Sources: Rolls-Royce planning to vacate two-thirds of its downtown campus

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Rolls-Royce Corp. plans to vacate most of its Meridian Center campus in downtown Indianapolis in the coming months in favor of a long-term remote work model, multiple sources have told IBJ.

The United Kingdom-based aircraft engine manufacturer is expected to jettison about 270,000 square feet of office space on its 2.2-acre campus at 450 S. Meridian St. later this summer, while retaining a building on the southern portion of the site for at least another decade.

Two industry sources aware of the plans—which won’t be finalized for several weeks—told IBJ that the company is giving up the leases on the northernmost building and the building directly to its south, which is connected to a 1,550-space parking garage regularly used by employees. About 3,000 people worked in the company’s downtown offices prior to the pandemic. 

An additional source confirmed Rolls-Royce is planning to vacate most of its campus, but could not offer details because the individual was not briefed on specifics. All three sources spoke on the condition of anonymity because they weren’t authorized to discuss the matter publicly.

One source said Rolls-Royce is close to signing a 10-year lease extension with property owner VEREIT Inc., a Phoenix-based real estate investment trust. The deal would leave Rolls with the 135,000-square-foot office building at the northwest corner of South Meridian and West Merrill streets, while VEREIT would be able to take the other buildings to the market for lease opportunities.

The source said finding a single user for even one of the buildings could be a challenge.

Rolls-Royce is expected to vacate the other two buildings and reduce its parking needs over the coming year. Its current lease is set to expire in summer 2022.

The sources said they expect Rolls-Royce won’t be the only major employer in downtown Indianapolis to eliminate some of its office space, with one stating “a lot of employers are going to realize they can shrink their footprint” and reduce real estate costs.

When reached for comment Wednesday, a Rolls-Royce spokesperson did not confirm any plans—instead stating that the company’s long-term return-to-work and real estate strategies have not yet been finalized.

George McLaren, vice president of marketing and communications for the company, also referred IBJ to a company statement from April 22, which indicated Rolls-Royce was “reviewing office space requirements going forward but no final decision [had] been reached.”

He said only about three floors in one of the buildings are currently open to workers, with “a very limited number of people” reporting to the office regularly since the pandemic began.

Rolls-Royce first moved about 2,500 people to the former Eli Lilly and Co. office buildings in 2012, as part of a $20 million renovation and modernization of the campus. Previously, the company had its office staff spread across several buildings in southwest Indianapolis and Plainfield.

Lilly completed development of the $58 million campus in 2002 with partner Kite Realty Group Trust, but in 2010 moved about 1,000 people from the property to its Delaware Street campus amid staffing cuts and consolidation.

Lilly retained ownership of the campus until 2013 and received a 10-year tax abatement on the buildings as part of the deal, while Rolls-Royce received about $300,000 in training grants from the city and state.

VEREIT did not return a phone message requesting comment.

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12 thoughts on “Sources: Rolls-Royce planning to vacate two-thirds of its downtown campus

    1. 3 of the 25 largest and successful cities in America have a Republican Mayor (and it is really 2 because Curry is continuously accused of being a Democrat by the idiots in Jacksonville)

      Your argument is that everyone should move to the Republican led suburbs which are only able to exist because of the vibrant downtown they are built around?

      Have you ever thought that if downtown Indianapolis died, the entire state would die? There is a reason the state legislatures are obsessed with keeping us in check, because we control the entire economy of the state in one way or another…

    2. Lol, headline you’ll never read “Major Corpotation Leases 100,000k Sq Foot Office Space in Republican Stronghold Scott County”

    3. Another headline you’ll never read: “Knowledgeable Ike McCoy does something meaningful”.

  1. I am not sure how to “react” to this news. On the surface, it sounds foreboding; however, as I reconsider, I’m not sure I do feel that way. R-R isn’t “cutting its workforce” and, one would infer, that the impact to that workforce will be minimal. The individuals affected will be offered a chance to maximize their personal and professional lives and “save” on the expense of costly commutes to downtown. Heavy traffic flows into and out of the city will be reduced as there will be fewer folks rushing to work every day and even our air quality may very well improve.

    There is a vibrancy that the downtown workforce brings to the city, however. Restaurants and shops have relied (and will continue to rely) on a bustling daytime downtown to ensure their facilities can operate at maximum potential. serving both the lunch and dinner crowd. This dynamic cannot be taken lightly, as restaurants provide a substantial “draw” for the ever-growing residential population that now occupies space in the city when the day’s work is done.

    Recent trends in the event and exhibition industry are pointing Indianapolis in the direction of new opportunities. Post-pandemic chatter among leaders in that industry is sharing that the recovery with convention and events will bring about significant changes. Notably, that the major convention cities of Las Vegas, Orlando, Chicago, LA, San Francisco, etc are going to find themselves losing out on trade shows and conventions that have historically been at their venues. Attendance at major trade shows is already showing itself to be significantly reduced and meeting planners/organizers are discovering the many advantages to locating their “smaller” event in venues like Indianapolis. A major trade show in the food industry, Sweets and Snacks, will be in our city next week, rather than Chicago. Admittedly, the commitment is for one year, but it may be the beginning of an exciting trend. I am hopeful the aggressive work of our civic leaders is going to pay off in a big way as Indianapolis’ well-established reputation for hospitality is snapped up by planners eager to find a great home for their smaller, yet impactful, convention/meeting/event.

    When this happens, the activity downtown will be filled with conventioneers who are anxious to discover all the opportunities our great city provides in restaurants, entertainment, cultural history and Hoosier hospitality. Where I am glad I am not an investor in commercial real estate, I also know that many commercial buildings have found new life in becoming places where people live, rather than work. If that were to be the case, life after the pandemic opens a door for our city to look to the future with optimism and opportunity, even on the heals of news like this.

  2. I’m not surprised. I anticipate more moves similar to this as teleworking becomes more acceptable. Plus, don’t forget the CCB will be losing at least half of it’s offices soon. I don’t anticipate the vacated space to fill quickly, if at all.

    1. Anticipated to be a 10 year gap to get back to 80% filled as the Ballard administration made literally zero plans to backfill the space and just kicked it along to the next Mayor… I recall this being brought up in a town hall setting when it was announced and Ballard just ignored the question and moved on… sigh

  3. I have a friend who works at RR DT. He too is full time at home since the panny, and says that’s the plan moving forward with plans to return to office for meetings only.

    1. Yes, it all went downhill after 1 weekend in June last year. Not mind you the once-in-a-century pandemic that has disrupted the way everything functions worldwide. The one that shut down offices, hotels, the convention center, and emptied the arenas across the world. Nope. That absolutely has nothing to do with it.