The good news is, we still have what we consider to be the best development site in downtown Indianapolis. We want it to be the right fit."
Demand for the space should be strong, at least in theory. A handful of restaurants including a Buffalo Wild Wings and Dunkin Donuts recently opened nearby, a Jimmy John's and Qdoba are thriving in the King Cole building next door, and an emerging restaurant alley with Fogo de Chao, Adobo Grill and Scotty's Brewhouse is sprouting about a block away.
But there also is potentially bad news brewing at the high-traffic corner of Washington and Meridian streets: The bookstore Borders is looking for another tenant or tenants to sublease its roughly 21,000 square feet in the Barnes and Thornburg building, and the intersection's northwest corner has been vacant since Flagstar Bank moved to the corner of Washington and Pennsylvania streets more than a year ago.
Plenty of owners have taken shots over the years at redeveloping pockets of rundown properties along Washington Street between Meridian and Pennsylvania streets, but many of those efforts have fizzled. In 2004, before Ehret and Demaree had acquired the McQuat building, another developer proposed a condo conversion for it but threw in the towel three months after announcing the plans.
Even the successful redevelopments — such as the neighboring Victoria Centre, where Red's Barber Shop is an anchor — have been an uphill climb. The owners of Victoria Centre couldn't pre-sell enough condos in the building to get financing in the early 2000s, when the market was much stronger. They've had better luck of late finding office tenants; hair care products company Kenra is moving its headquarters to two floors in the building.
When Stan Evans bought Victoria Centre with partner Mark Wastl in 2000, he figured the McQuat and H&H buildings would have been redeveloped by now.
"I'm optimistic about any activity," said Evans, a senior vice president at locally based Paragon Development. "[Ehret and Demaree] have had some pretty grand plans they've tried to launch over the last couple of years and the market has not been helpful for them to get there. I guess reality dictates they do something more reasonably sized."
Pushing out blight
Finding a way to move the properties out of the "vacant" column would help the entire block, said Brian Epstein, a principal in locally based Urban Space Commercial Properties.
"Things are turning around on Washington Street and something needs to be done in that hole," Epstein said. "If they can do a mix of restaurants and apartments, I think it's a great use of that space."
The eight-story McQuat building has been vacant since at least the mid-1990s, when a string of retail tenants occupied the first floor. The upper floors have been mostly vacant since 1981.
Tax records list the building's construction date as 1912, but Indianapolis Historic Preservation Commission records date the building to 1901, when it was home to Badger Furniture Co. The 1-1/2-story H&H Mart building was constructed in 1952. Neither building is in a historic district or registered as such, but the McQuat is considered notable.
Ehret and Demaree already have spent nearly $4 million on the properties and carrying costs, including property taxes. They put up about $900,000 for the H&H building, and spent just over $1 million for the McQuat.
The vacant lot that's also part of the redevelopment plan previously was home to a four-story structure at 6 E. Washington St., which the partnership acquired in 1999, and a one-story building at 8 E. Washington St., which the two purchased in 2000.
The plan that fell through called for the demolition of the H&H and McQuat buildings as well, but incorporating the existing buildings now is a possibility. The price of the project could range from as low as $8 million up to $35 million, Demaree said. They have not determined whether to ask for city incentives.
"We just want to do something," Ehret said. "We've held it long enough. We've been patient."