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The owner of one of the tallest apartment towers in Indiana is planning to sell a stake in the downtown property.
Flaherty & Collins Properties has hired the Indianapolis office of Dallas-based brokerage CBRE to identify and negotiate with potential partners on 360 Market Square, the 27-story tower at the northwest corner of East Market and West New Jersey streets.
The tower, completed in 2018 at a cost of about $120 million, has 292 upscale apartments and ground-floor retail tenants Whole Foods Market and Tinker Coffee Co. It also has a 525-space parking garage.
360 Market Square is one of the city’s priciest residential properties, with an average rent of $2,365 per month, or $2.58 per square foot. The average unit size on the property is 915 square feet, according to CBRE. About 95% of the residential units are occupied, while the commercial side is 100% leased.
Neither Flaherty & Collins nor officials with CBRE would share an asking price for a stake in the property, or how much of a stake the Indianapolis-based developer and property manager is hoping to sell. CBRE is expected to receive offers for a stake in the building in late April.
In a statement, Flaherty & Collins said the move to recapitalize the project—or bring in new sources of equity through additional investors—is part of a financial management plan “to ensure the long-term success and sustainability” of the property.
“By considering various recapitalization options, F&C aims to optimize the property’s potential and align it with the company’s growth and operational objectives,” Nina Settappa, marketing manager for Flaherty & Collins, said in the emailed comments. “The engagement with CBRE demonstrates F&C’s commitment to leveraging expert resources and market insights to assess the best financial pathways for 360 Market Square. This process is indicative of F&C’s strategic foresight and dedication to maintaining and enhancing the quality and performance of its urban development projects.”
Hannah Ott, vice chair of CBRE’s Indianapolis multifamily team, said the stake being offered for the building is up for negotiation, but would include the retail space. She confirmed that Flaherty & Collins still plans to retain at least partial ownership, as well as management of the property.
“This is such a unique opportunity for [a firm] to acquire a highly regarded asset that performed extremely well,” said Ott. “Flaherty & Collins has a desire to stay in the deal and rehab and recapitalize the asset … because they believe so strongly in it.”
While the project on the site of the former Market Square Arena broke ground in 2015, the development took three years to complete due to numerous design changes and challenges with contractors. Original plans called for the building to be one floor taller to accommodate all above-ground parking.
The city contributed $5.6 million in land for the project, along with $17 million in tax-increment financing. It also had significant input on the project’s design and components.
“They wanted a curvilinear building,” Jim Crossin, Flaherty & Collins’ vice president of development, told IBJ in 2017. “A statement on the skyline. And they wanted a grocery.”
The 290-foot building, designed by Netherlands-based CallisonRTKL, is the third-tallest apartment tower in the state, trailing only the Riley Tower buildings in downtown Indianapolis, which each stand at 295 feet.
The 220 N. Meridian St. building, which clocks in at third on that list at 284 feet, has been converted from an office tower to residential in recent years, with the final three floors set to be converted starting in 2025.
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Why does an 8 year old property need to be “rehab”ed?
that’s a technical term used in an offering prospectus…it could mean “rehab” the P&L statement as much as the physical plant.
A capital infusion would do just that. Plus…
At 7-9 years, several HVAC systems likely need rehabbed or replaced. And any building that has 560 parking spots, needs constant maintenance and upgrades. Think: 560 vehicles, of varying quality, entering/exiting your garage every day. Dripping fluids, wear and tear….bringing in road debris and snow/ice…a huge expense just to keep the garage current.
Rick, i’m a CPA and I’ve never heard of rehabbing a P&L statement. I’ve also managed commercial real estate for 10 years and what you’re describing is routine maintenance, not rehab. Now it could be the person that used that word misspoke
I would guess their loan is maturing and they cannot afford the desired amount of leverage with current rates, so they need to raise equity to avoid reaching into their own pockets.
Agree
We need more high-rise residential in this city. Nashville is building high-rise apartments and condos left and right
Nashville and Milwaukee both are building high rises and neither city has a bigger population than Indy, so im not sure how the demand is more significant in those cities compared to here. Eleven Park will provide more residential with several towers only reaching about 15 stories in a cluster. The Old City Hall development on Alabama will see a 32 story tower break ground later this year. It will be truly a mix use development with a hotel, museum and apartments all under one roof.
Is there more demand for downtown apartments and condominiums beyond what is on the drawing boards? It makes little sense to build towers if the market for them is not there. Developers prefer to “go duck hunting where the ducks are.”