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Developing Indianapolis: Leaders Bullish on the Future

Posted 5:00 AM by

At the recent Indianapolis State of the Market” event, a trio of developers and the state’s economic development leader participated in a panel discussion with KSM’s Josh Malarsky on metro Indy’s assets, opportunities, and challenges.

While Indiana Economic Development Corporation (IEDC) president Elaine Bedel, Strategic Capital Partners president Richard Horn, Flaherty & Collins CEO and principal David Flaherty, and Birge & Held asset management president and COO Andrew Held seem to agree that Indy’s well-known assets – central location, proximity to the nation’s population, available workforce, etc. – continue to play a role in our success, they also believe lesser-known factors and assets might be even more powerful in the future than we realize.

For example, Central Indiana’s affordability is often discussed, but Birge & Held’s Andrew Held notes that, at a time when the nation is experiencing an affordable housing shortage (the Washington Post recently reported that the U.S. has lost 60 percent of its affordable housing stock since 2010), in Indianapolis, on average, only 17 percent of household income goes to housing, compared to the national figure of 28 percent.

Of course, Indy’s affordability does not stop at housing, as the IEDC’s Elaine Bedel underscores by noting that a firm in San Francisco would have to pay an employee more than $300,000 to match the buying power of a $100,000 salary in Indianapolis.

Other factors in our success are a collaborative culture and, as Strategic Capital Partners’ Richard Horn points out, financial institutions that understand the importance of real estate and work to make deals happen. “We have good bankers here,” he says, a fact that no doubt contributed to the record 11 million square feet of space that he said was absorbed into the market last year.

Developments underway or on the drawing board suggest the momentum is likely to continue. Bedel, Horn, Flaherty, and Held all speak highly of the range of projects coming online – from new commercial and residential development in suburban areas to redevelopment in urban areas – and also of the market’s willingness to deliver amenities wanted by young workers and the firms that employ them. Mixed-use projects specifically draw praise for their ability, as Flaherty & Collins’ David Flaherty puts it, to “activate the streets,” delivering amenities to occupants of a development and the people who live and work around them. Everybody agrees that the local marketplace has embraced the “live, work, and play” concept that is essential to today’s successful developments.

Horn applauds Fishers, Westfield, and Brownsburg as examples of suburban communities that understand the need to create identities and invest in the walkable multi-use areas that can serve as “downtowns” for formerly ill-defined communities. Flaherty says the state is helping economic growth by attracting and supporting businesses, and Held says the area’s success in attracting high-tech companies and jobs will continue to pay dividends in terms of real estate development.

Of course, along with all of this good news comes challenges.

Capital flooding into the real estate market from outside the Midwest threatens to squeeze out local players, and the residential market could be stressed by the amount of inventory set to open in the coming years. For example, roughly 2,000 units are coming online in Hamilton County in the next 12 to 24 months, and about 2,500 units are due to hit the downtown market. Still, developers like Held are optimistic that the market will accommodate the new units, and that local players can stay in the game.

Additional concerns include the impact that rising construction costs could have on real estate activity, as well as old industrial sites and the costs involved with breathing new life into them.

And the age-old challenge that will forever dog Indianapolis: the “no mountains, no oceans” indictment. But Flaherty believes the city is combatting that old charge with quality of life and affordability. “There’s nothing wrong with being in the Midwest,” he says. And he’s right. As touted by groups like “No Mean City,” Indy is perfectly positioned for business attraction and growth. Bedel adds that, these days, the state economic development team has a ready answer for the “no mountains, no oceans” complaint: “We have mountains of savings and oceans of opportunities” – a note of optimism and enthusiasm echoed by all. 

About the Author
Josh Malarsky is a partner in Katz, Sapper & Miller’s Real Estate Services Group. Josh advises clients on complex real estate transactions ranging from buy-sell agreements to tax credit projects, REIT structure and compliance, and more. Connect with him on LinkedIn.

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