City picks $175M project for block that includes City Market, Gold Building

(Rendering provided by Citimark and Gershman Partners)

A pair of local development firms are planning an ambitious $175 million-plus redevelopment of the downtown block that includes the Indianapolis City Market and Gold Building, with a heavy focus on bringing more apartments to the city’s central business district.

The City Market East project, a joint venture between Citimark and Gershman Partners, will include the reskinning and redevelopment of the iconic 20-story Gold Building into 350 apartments, along with the construction of a 11-story, 60-unit apartment tower to replace the City Market’s east wing, updates to an office building at the southwest corner of Ohio and Alabama streets, and an expansion of the market itself.

Gershman and Citimark’s project was chosen by city officials following a months-long request for proposals process. The chosen project beat out two other proposals submitted by local developers TWG Development and Flaherty & Collins. 

The project is expected to be formally announced by Mayor Joe Hogsett on Wednesday morning during a news conference at the eastern plaza of City Market.

“This will be, no doubt, a signature project that we can point to as part of our downtown resiliency strategy coming out of COVID, with a focus on the future of downtown,” Scarlett Andrews, director of the city’s Department of Metropolitan Development, told IBJ. “We thought it would be important that, whatever happened with this site, there was some cohesiveness and thoughtfulness that went into it.”

The project’s components include:

— a $90 million redevelopment of the 47-year-old Gold Building at 151 E. Ohio St. into a 350-unit residential tower, with a new facade consisting of transparent, modern glass;

— construction of a $40 million, 11-story apartment tower on the site of the City Market’s 45-year-old east wing, which will be demolished. The building will include 60 multifamily units, 8,000 square feet of office space and 22,000 square feet of retail space. This part of the project includes expanding the main City Market building with construction of a 10,500-square-foot glass enclosure on the plaza along East Market Street;

— $30 million for ongoing improvements to the 11-story 251 E. Ohio St. building next to the market’s east wing that includes upgrades to the lobby, mechanical systems and elevators, upgrading the 220,000-square-foot structure from a Class C office building to Class A;

— $12 million in improvements to the parking garage adjacent to the office building, including $4 million in ongoing repairs to mechanical systems and elevators, and improved lighting. The project will also include new exterior decorative screening on some of the building’s facades and new public art along Wabash Alley. The 530-space garage will serve office and residential users in the block; and 

— a $4 million conversion of existing alleyways into pedestrian-only pathways to connect more people with City Market and offer new spaces for local designers, artists and entrepreneurs to use the alleys to showcase their work.

Overall, the developers plan to spend at least $176 million on the development, but Eric Gershman, principal at Gershman Partners, said the cost will likely be closer to $200 million by the time construction is complete.

The eastern plaza would be provided to the developer through a 99-year ground lease, since the city wants to retain ownership of the property. The proposal does not include a redevelopment of the western plaza space, which sits over the city’s historic catacombs. The development is also expected to include extensive infrastructure improvements and a focus on multi-modal transportation.

Gershman and Citimark have controlled the northern half of the block—including the alleys—for the past few years. They acquired the Gold Building and 251 E. Ohio St. in March 2019, with plans to improve the structures and their selection of office tenants.

In fact, in December 2020, the owners announced plans for a $55 million revamp of the tower that also called for replacing the iconic gold exterior with gray panels.

Eric Gershman said the decision to convert the Gold Building from office to residential was made quickly, but it makes sense—particularly as part of the larger vision for the block.

“When you look at what’s probably the most immediate [impact] here and what benefits the greater office market, [residential] started to make a lot of sense,” he said. “Now that this furthers all our goals and augments the office market, it makes sense to go this direction. This RFP just helped it all make more sense, by bringing the block together as a total development.”

Roughly 25,000 people live downtown, which has an apartment occupancy rate of about 97%, according to Downtown Indy Inc. About 410 multifamily units—ranging from one- to three-bedrooms—will be created by the overall project.

Andrews said city officials have been pushing for new multifamily housing downtown for several years, and quite a few units have come online even since the pandemic.

