Steak n Shake paying $3.8M for Ober Building

An affiliate of the Steak n Shake restaurant chain has agreed to pay $3.8 million to acquire downtown's Ober Building from the Capital Improvement Board of Marion County.

The proposed sale of the six-story office building at 107 S. Pennsylvania St. to Steak n Shake of Indianapolis Office Inc. is scheduled for review Sept. 5 by the Metropolitan Development Commission.

Indianapolis-based Steak n Shake, a subsidiary of the publicly traded San Antonio-based Biglari Holdings Inc., has its local offices in the Century Building on the opposite corner of Pennsylvania and Maryland streets from the Ober Building.

The restaurant chain likely will move its headquarters operations, including administrative offices, meeting space and a test kitchen, to the 1910 building named for C.S. Ober, a local businessman who founded Business Furniture Corp. and Stationers Inc.

Steak n Shake's lease for multiple floors in the Century Building expires next year, and that building is going through foreclosure, so the company's timing on buying the nearby 62,500-square-foot building makes sense.

A company official did not return a phone message left Tuesday morning.

The CIB had not publicized an asking price for the Ober Building, which it acquired for $5.5 million in 1999. In 2004, the Ober Building was appraised for a value ranging between $4.4 million and $4.8 million.

The CIB more recently has paid for two more appraisals, but did not disclose the results. The MDC agenda item says the purchase price is "not less than the average of the two appraisals."

The building's price seems "in line" based on its condition, location and market demand, according to a veteran office broker who did not participate in the deal.

The buyer is getting a building for less than half of the cost of replacing the space with a modern structure, but fixing it up to accommodate Steak n Shake's operations won't be cheap. "You're really paying for location," the broker said.

The Capital Improvement Board acquired the building because it wanted to control the properties around what is now known as Bankers Life Fieldhouse.

The building is about half-occupied, with such tenants as Ratio Architects and NuOrbit Media paying rent of roughly $14 to $15 per square foot, CIB records show. The Ober Building generated total operating revenue last year of $557,000 and produced a profit of nearly $316,000.

The CIB will use the sale to plug a $2 million funding hole that will open up next year for the Indianapolis Convention & Visitors Association due to the expiration of a grant from Merrillville-based White Lodging Services Corp., which owns the new JW Marriott hotel in downtown Indianapolis.