Zeller Realty Group plans to invest $4 million to update a trio of high-profile but underused office buildings along Carmel’s North Meridian Street corridor after acquiring the properties in late November.
“The previous owner just ran out of money,” said Mark Vollbrecht, a senior vice president who manages Indianapolis operations for the Chicago-based real estate firm.
Meridian Plaza, on the east side of Meridian between 103rd Street and 106th Street, was set for sheriff’s sale in Hamilton County on Oct. 31. Public records show Wells Fargo had a $36 million judgment against former owner ARI-Meridian Plaza LLC.
Vollbrecht said Zeller purchased the property from the loan servicing pool for an undisclosed sum. Local observers estimate the market value of the 306,000-square-foot complex to be $20 million.
California-based Argus Realty Investors LP bought the three-building Meridian Plaza office park for $38 million in 2005, before the economic meltdown. The company later merged with a real estate investment trust that is now facing investor lawsuits alleging fraud.
Zeller entered the central Indiana real estate market in 1999. Its office holdings include One College Park, near West 86th Street and Michigan Road in Indianapolis, and Carmel’s Meridian Mark I and II, at Meridian and 116th streets.
The granite-clad Meridian Mark buildings are 88-percent leased and expected to hit the market soon. Brokers told IBJ last month that they could fetch as much as $57 million.
Meridian Plaza, meanwhile, is a little more than half full. Tenants include First Merchants Bank and RQAW Consulting Engineers and Architects.
But the suburban office market is heating up, and brokers said Meridian Plaza’s prime location just north of Interstate 465, across the highway from St. Vincent Heart Center of Indiana, will be even more appealing once the state finishes a major overhaul of Meridian/U.S. 31.
“It couldn’t be better located,” said Adam Broderick, a senior vice president at Jones Lang LaSalle who leases the nearby Meridian Corporate Plaza. “It’s the first thing you see when you come off of 465 at Meridian.”
“It’s the gateway to Carmel, if you will,” concurred Dan Richardson, a senior vice president at CBRE’s local office. Richardson has sold Meridian Plaza twice and handled leasing for the complex for about 10 years.
Built in the mid- to late-1980s, Meridian Plaza might need some TLC, but Broderick said it has the “bones” to bounce back. Class A office space in the Carmel submarket is more than 90-percent leased, he said.
“I’m 99 percent confidence [Zeller] can turn it around and do it pretty quick,” Broderick said.
Zeller plans to spruce up Meridian Plaza’s lobbies, parking lots and other common areas, adding fitness facilities and possibly new tenant spaces.
The “virtually vacant” northernmost building, at 10585 N. Meridian, is more of an opportunity than a challenge, Vollbrecht said. With nearly 70,000 square feet of available space—and amenities like a balcony and fireplaces—it could accommodate a single user looking to establish a significant presence in Carmel.
“A large block of vacant space in the most desirable submarket in the suburbs … that just doesn’t exist,” agreed Broderick, the Jones Lang LaSalle broker. “Everything else in the area is extremely well-leased.”