Timeline firming up for converting Gold Building to apartments as construction costs climb

As shown in this rendering, the Gold Building (left) will be be reskinned in a cooler shade as part of the redevelopment of the City Market block. (Image courtesy of the city of Indianapolis)

The city of Indianapolis has reached preliminary terms on an incentives deal with a pair of local developers that plan to convert an iconic downtown office building into apartments.

Indianapolis-based firms Gershman Partners and Citimark expect to spend about $200 million transforming the 20-story Gold Building, 151 E. Delaware St., into 354 apartments, as part of a larger project focused on revamping downtown’s City Market block.

Last month, city officials and the two developers reached a tentative deal for addressing key elements of the project. The agreement is expected to include a still-undecided amount of developer-backed tax-increment financing, investment in public spaces like the west plaza of the City Market property, investment in public art and a lease for development of an apartment tower on the block’s eastern plaza.

The terms also include a shared appreciation component, through which the city would be able to recoup a portion of its investment in the event the Gershman- and Citimark-owned properties are sold within a certain time period. It’s the first time the city has incorporated such a stipulation into a development agreement.

The agreement, which still must be approved by the city’s Metropolitan Development Commission, stems from the joint venture’s selection in June 2022 to redevelop portions of the City Market block.

But the costs for the project have skyrocketed in the nearly two years since its announcement. The Gold Building conversion and renovations to the adjacent Ohio Street parking garage (which is included in the new $200 million price tag) were initially expected to cost $120 million.

“There are challenges that are occurring in the market itself, in that we’ve seen interest rates go up and the financing has changed on this project,” said Megan Vukusich, director of the Indianapolis Department of Metropolitan Development. “We have had to adapt to that to ensure that it’s successful. But then, this is also a unique project.”

The conversion of the Gold Building is essentially the first phase of that project. The overall redevelopment plan also calls for new high-end apartment tower built on the eastern plaza and an overhaul of the City Market proper, directly across Market Street from the entrance to the City-County building.

Part of the first phase will include a complete revamp of the Gold Building’s mechanical, electrical and plumbing systems to accommodate the abundance of apartment units, which will range from studios to three-bedrooms. The conversion will also change the golden facade of the iconic building to a more subdued silver tone, with new window paneling.

About 9,000 square feet of street-level retail will be included in the former Gold Building, as well.

A portion of the units will be reserved for lower-income individuals and families, as is required by the city for the project to receive TIF incentives. A final figure for TIF funding on both phases is expected to be determined this summer.

The block’s west plaza will be recast for better use as a public and apartment amenity, city officials said. The project also will have a public art component.

The second phase of the project, which in some ways will occur in tandem with the first, will involve the improvements to the City Market, the demolition of the market’s east wing, and the construction of an 11-story, 60-unit apartment tower in the wing’s place.

The new apartment tower would be built on land leased to the developer by the city, with those lease payments put toward city market operations.

The city already has earmarked $18.8 million in TIF funding for the first and second phases of the project, but the developers are expected to receive a second allocation due to the increased costs.

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 the 251 E. Ohio St. office building in March 2019, with plans to improve the structures.

Vukusich said extensive amounts of due diligence, including environmental testing and tax assessment forecasting, must still be completed on the property before public financing is secured for the project. A single-site TIF district has already been created for the project.

Eric Gershman, principal of Gershman Partners, said the firm hopes to finalize terms with the city by the end of the summer, in order to begin construction in the early fall.

DKGR is the architectural firm on the project.