The Resilience and Importance of Retail in Indianapolis
While Indiana is well known for the Indianapolis 500, the state’s economy is firing on all cylinders and experiencing noteworthy job growth. Indiana’s marketing campaign, “A State That Works,” has been successful in attracting investment to the state by touting its highly ranked business climate, competitive cost of doing business, pro-business tax climate, low cost of living, extensive logistical infrastructure and access to strong educational systems.
In June 2018, Bloomberg ranked the Indiana cities of Elkhart (No. 1), Kokomo (No. 3) and Columbus (No. 13) for having the largest employment gains in the country since the recession. The Indianapolis metro area has created one of the nation’s top burgeoning tech scenes with a 68.1 percent increase in tech job growth from 2006 to 2016, landing No. 5 on Forbes’ list of “Cities Creating the Most Technology Jobs.”
The state’s stable economy and encouraging unemployment rate have provided strength to the rapidly evolving retail industry. While national news is filled with retail bankruptcies and store closures, there has been tremendous retail activity backfilling vacancies and spurring new development from the following retail sectors: grocery, home living, health and wellness, beauty, fitness, off-price/discount, and dining and entertainment.
Following the bankruptcy of locally based Marsh Supermarkets in 2017, several grocery stores capitalized by opening new locations in underserved markets. Fresh Encounter and Kroger collectively purchased 26 Marsh stores at auction. A number of other national and local grocery stores have since leased additional locations including Fresh Thyme Farmers Market, Aldi and even local ethnic grocers.
Successful omni-channel retailers are thriving in today’s environment by allowing consumers to experience products prior to purchasing. To name a few, Bonobos, PGA Superstore and Floor & Décor have opened their first locations in Indianapolis. Bonobos founder Andy Dunn has credited the move from e-commerce to omni-channel retail as a turning point of profitability for the company.
PGA Superstore, which backfilled a Babies ‘R’ Us, allows customers to test out golf clubs prior to purchasing. Floor & Décor, which expanded into a former Golfsmith location, highlights its flooring and tile products through fully designed showrooms, providing a unique customer experience.
Health and wellness retailers have also emerged as anchors by drawing daily traffic to shopping centers. UFC Gym is entering the market with a 20,000-square-foot gym in Whitestown, Indiana, and Planet Fitness has successfully opened numerous outposts across the state. In addition to the larger gym formats, a number of smaller, boutique gyms and healthcare operators are actively leasing space in the marketplace. With the rise in healthcare competition, medical users are increasingly taking over well-located retail spaces to out-position competitors, locating closer to their patients in more convenient and trafficked locations.
Creation of communities
Retail has been a catalyst and a vital component in creating a vibrant downtown Indianapolis. Most notably, Hendricks Commercial Properties is transforming the former Coca-Cola Bottling Plant into a $300 million mixed-use development situated on an 11-acre site in downtown Indianapolis. The project includes a 147-room West Elm Hotel, 227 residential units, 180,000 square feet of Class A office space and 175,000 square feet of retail space.
By carefully curating the tenant mix, the project is set to be a major entertainment destination uniquely featuring a large food hall, an eight-screen Living Room Theater and Pin Mechanical, which offers a lineup of recreational games.
Thompson Thrift is also creating an entertainment district in the suburb of Fishers, the No. 1 city on Money magazine’s 2017 “Best Places to Live in America.” The Yard at Fishers District includes 260 luxury apartment units, a 211-room Hyatt Hotel and 104,000 square feet of retail space. The tenant mix will be a collection of local, regional and national tenants for patrons to enjoy. This retail corridor started to gain steam in the fall of 2017 when Ikea, Top Golf and Portillo’s Hot Dogs all opened their first locations within metro Indianapolis.
Carmel, named the No. 1 “Best City to Live in America” by Niche.com in 2018, has effectively created an urban-style suburb by implementing multimillion-dollar improvements along the Monon Trail, a shared-use trail for walkers and bikers.
Furthermore, city officials have laid the groundwork for developers to take advantage of prime parcels to implement Carmel’s vision of its downtown districts. Major developments such as Sun King Distillery & Food Hall, a 12,000-square-foot Anthony’s Chophouse, 115,000-square-foot Merchants Bank Headquarters, an outdoor ice skating rink and numerous residential units have helped shape a true live-work-play environment in downtown Carmel.
In burgeoning Whitestown, there is a 300,000-square-foot power center set to open this year near the intersection of Interstate 65 and State Road 334. The developer, RealtyLink, has curated a balanced retail tenant mix offering fitness, home living, discount and beauty retailers. The project has also helped attract national restaurants like Chick-fil-A and Panera Bread to enter the market as well.
— By Seth Biggerstaff, Vice President, Veritas Realty. This article originally appeared in the March 2019 issue of Heartland Real Estate Business magazine.