More than 950 acres of land is expected to change hands in early 2020 as part of the sale of Hulman & Co.’s Indianapolis Motor Speedway to Detroit-based Penske Corp.—and founder Roger Penske has a big vision for that land.
Penske told IBJ that the company will soon begin studying the best use of IMS and hundreds of mostly undeveloped acres that sit outside the track and Brickyard Crossing Golf Course, as part of an effort to create an “entertainment capital.”
And while Penske offered no details, he pointed as an example to the Kansas Speedway, where restaurants, an outdoor mall, Major League Soccer stadium, Minor League Baseball stadium, hotels and a casino have developed in and around the 18-year-old track. Just this summer, developers proposed an additional 180-acre, $500 million campus nearby with apartments, a senior living center, a concert pavilion and more retail.
“They built a whole city,” Penske said.
Already, Penske has met with officials from the town of Speedway and said he wants to bring together planners and experts to talk about the possibilities.
“I think we’ll find out how to utilize it more than just three days” of the year, he told IBJ. “But there’s a lot to do, and these are studies that we’ll move forward with over the next several months to determine the best use.”
In all, IMS and Hulman-subsidiary Georgetown Realty Co. Inc. control about 37% of all the land in Speedway, making Hulman the 4.8-square-mile town’s single-largest landowner.
All that land will be turned over to Penske when the deal closes, bringing with it responsibility for about $2.7 million in annual property taxes.
Valued at $97 million for tax purposes, the acreage accounts for about 16% of Speedway’s assessed property value of $608 million.
Much of the land Penske Corp. is acquiring is occupied by the track itself and the golf course, but at least 200 acres outside IMS present development opportunities.
Mike Wells, president of Indianapolis-based developer REI Real Estate Services, said he is all but certain new development will come to the IMS property over the next few years, but said he doesn’t expect the facility will fully mimic the Kansas track.
“I think it will be a challenge, but there’s a way to achieve connectivity and make new development part of an overall experience at IMS,” Wells said. “You’ve got to be clever and really give it some thought, but I think there are ways to make the [speedway] a more interesting visit for everyone.”
Currently, much of the 200 acres outside the track is used for race-day parking. Most of that property is to the north and west of the track.
By comparison, the GM stamping plant property west of downtown is only 103 acres. Ambrose Property Group planned to spend up to $1.4 billion at the Waterside site over the next 15 to 20 years on developments including hotels, apartments, restaurants and offices—before announcing in September it was withdrawing from the project. The first phase of the Waterside would have been worth nearly $300 million, Ambrose has said.
Speedway has been on a development tear over the past decade, but it has been concentrated along Main Street, southwest of the track, rather than on Hulman-owned property. Developers, in partnership with the town, have unleashed more than $375 million in projects—from the Wilshaw hotel/apartment project and restaurants and breweries to Sarah Fisher’s Speedway Indoor Karting complex.
Penske has said he is prepared to invest in the track and surrounding area—one of the reasons he was chosen by the Hulman family to acquire the company.
Land to the east of the track includes a 68-acre solar farm. Parcels to the south—on the other side of 16th Street—contain parking lots and offices for IMS Productions and the IndyCar Series.
Wells said it is difficult to predict what Penkse might have in mind for the undeveloped portions of the property but said he wouldn’t be surprised if it includes restaurants, shopping and residential units.
He said expanding the IMS Museum—something that’s been planned for years—and creating new experiential areas is likely to continue under Penske.
Museum director Betsy Smith said she has not yet spoken with Penske about the museum’s multi-million-dollar renovation project, but said she had “no reason” to believe it won’t move forward, especially since the not-for-profit museum is raising funds independently of IMS and IndyCar.
Jacob Blasdel, town manager of Speedway, spoke briefly with Penske after the sale was announced, and said Penske committed to gathering input from town leadership on development plans.
“I think we’ll have to see what the plans are,” Blasdel said. “We have been, as a community, aggressive in development, But I think we’ve been very thoughtful in what we want to do.”
He said he expects Penske will operate similarly.
Martyn Thake, with Tucson, Arizona-based motorsports consultancy MCS, said it’s likely Penske will first examine whether additional infrastructure is needed to support track-related activities before considering adding entertainment offerings.
Infrastructure changes could include new clubs inside IMS, installing lights at the track or updating the golf course and other facilities. Penske has said he is considering bringing more NASCAR events to the track, along with Formula One and a 24-hour race—all things that would require substantial investment in the track and its amenities.
After addressing the track’s immediate needs, Thake said, plenty of options could be on the table for the surrounding land.
“They have some awesome, developable real estate there, by the look of it,” Thake said. “There’s a lot of residents around there now, who weren’t there when it was built. There are some opportunities.”
One of the biggest challenges Penske and IMS will face will be balancing new projects with race-day parking needs, experts told IBJ.
“If it’s determined that there’s some surplus property, there are likely some opportunities to turn that into some sort of new development,” said Abbe Hohmann, president of Indianapolis-based Site Strategies Advisory.
IMS declined to share details about how the lots surrounding the track are used on race days.
“Any assumptions about how capital projects could impact parking are very speculative at this point in time,” IMS said in a written statement.
But Hohmann and others said parking could be shared between the track and a new entertainment district on the acreage to the northeast.
“It’s hard for me to imagine that there aren’t higher and better uses” for some of that land than how it’s being used now, said Mary Smith, a parking expert and senior vice president of Indianapolis-based Walker Consultants.
She said construction of parking structures could be feasible if entertainment or recreation venues that can share them also are developed. In the past, Hulman has steered clear of parking garage developments because building them is costly—about $21,500 per parking spot, according to professional services firm WGI.
“It would be a lot of money to maintain a parking structure … and use it just two or three times” per year, Smith said. “If you have something else there being used regularly, then it begins to make more sense.”
Blasdel said whether parking structures will be part of Penske’s plans for the site is unclear. He said the town is continuing to look for other redevelopment opportunities of its own close to the track.
Speedway Redevelopment Commission owns several small parcels along the perimeter of the track, which it acquired as they became available.
The town has eyed making land swaps with IMS as part of its overall strategy, including having conversations with senior leadership at Hulman about the possibility, Blasdel said.
While those discussions are in their infancy, making land swaps could provide IMS more land for parking or other projects, while freeing up parcels for the town to pursue its own developments.
“You’ve got a massive investment out there that is tremendously underutilized,” REI’s Wells said of the track. “There’s not a simple answer to solve that, but there is an answer. I think with Penske and his business skills and capital, it’s very much achievable.”