INDIANAPOLIS—Onward Investors, LLC has become the latest investor to give Indianapolis' downtown a vote of confidence. The Minneapolis-based company just completed the purchase of 130 E. Washington St., a 203,250 square foot historic office building in the CBD that it plans to reposition as creative office space. The company paid about $9.25 million and will put several millions more into a renovation.
“We're a value-add buyer,” John Sohlberg, senior managing director and chief executive officer of Onward, tells GlobeSt.com, “and this is great area for us; downtown Indianapolis has been a recovering market and this building is in a section of downtown that is gentrifying.”
130 E. Washington was developed in 1922 for Meyer Kiser Bank by the architectural firm Vonnegut and Bohn. But in the 1960s a modern façade was added and somewhat covered up the 12-story building's historic appearance. Currently, the property is about 50% occupied. Tenants include Arcadis and the national governing bodies of USA Track and Field, Diving, Gymnastics, and Synchronized Swimming.
Onward plans to restore its historic luster by uncovering the windows, letting more natural light flood in and bringing back high ceilings to the interiors, among many other changes. Furthermore, Onward wants to have more life and activity in the building and plans to add a restaurant on the ground level. “This is going to be a creative office space that attracts tenants with younger employees,” says Sohlberg.
The CBD has already begun attracting marketing, design and high-tech firms, kicking off even more development that then reinforces the trend. “The workforce has started to move downtown,” Alex Cantu, capital markets vice president for Cushman & Wakefield | Summit Realty Group in Indianapolis, tells GlobeSt.com. “We have had a significant amount of apartment stock, about five to six thousand units, which has been developed and absorbed in the downtown area.”
Cantu and C&W|Summit partners Matt Langfeldt and Rich Forslund represented the seller in the sale of 130 E. Washington St. The company will handle the management and leasing of the project moving forward.
The overall office market, consisting of about 11 million square feet of space, has a vacancy rate of about 20%, Cantu says. But like Onward plans to do, many landlords have “taken antique product and transitioned it into something that appeals to modern office users.” In fact, when analysts considered only the city's historic office structures, which total about 1.2 million square feet, they found an occupancy rate of roughly 94%. “It's not dissimilar to what you would find in Chicago's River North neighborhood.”
As reported in GlobeSt.com, earlier this year Cantu and the same C&W|Summit sales team closed the sale of the Century Building, a 153,849 square foot office building in the CBD at 36 S. Pennsylvania St. It was originally built as a warehouse in 1901, but today the tech company Salesforce.com anchors the property.
Cantu adds that, in addition to the historic building niche, investors have also shown interest in Indianapolis' more modern office spaces. In 2014, for example, New York-based Nightingale Properties purchased the 36-story, 696,000 square foot Regions Tower, and the 515,000 square foot Market Tower was bought out of foreclosure by Chicago-based Zeller Realty Group.
And the C&W group also recently engineered the $14.3 million sale of 8909 Purdue Rd., also known as College Park Plaza, an 180,637 square foot class A office building located in Indianapolis's Northwest submarket, to Sohlberg's Onward Investors.
Its suburban-style appearance and location is quite different from the historic structures in the CBD, but Sohlberg says the purchase shows just how strongly they believe in the Indianapolis office market. “It's two different types of office assets that fill two different niches.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
