Duke Realty Inks 300,000-SF Deal With Simon

INDIANAPOLIS-Duke Realty Corp. will develop a 300,000-sf Downtown office tower here for locally based Simon Property Group. A source at Simon tells GlobeSt.com the company will acquire the building upon its completion in mid-2006 and relocate its headquarters there from the National City Center building located across the street.The new building will be located at the Capitol Commons site on the southwest corner of Washington Street and Capitol Avenue. The National City Center building, owned by Harbor Properties, sits on the southeast corner of the intersection. Simon occupies about 175,000 sf in that building and another 25,000 sf in the Claypool Building, a mixed-use development it owns on the northeast corner of the same intersection. The Indiana statehouse occupies the NW corner of the intersection.Simon has signed a one-year lease extension for its space in National City Center, which was to expire in September 2005. In addition to leaving that building in 2006, a Simon spokesperson says the company also will vacate its space in the Claypool Building. The extra 100,000 sf in the new building will be used to accommodate future growth, according to the spokesperson.Duke Realty will begin construction of the new office tower in the fourth quarter. The tower will rise between 12 and 14 stories. August 2006 is the scheduled completion date. Simon Property Group is a publicly traded REIT that invests primarily in regional malls and community shopping centers. Through subsidiary partnerships it owns or has an interest in 192 million sf in 248 properties in North America, Canada and Puerto Rico. City officials were intent on keeping Simon Downtown because of the economic boost its employees and visitors provide for business in the area. Prior to the announcement, there was some concern that Simon would head for a location outside Downtown near Keystone at the Crossing, where Duke Realty recently received a zoning variance for a 14-story, 200,000-sf office building.Despite Simon’s decision to stay Downtown, its move does nothing to boost absorption in Downtown Indianapolis, which currently suffers a vacancy rate of about 17.5%, according to CB Richard Ellis.