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The two-building, 498,000-square-foot Terminus industrial project was completed earlier this year as part of the expansive Hobbs Station mixed-use development in the robust Plainfield market.
The project from Chicago-based HSA Commercial Real Estate is the company’s second major investment in the Plainfield market, joining the seven-building Gateway Business Park that’s adjacent to Indianapolis International Airport and Interstate 70 and consists of more than 1.1 million square feet of space.
Terminus is one of several elements of the $300 million Hobbs Station project, which is being developed across 125 acres at U.S. 40 and North Perry Road by Indianapolis firm New City Development Partners.
Hobbs Station is set to feature more than 200 single-family homes, 650 apartments, 120 senior housing units, more than 70,000 square feet of retail and restaurants and as much as 200,000 square feet of build-to-suit office space, alongside the logistics component.
The Terminus element, which occupies 37 acres, consists of a 234,000-square-foot building and a roughly 264,000-square-foot building that were constructed on a speculative basis. The entire southwest Indy-area market, which includes Plainfield, has 102.4 million square feet of industrial space, according to Cushman & Wakefield.
IBJ spoke with Robert Smietana, president and CEO of HSA, about the company’s investments in the crowded Plainfield industrial submarket and what he sees as HSA’s future in Indianapolis. He said the company is already receiving interest from prospective tenants in each of the Terminus buildings, which are being marketed by the Indianapolis office of Colliers.
The interview has been edited for clarity and length.
What made you interested in investing in investing in the Hobbs Station development?
Well, we have been investing in Plainfield for about the last 15 years, so we understand the value of that location. There’s not a lot of new land in Plainfield, so we saw this as a great opportunity to expand our holdings from our original project here, Gateway Business Park. The growth out there over the years has been great, and we’ve built seven buildings as part of that project, so we see the value in Plainfield. We saw the opportunity to purchase the site [in] Hobbs Station as perfect for us to be able to, hopefully, continue our success in Plainfield.
The Hobbs Station project is among the many that has popped up in recent years focused on offering a so-called ‘live, work, play’ atmosphere, where residents can have access to quite a bit of what they need within a short distance. The industrial element is unique here, though, because that’s not typically a commercial product associated with those sorts of projects. To that end, how does your location at Hobbs Station influence the way you’re marketing the property?
I think a lot of people have this notion or characterization of industrial development as a giant warehouse that has boxes stacked from floor to ceiling, with only a few workers inside. But that’s really not the case, as we have some very sophisticated tenants that have highly trained, highly educated employees. Those are the types of users we’re looking for with this project—ones who want to go window shopping during their time out at lunch. The value of Hobbs Station is that it has everything from senior housing to restaurants and retail to residential to industrial, and it’s very forward thinking. As a result, we’re hoping our project, which has a very high-end design, will allow us to go after more biotech-centric tenants that are looking to take on space, rather than standard warehouse users
As a firm that has been invested in the area for quite some time, how healthy do you consider the Indianapolis market overall?
It’s an interesting time, and things have changed a little bit, certainly. From 2019 to 2022, you couldn’t put buildings up fast enough. Because tenants were competing for available space. And while that was very unique, that has changed and I would say it’s moderated to what things looked like pre-pandemic. Of course, the Indianapolis market is not just one market, it consists of several different markets, and I think what we’re seeing is that established markets like Plainfield continue to do well—it’s sort of ground-zero for investors. But overall, there’s been a rush particularly in the eastern market, the Mount Comfort area, where a lot of buildings were put up there—a lot of giant structures, and there’s not as much demand for those now. If you look at markets separately, and the types of buildings and the types of vacancies that exist, those are very different stories, sort of night and day.
Do you have plans for development projects in the Indianapolis market beyond Plainfield, or is that where you expect to continue investing exclusively?
We do own a parcel in the Mount Comfort market, but that would be a project where we wouldn’t build a 1 million-square-foot building like you’ve seen pop up, but rather one that’s smaller—around 300,000 to 500,000 feet. We plan to do that when the time is right, and we don’t think in that market the time is right.
Whereas in Plainfield, I hate to say the time is always right, but it’s more right than wrong. We like the town of Plainfield, and there’s a cachet to it. Users want to be here.
What do you make of the incentives available for your projects, both locally and elsewhere across the United States?
As far as incentives go, the most dominant here is the 10-year graduated tax abatement, and that’s very valuable and actually very smart. There are a lot of other communities where they have 10- and 15-year tax abatements, but they go from zero during that period to a full assessment after those are over, which creates a very different dynamic that’s not used to paying that additional money for taxes. It shocks a lot of tenants, and they sometimes will move markets as a result. But the graduated approach in Plainfield [and elsewhere across central Indiana], it means that many tenants don’t move. We have a few tenants that were original to our Gateway project that have stayed. We like the stickiness of that, and I think it’s just smart business.
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