Downtown Indy Gets $3.3Billion of Development Investments
If you’re wondering if Indianapolis is a good place to invest in real estate, take a look at the astronomical amount of money that is pouring into the area. The $3.3Billion is from a wide variety of businesses which shows that a lot of people see a bright future for Indy.
The recession has brought downtown construction to a crawl in many cities, but not Indianapolis.
Boosted mostly by tax-supported projects, Indy’s Downtown is in the midst of a multibillion-dollar construction boom that some say may be among the largest in the nation.
Experts caution that it doesn’t necessarily signal an unusually robust local economy, but the spending comes at a good time — when interest rates and construction costs are low — and it could position the city for growth once economic vitality returns.
According to a new tally recently released by Indianapolis Downtown Inc., 78 projects worth $3.3 billion are under way Downtown, up from $2.8 billion worth of investment as measured in January.
Much of the construction is supported by public sector investments in facilities such as the new Wishard Memorial Hospital, the Indiana Convention Center expansion and renovations of the Birch Bayh Federal Building & U.S. Courthouse and Minton-Capehart Federal Building backed by federal stimulus dollars.
But Downtown and surrounding areas have seen private investment in expansions at Methodist and Riley hospitals, the construction of the 1,000-room JW Marriott hotel complex and additions to the NCAA headquarters.
“Our pipeline of projects continues to grow, even given the economic times we’re facing,” said Terry Sweeney, vice president of real estate development for Indianapolis Downtown Inc., a nonprofit supported by the city that aims to manage, market and develop Downtown.
“What’s equally as impressive is we’re having investment happening throughout the Downtown, and not just in one pocket and not in just one industry, but across the board and across the geographical boundaries of Downtown.”
Tom Murphy, a senior fellow for the Washington-based Urban Land Institute who tracks development in major U.S. cities, called the surge of development in Downtown Indianapolis unusual given the recession.
“To have $3.3 billion in downtown development, that’s the highest number of investment I’ve heard of any place in the country,” said Murphy, a former Pittsburgh mayor. “It’s surprising, but my view is that cities that have any flexibility in their budgets or some entrepreneurship in their leadership, this is the opportunity to make these kinds of investments.
“Interest rates are at a historic low, labor costs are low compared to what they have been in the past, so this is a good time to make these kinds of investments if you can do it.”
Although the building boom bodes well for the future, it’s not necessarily an indicator of health in the local economy, said David Reed, an office manager for commercial real estate firm CB Richard Ellis.
For example, the projects at Wishard, Methodist, Riley Hospital for Children and Clarian Health’s neurosciences center represent a response to consumer demand and are “kind of an anomaly in our economy,” Reed said. In addition, the convention center expansion was approved and had momentum before the recession, and billionaire developer Dean White “had the courage to build the JW Marriott with all cash and push right through a down economy.”
“There’s a lot of great things happening we can point to that have just been wonderful, including the stimulus money and all that has brought along, like the renovation of the federal buildings,” Reed said. “All of these projects are great for the economy and stimulating our economy, but they are not indicative of any recovery in our economy. It’s just good news we can talk about.”
Whether they are an indicator of Central Indiana’s economic health or not, the fact that Indianapolis is developing so heavily in its Downtown sets a tone for other developers in the city, Murphy said, and positions it well to emerge in a stronger position after the recession.
“This says a lot about Indianapolis’ civic leadership, that they didn’t blink when everything started to move downward with the economy,” he said. “I’ve been to a lot of places where the leadership says, ‘Why should we do anything? Look at what’s happening.’ This level of development instills confidence and shows people are willing to step out and take some risk, which is very impressive.”
And not all of the development has been commercial.
The 258-unit Residences at 451 E. Market St. apartment development and the Villaggio at Page Pointe condo development on Virginia Avenue are among the priciest in the city, at $30 million each.
Plus, Sweeney says, a pair of student housing projects near Indiana University-Purdue University Indianapolis on Indiana Avenue are under way and represent a segment of development for Downtown — traditional student-housing construction by private developers, a new trend he predicted would continue over the next two years as IUPUI’s enrollment continues to set records.
Downtown has maintained its steady stream of development for many reasons, Sweeney said.
“We have the foundation of a safe, clean Downtown that has over the years built a well-rounded product that has created a desire from people to live, work and play there, and you layer on top of that the anchors that the local, state and federal government provides along with a major university, an expanding convention center, a retail anchor in Circle Centre, a growing residential base and the hospitals and life sciences that continue to be big drivers,” Sweeney said.
“All of that continues to create this snowball of development.”
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