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Real estate around the state.

An update on commercial real estate in Northwest Indiana, South Bend/Mishawaka, Fort Wayne, Indianapolis and Evansville

The real-estate story of the past year seems to be one of recovery, as low interest rates and high business confidence have begun to erase the effects of recession.

"If interest rates remain low and business confidence holds steady, the gradual recovery in sales activity begun during 1992 could continue into 1993," notes the recent Indianapolis market study released by the F.C. Tucker Co. Inc. of Indianapolis.

Agrees Calvin Dentino of Citizens Realty & Insurance in Evansville, "Things look optimistic. We're seeing kind of a new beginning."

Adds John Phair of the Holladay Corp. in South Bend, "We believe 1993 will be an excellent year."


"Porter County is the hot spot in Northwest Indiana," says Jay Pouzar of Gough, Lesch & Gough in Merrillville. Valparaiso, the county seat, has seen the bulk of the commercial real-estate activity.

The first phase of the multiuse Shandana Point project in Valparaiso was completed this past year. The project, being developed by Pouzar's firm, will include an outpatient medical center, 20,000 square feet of retail space for medical offices, and an apartment complex. Other phases of the project will be completed during the next two years.

Meanwhile, development has been changing the face of downtown Valparaiso. While some of the work has been in the public sector, those in the area expect development interest will follow in the private sector. One project currently under way is a new County Administration Building and parking garage. This 63,000-square-foot office building will be complete by the middle of the year. Also, Porter County authorities are planning a multimillion dollar renovation of the county courthouse.

Already, says Harley Snyder of the Harley Snyder Companies in Valparaiso, "there has been a lot of activity from the standpoint of inquiries" in the local office and industrial markets. Many of these inquiries, he says, have come from people who have recently moved from Chicago to Indiana and now want to bring along the businesses they own or operate.

Lake County's commercial real-estate future also holds much strength, local agents say. Stan Wolucka of Price Realtors in Highland says that he, like Snyder, also expects "an influx of businesses from Illinois because the tax structure is much more beneficial in Indiana."

A fair amount of office space is available in the area, Wolucka says, but because absorption is up he believes vacancies will be much more scarce within a year or two. Most of the office development going on within the past year, he notes, has been build-to-suit, not speculative.

In the retail sector, meanwhile, Merrillville Crossing recently resumed development after two years of legal constraints had stalled work. Construction will continue on the unfinished buildings at the retail project near U.S. 30 and I-65. And, adds Wolucka, a new Wal-Mart is now open at U.S. 30 and U.S. 41 in Schererville.


Chris Davey, president of Cressy & Everett Commercial Co. of Mishawaka, reports that "1992 was a better year than '91." A large portion of the company's achievements in the past year have been linked to its Edison Lakes office park project.

In the past year, the first phase of a $3 million, 100,000-square-foot medical complex was completed at Edison Lakes. Meanwhile, Cressy & Everett has developed seven smaller office buildings on the campus. Each building totals about 6,000 square feet, and six of the seven are now occupied. Also, construction will begin this spring on a 70-room Courtyard by Marriott hotel.

The past year saw the completion of three projects involving the Holladay Corp., according to John Phair, a Holladay vice president. One was the 120-room Inn at Saint Mary's. Also, Holladay completed a 25,000-square-foot build-to-suit office for Memorial Home Care Services, a division of Memorial Hospital. And the company did a 7,000-square-foot build-to-suit to house the regional marketing headquarters of Prudential Insurance.

This June, Phair says, Holladay plans to start work on a 35,000-square-foot build-to-suit office on the East Race in downtown South Bend. It also will begin work on an office park at Indiana 23 and Douglas Road, which will feature six office buildings ranging from 5,000 to 12,000 square feet.


Times have been rather slow in the Fort Wayne commercial real-estate market, according to one local broker who preferred that he not be named. But he says inquiries and other activity are on the upswing, and he predicts that the next few months will see some big stories develop.

Among the bigger recent happenings on the Fort Wayne real-estate scene was the joining of two of the oldest local commercial firms. Goldstine Inc. and the N.B. Knapke Co. announced a merger in November, creating the Goldstine Knapke Co. The new firm has entered into an agreement with The Galbreath Co., an international developer based in Columbus, Ohio. They claim that "acting in joint venture the firms represent the largest full-service real-estate group in the state."

In other happenings, the property encompassing the Phelps Dodge Magnet Wire facility recently was annexed into the Fort Wayne city limits. In conjunction with that move, Phelps will be refurbishing and adding to its old plant. The $26 million deal will create 80,000 square feet of new office space, and include the renovation of the old plant.

Retail property has been active in the past year, with moves including the addition of Wal-Mart to the Apple Glen complex. And like other areas of the state, Fort Wayne has caught the eye of a number of restaurant chains. "A lot of national chains have been looking at Fort Wayne during the last two years," says George Huber of Murphy & Associates. Among those to open in 1992 were Chili's, Applebee's and Damon's.


The biggest news here is that the amount of modern bulk warehouse and manufacturing space has hit a record low, according to David Goodrich, F.C. Tucker Co.'s president for commercial real-estate services. For the past three years speculative development has been sparse, and absorption in 1992 was strong.