“What we are most excited about is that this proposal brings housing density, which is very critical to us,” she said. “It also works with the market to think about long-term activation of that site and how the strategic vision for the market … will go hand-in-hand with the changes.”

Even so, it’s not entirely clear how Gershman and Citimark plan to divvy up the units between market-rate and affordable—something city officials say is crucial to enticing more people to live downtown.

The project is expected to receive significant incentives, likely in the form of developer-backed tax-increment financing bonds, but the development team has not yet formalized how much it plans to request from the city—which has said it is supportive of using TIF and other tools to support redevelopment of city-owned property.

To receive city backing, though, the project will be required to have an affordability component, targeting individuals making up to either 30% or 50% of the area’s median income. Andrews said the city is continuing to work with Gershman and Citimark to determine the appropriate number of affordable units for each of the project’s residential components.

“We felt it was important [to work] with a developer that we felt had a financially feasible proposal and we could partner with … on any incentives, but in a way that it did not drain our other resources and preserved our ability to work on other projects,” she said.

The project includes plans to expand City Market and create new opportunities for vendors to take on space, either inside or as part of an expansion that will run along Market Street proper. That expansion is aimed at enticing more visitors to the market, particularly during evening hours and other low-use times.

The firms said they plan to work closely with City Market’s leadership as part of its efforts to expand the market.

“Knowing what they are going to do with this project, particularly with their housing efforts right there, that’s a game-changer for the City Market,” said Keisha Harrison, executive director of the market. “I think this is a more holistic approach … it’s taking the footprint of City Market and changing it, where it will in some ways be the same, but have a different feel and environment to it.”

Taylor Schaffer, deputy mayor and chief of staff for Hogsett, said that each of the groups that put forth ideas for the site are already heavily invested in downtown.

TWG’s proposal focused on a new 32-story glass tower on City Market’s east plaza that would have consisted of first floor retail, a parking garage, connections to the office building at 251 E. Ohio St. and dozens of market rate and affordable apartment units. That project would have cost about $114 million.

The Flaherty & Collins proposal includes a $33 million tower with 99 luxury units and a new tap room for Sun King Brewery. The developer would have requested about $12 million in TIF funding from the city. The firm also planned to connect the tower to its Market 360 tower on the east side of Alabama Street, and had proposals for several other properties downtown.

“It’s fair to say all of our respondents have a heavy, heavy role in downtown—and they all have immediate or quasi-immediate footprints near City Market,” Schaffer said. “There was an incentive for people who were invested in downtown, who understood the vision of downtown and could reasonably put together a proposal that met the specifications that DMD put together, to be the ones to come to the table.”

The Gershman/Citimark project is the first in a long line of redevelopments expected to occur in the coming years on city-owned real estate. Those projects, which include Jail I, Jail II and the City-County Building, among others, could help reshape the city’s skyline—particularly in the Market East Cultural District, which is generally bounded by New York Street and railroad tracks from north to south, and Delaware Street and East Street from west to east. City officials also have a focus on redeveloping properties on the east side of downtown, including Elevator Hill and the former Jail II and Arrestee Processing Center.

Other sites like the Indianapolis Downtown Heliport and Circle Centre Mall are also expected to undergo their own redevelopments in the years ahead, as well.

City officials said the Gershman project was the only one of the three proposals that offered a comprehensive plan for the entire City Market block, though the others also included other components such as a reuse of Old City Hall, new construction on the western plaza of City Market, and even examinations for what could be done with the heliport and Jail I.

The City Market East project is expected to go before the city’s regional center hearing examiner in the coming months. The Department of Metropolitan Development will also soon begin working on the creation of a new single-site tax-increment financing district to support the project—something that’s expected to occur through the Metropolitan Development Commission and City-County Council by the end of the year.

Gershman plans to begin work on the Gold Building in the first half of 2023 and start construction on the new apartment structure on the east plaza by the end of that year. The entire project is expected to be finished by the end of 2025.

Hagerman Group, based in Fishers, is the lead construction firm on the development. Indianapolis-based DKGR Architects is the lead design firm on the project, joined by engineering company DLZ and landscaping and urban architecture firm Merritt Chase.