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Indianapolis Mayor Joe Hogsett considers the $600 million plan to redevelop Circle Centre Mall, announced Wednesday, one of the most important development projects the city has taken on in decades.
“When you’re dealing with a $600 million investment, you can’t help but put it at the top of the heap … [of] important investments that will continue the progress and the renaissance that we’ve already established,” Hogsett said.
Hogsett told IBJ that the impact, size and prime location of the development—which will maintain the existing mall footprint bounded by Illinois, Washington, Meridian and Georgia streets—elevate the project’s significance.
Wisconsin-based developer Hendricks Commercial Properties LLC is set to lead the effort, after more than a year of discussion and negotiation behind the scenes with the city, the Indiana Economic Development Corp., and—separately—the ownership group of Circle Centre.
Hendricks plans to create a campus that’s more like a village with a central promenade, transforming the traditional mall that was developed in the 1990s by fusing together existing buildings and new structures.
The developer envisions replacing the mall’s main hallway with an outdoor, elevated promenade that would be flanked to the east and west by a dozen four-story buildings with a mix of residential, parking, entertainment, retail and office space encompassing 1.9 million square feet.
The price tag for the redevelopment does not include the total cost to acquire the property, city and Hendricks officials told IBJ. Circle Centre Development Co. has declined to share how much it is selling its assets for, while negotiations are still ongoing for the city-owned properties.
To be sure, the mall redevelopment is not the largest downtown project underway in terms of investment cost. Rather, it comes as the city has more than $9 billion in other downtown developments in the pipeline over the next decade, spanning more than 30 projects.
Construction is underway on the $751 million expansion of the Indiana Convention Center. A $1 billion soccer stadium district also is planned. Then there’s Indiana University Health’s $4.29 billion hospital project and ongoing efforts at 16 Tech, which has an ultimate target of $600 million by the time that campus is built out.
But the scope of the Circle Centre project, paired with the prime nature of the real estate, would prove to be monumental, Hogsett said.
Indianapolis is also seeing major movement on the redevelopment of city-owned properties like Old City Hall and the City Market, with Jail I set to be made available for redevelopment in 2024 or 2025. And Gainbridge Fieldhouse is weeks away from the opening of the Commission Row building, the final stage of a mostly publicly financed $400 million revamp that began in 2020.
“I think the combination of all these things really bodes well for the future of our city and sends the people of Indianapolis a strong signal that, to the extent that they had any concerns about the lingering after effects of COVID 19 and the global pandemic, Indianapolis is coming out of that difficult period as strong and with more momentum than I would say we’ve ever had before.”
IBJ first reported Wednesday on a pair of deals to catalyze the Circle Centre redevelopment, including one with the Circle Centre Development Co. to acquire most of the mall’s physical assets and another with Indianapolis and the state for the land beneath the property, a trio of garages and the L.S. Ayres building.
The deal with the city and state deal also lays the groundwork for incentives on the project, which are valued at $64 million—not including what could be tens of millions of dollars in developer-backed tax-increment financing bonds. Both deals are expected to close in the first quarter of 2024.
Hendricks’ vision for the project, created in response to the city and state officials approaching the firm in mid-2022 as they sought to find a long-term solution for the mall property, calls for dismantling parts of the existing mall structure and converting the property into more of a village-like environment.
Plans for a gradual approach to redevelopment, with $100 million set to go into a first phase focused on the south-end block that is bordered by Illinois, Meridian, Georgia and Maryland streets. That portion of the project is expected to get underway as soon as 2025 and be completed in 2028, with the remainder of the mall redeveloped through about 2033.
Hogsett said while the firm wasn’t the only one considered for the project—city officials have declined to share what other firms were approached—a combination of the company’s vision and its track record of high-quality local projects like Bottleworks and Ironworks at Keystone were enough to persuade the city and state that Hendricks was the right fit.
“I don’t think it’s fair to say that neither the city nor the IEDC [initially] put all its eggs in the Hendricks basket,” said Hogsett, a Democrat.
“At the early stages of the discussion … there were other developers that certainly had expressed an interest, or at least we talked to, about what their vision was for Circle Centre Mall. But it was Hendricks’ practicality and their ability to get the job done that convinced all of us, and ultimately convinced the ownership group, that they were the group that should be chosen to lead the project.”
Former Indianapolis Mayor Stephen Goldsmith, a Republican who led the city when the mall opened in 1995, said he believes the involvement of Hendricks in the project is a “strong choice” given the company’s successes elsewhere in Indianapolis.
Like Hogsett, he said it’s also a strong addition to the city’s stable of ongoing development projects.
“This is a great real estate decision—to fill in and come up with a creative reuse for the property,” he said. “I’m really hoping that it will … catalyze the convention business even further and catalyze more people visiting downtown Indianapolis to have a good time and [understand] there’s a reason to come down there.”
During Goldsmith’s administration, the mall was a bustling shopping center that consistently generated traffic for the downtown area and the many stores and restaurants in and around the property.
But the mall has declined in recent years, as original anchor tenants departed in favor of more suburban locations—or simply due to decline in revenue. Nordstrom departed in 2011, while Carson Pirie Scott closed its three-story anchor store in 2018.
The mall’s interior concourses have lost many of their nationally known tenants in the last decade, including Gap, Gap Kids, Eddie Bauer, GameStop, FAO Schwartz, The Loft, The Limited, Abercrombie & Fitch, Johnston & Murphy, Victoria’s Secret, New York & Co. and Express.
That’s not to say there hasn’t been some success in backfilling those spaces, as well as the many restaurants spaces that have churned over the years.
The Nordstrom space has since been filled by Helium, The Indianapolis Star and, most recently, Direct Connect Logistix. And newer eateries like Punch Bowl Social, Sugar Factory and Yard House have filled gaps after other restaurants left.
As currently proposed, the redevelopment would comprise 1.9 million square feet. Within that, 376,000 square feet would be retail space, including 135,000 square feet along the central promenade, and about 471,000 square feet of it office space—much of which would be in the L.S. Ayres building.
Plans for residential space remain more tentative. The initial concept calls for 228,000 square feet of apartments, condos and other residential options. While Hendricks has not finalized the composition of those units, city officials have said having an affordable-housing component will be a focal point of negotiations for further financial support.
“This is a necessary step that I thought would have been taken 10 years ago,” Goldsmith said. “ That is a very long time for that mall to have sustained itself in a period of changing downtowns and changing retail. So, I’m excited about this evolution, which is a natural and expected evolution from where we were” in the 1990s.
Goldsmith said work also remains on addressing cleanliness and homelessness downtown. But he noted that the city is working on a low-barrier shelter on the near east-side.
The plan comes nearly two years after Indianapolis-based Simon Property Group had its 15% share bought out by other CCDC partners in February 2022, who at the time said they were moving ahead with plans to secure a “transformative” redevelopment of the property.
The Hendricks proposal of a more village-style aesthetic would be a welcome change for the property, Goldsmith said. But he added that it is “equally important” for the city and state to shore up their incentive package in a manner that can help support the company’s aspirations.
Ultimately, he said, it will be important for Hendricks to ensure the uses they put forth for their project are ones that will breathe new life into the property.
“As they go forward, what will be important is [whether] the uses bring more people to downtown Indianapolis,” Goldsmith said. “I think this is a great stage one. I think stage two will determine whether this is a very good solution or a terrific solution. And that depends on whether the uses configured there bring more people to downtown Indianapolis.”
By Mickey Shuey of Indianapolis Business Journal
