Dear BP Indianapolis Real Estate Community,
I would be interested to hear if anyone has a view/opinion (pro or con) on this week's article in the Indianapolis Business Journal (see below), which asserts that the neighborhood near/at Capitol Ave & W 16th stands to benefit appreciably based on the recent announcement by IU Health to consolidate some operations near/at Methodist Hospital. Anyone see opportunities from a residential real estate perspective as a result of this announcement?
$1Bn Methodist Plan Could Spur Neighborhood Rebirth (IBJ)
Residential? Not a lot of homes around there. Methodist took them all years ago. There are no houses from just north of 21st. I worked there for 41 years. You would think a lot of eateries could stay in business around there with thousands of employees at the hospital. But there is a decent cafeteria in the hospital and employees don't have time to eat out (30 mins). The hospital has always been pinned in by the interstate to the west. Don't know where the new building is going yet. A couple of years ago they were going to build an ICU tower on the SW corner of 18th and Capitol but put it on hold after ACA. So, are they going to build on the Eastside of Capitol? I would be willing to bet they are going to build on the SW corner of 16th and expand to Illinois St. They already acquired land recently and took out the fire station there for an admin building which was never built.
Okay, those are rambling thoughts but I'll bet there will be more opportunities around University Hospital and sooner since they will be closing those doors first. Maybe build some multis for students.
Very interesting article @Matthew Schroeder . My other business is in health care so those types of articles interest me. But a BILLION dollars? Where in the heck are they coming up with that kind of money ??
Most hospitals around me are consolidating because ACA and Medicare are kicking their butt and they are hurting financially. Something of interest is nowhere in the article did they mention that they are adding more beds or more patient services. Just that it is making them more "efficient", which could save money (but a billion dollars?). It worries me that they only have 800 out of 1200 beds occupied at any one time. Plus they said in the article that the patients can't figure out how to enter the hospital? REALLY? That's no reason to spend more money on redesign, how about better signage?
If I'm the hospital administrator, my biggest question would be how can I both save money and bring more patients through the door? Are they looking at an increase in population in the Indy area? It seems that Supply should meet Demand.
Maybe it was a poorly written article? If they are able to pull this off, I'm thinking it might be best to invest in commercial buildings locally because it will draw physicians and other medical specialists to the area. Long term, low hassle tenants. My two cents. Thanks for the post!
@Dennis Weber @Makenzie Kelly Thank you for your input. I drove around the neighborhood & site earlier today and there is certainly a lot of area for the redevelopment of the hospital & medical facilities.
Unfortunately, from a residential real estate investment perspective, most of the immediate area is zoned commercial/retail and has existing buildings on it or is vacant. There is very little, if any, residential in the immediate area.
We own a couple of properties in the Aurora / Denver market which benefited greatly from a similar redevelopment, where the University of Colorado and various other medical entities consolidated into one major complex/area, and that spurred all sorts other businesses (medical-related as well as others such as hotels, restaurants, etc.) and residential property values in the area have appreciated very nicely. That project has also taken 5-10 years to come to fruition, but it is really impressive, and has brought a lot of very good paying jobs to the area.
I was trying to asses whether there might be a similar opportunity based on the size of this investment.
They are part of IU Health, which means they have the backing of Indiana University. I'm certain if it ends up being that much, they would have no problem securing the funds.
I drove the length of Capitol from about Kessler all the way down to Zesko (640 Capital) to pick up some kitchen goods after reading that article. I was incredibly impressed with the area north of 40th all the way through Kessler. A lot of nice homes with big yards and intricate decor.
South of 40th and especially around 16th street, it was the complete opposite. Chain link fences, houses with bad paint, cars without wheels. I didn't feel endangered, but i didn't get the feeling that residential development could be supported with rents that are existing in that area. I think the IBJ really oversold the potential boon to the area.
But, that being said, state of the art Hospital Facilities facilities matched with the Indiana University Health System could bring a lot more people into the area. This combined with the other redevopment we are seeing on 16th St further east from Delaware -> as far as Park could offer potential in that 5 - 10 year time frame you mentioned.
Maybe I would buy if I were a hedge fund.
I recently moved from 800 North Capitol, which is a historic rehab of the old Litho Press building by TWG Development. They bought the building for, if i recall correctly 750k and put 16 million into the development. I believe there are 100 units in the building. The owner is a former real estate attorney at ice miller, which is where I almost ended up. Great guy and firm to work with.
In terms of opportunity, up and down capitol there is a ton of development opportunities for multi-family and higher, not so much residential. The building right across from 800 North Capitol was abandoned for years. Someone tried to put around 30 apartments up and the project went sour. A developer acquired it last year and has given it a total makeover. The only hiccup is that they have to have Sec. 42 housing available to get tax credits and preserve a bunch of the building to get the historic tax credits. The reason why they aren't market is because the banks are still iffy about lending for market projects. Last I recall, there is a market project going up where the old market square arena was, which will feature a whole foods.
I say all of that to say this, if you have an investor group, or, if you have the funds yourself, rehab of one of the historic building, this is the time. Indy Downtown is growing and developing at an incredible rate. I was a member of IndyDT and i pitched to the group to get Google Fiber in the city to spur more development and make the city more attractive to millennials. Bottomline: get in now, if you can.
The only association that IU Health has with Indiana University is the medical school, funny enough. In 1997 Methodist, University, and Riley hospitals merged into Clarian Health. After spending millions for a marketing campaign found the name was bad. Clarian, being a teaching hospital system, wanted to exploit the association and spent millions more to change its name to IU Health (2005 maybe?). They started building for-profit locations around the beltway and elsewhere. Even in Lafayette! Insured patients started going to these campuses leaving all the indigent care to the downtown campus. This decreased the insured population downtown. The only ones doing well financially are the Northside, Carmel, Avon, and Lafayette. The Eastside, Southside, and the one off I-69 are total flops. The for-profits doing well can hold up the flops but this money can't be comingled with the not-for-profits. Wouldn't surprise me if the new hospital will be for-profit.
They laid off 900 people in Dec 2013.
I think the lesson here is that you can't make money in a hospital downtown sadly. At least, currently.
That is interesting to hear. Very good point about the amount of insured people downtown. It reminds me of why Indy is hesitant to make mass transit available from outsid 465 into the city (besides the shuttle bus from fishers, carmel).
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