"We're really running out of decent-sized, well-placed industrial land in Marion County," notes Michael McKenna, senior vice president in charge of the city's CB Commercial office. "There just isn't all that much left, especially if you have a user that needs a sizable piece of land."

A number of projects are in the works to help ease the demand. Perhaps the largest potential project in the state is a proposed 1,100-acre industrial park just south of Indianapolis International Airport. The Holladay Corp. is behind the Indiana Industrial Park, which project manager Doug Hunt says will be almost entirely for industrial use. "Roughly 1,000 acres of the total 1,100 would be reserved for industrial tenants," he says, adding that potential activities could be airport-related, distribution-related, advanced manufacturing, biotech/pharmaceutical and rail-served. The park would contain a manufacturing training center.

"That land south of the airport is the largest area left in Marion County that makes sense for industrial and commercial development," McKenna notes. "In the past, the problem has been access to the site, and if they can get better access, it'll open up the whole area."

Also near the airport, Lee and Urbahns Co. is launching a 650-acre Fortune Park West. Straddling the Marion/Hendricks county line, the development could include restaurants, retail establishments, hotels, light industrial and light manufacturing, according to David Beauregard, sales marketing manager.

Meanwhile, Denison Properties Inc. is planning a 151-acre commercial park in Plainfield. Airwest Business Park will be along the east side of Indiana 267 between Interstate 70 and U.S. 40, and could include office, industrial, distribution and warehouse tenants. The developer expects the project to take at least a decade to build out.

On the other side of the metropolitan area, PolyGram Group Distribution announced this past August plans to consolidate its four Indianapolis area operations under one roof. The company will be joining the USA Group in the Exit Five industrial park in Fishers, a project of Sunbeam Development Corp. The facility will house 487,000 square feet of warehouse space and 47,550 feet of office space. About 600 employees are expected to move into the building this spring.

The overbuilding of the 1980s continues to plague the commercial office market, but Goodrich expects things to change in the coming months and years. As in 1992, he expects to see little new office space built this year, and what's on the market now will gradually be absorbed. "Vacancy in office buildings will go down faster in the suburbs than downtown," Goodrich predicts.

"Vacancy peaked out downtown and in the suburbs this past year, and will start to move down," McKenna agrees. But, he adds, downtown vacancy actually grew some recently with the announcement that AMAX Coal Industries would move its headquarters to Texas. That adds some 100,000 square feet of space to the market. Among suburban office developments is a new project from a developer that has been strong in retail, the Skinner & Broadbent Co. Clearwater Crossing Executive Park is going up along a large private lake on the city's northeast side, with parcels of 1 to 15 acres available.

As of December, the downtown office vacancy rate stood at 20.7 percent, up from 20.1 percent a year earlier. Suburban vacancies fell from their all-time high of 23.4 percent in 1991 to 21.3 percent.

The retail and restaurant market in the Indianapolis area also has been hot, says Goodrich "A number of restaurants have been showing interest in Indy." He also says Meijer, a Michigan-based chain of "hypermarts," this year is scheduled to begin building the first four of seven planned area stores, with completion anticipated in 1994.

Among retail happenings elsewhere in Central Indiana, the city of Anderson recently signed a deal with a Kentucky developer who has proposed a 145,000-square-foot factory-outlet mall known as River Centre.

The development would be near downtown Anderson and the White River, and the first phase--which would include 25 stores--is due to be completed by the holiday shopping season this year.


Recent months have seen the return of some speculative development in Evansville, reports Calvin Dentino, manager of the commercial property division of Citizens Realty & Insurance.

Local architect Dan Temme is launching a cluster of office/retail buildings on the north side of town along the U.S. 41 corridor. One building totaling about 8,000 square feet already is in the works, Dentino says. The nearest and far-east sides of Evansville also are seeing some spec office and warehouse developments, including space being developed by Castle Contracting in an industrial complex along Kotter Boulevard, he reports.

Based on the flurry of inquiries, Dentino expects a lot to happen in Evansville this year. "Things were pretty stable until about Thanksgiving, and they started to build prior to Christmas. Now, warehouse and office inquiries have been extremely active." There's been heavy interest in property leasing, he says, as well as purchasing. "We've had a couple of downtown lease deals in the 4,000-square-foot area," he says.

The downtown office vacancy rate by early 1993, he notes, was just under 10 percent, which is an improvement over figures from several months earlier. Jim McKinney, of local developer Regency Associates, says office demand is especially strong in the B and C classes. "As businesses have grown, some have preferred not to build new buildings, and would rather lease older buildings with lower rental rates."

McKinney says the retail market in Evansville also is strong. Vacancy rates are declining, he says, and at least one center is completely leased, a rare status during the recent recession.

Hopes in Evansville remain high that the city can attract one of the finance accounting centers being planned by the U.S. Department of Defense. Evansville and Indianapolis are among the cities in the running to land a center. McKinney says officials in Evansville have worked furiously in recent months to narrow four potential sites to one for submission to a Pentagon site-selection committee. Concludes the optimistic McKinney, "We will make them an offer they can't refuse."
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Title Annotation:Indiana
Author:Jones, Clay
Publication:Indiana Business Magazine
Article Type:Industry Overview
Date:Feb 1, 1993
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