INDIANAPOLIS—Chicago-based HEARN and equity partner CrossHarbor Capital Partners have just purchased the 28-story BMO Plaza building in downtown Indianapolis for $40 million from an entity managed by True North Management Group. It's yet another sign of investor interest in this city's CBD, partly driven by a greater interest from office users in the amenities typically found in urban core areas.

True North was represented by Avison Young in the transaction.

Located at 135 N. Pennsylvania St., the 440,000-square-foot BMO Plaza is the sixth-tallest building in Indianapolis and home to several prominent tenants, including BMO Harris Bank, the US Dept. of Defense, General Electric, Quarles & Brady, and Rubin & Levin.

Avison Young principals James Hanson and Erik Foster, based in Chicago, worked on the transaction in conjunction with Bill Ehret, also a principal of Avison Young and managing director of the firm's Indianapolis office, and Nancy Merritt, a senior associate, also based in Indianapolis.

“The BMO Plaza deal is an example of a value add investment strategy that was very well executed,” Hanson tells GlobeSt.com. “When True North acquired the building, it was deeply distressed. The prior owner had lost tenants leading up to and during the recession and did not have capital available to complete new leases, due to limited funds for tenant build outs, broker commissions, and other expenses. Therefore, the building became a zombie and was really not on any tenant or broker radars for a couple of years.”

He adds that “when True North acquired the property, occupancy was less than 50%.” But the company upgraded the amenity base, putting in a new tenant lounge and a high quality building meeting facility. True North also invested money in the common areas to let the public know that new owners were in charge. It updated the main lobby, the entry plaza, and spruced up the exterior. “They then went about reintroducing the building to the Indy real estate community so that everyone knew they had space available and could make market deals.”

True North spent several million dollars renovating the property and brought the occupancy level up to 73%.

Blake Hillemeyver, executive vice president for HEARN, sees significant potential for the company's latest acquisition.

“Indianapolis has done a tremendous job stewarding development and growth of the downtown area,” he says. “We anticipate increasing demand for professional office space, and the BMO Plaza building presents a prime location for potential tenants.”

“This has been a great success story for True North, which first recognized the potential of BMO Plaza and the opportunity to significantly enhance value through an aggressive modernization and leasing effort,” says Hanson. “With the repositioning successfully completed, True North was then able to sell the asset while still providing upside potential for the buyers.”

As reported in GlobeSt.com, in the past three years many of the top office properties here have traded hands. In 2014, for example, New York-based Nightingale Properties purchased the 36-story, 696,000-square-foot Regions Tower and the 515,000-square-foot Market Tower was bought out of foreclosure by Chicago-based Zeller Realty Group.

The Indianapolis CBD office market has grown steadily over the last few years, with vacancy decreasing and employment growing at twice the national average. Millennial workers are returning to the CBD, greatly increasing the number of residential units planned and creating demand for jobs and offices downtown.

True North was represented by Avison Young in the transaction.

True North spent several million dollars renovating the property and brought the occupancy level up to 73%.

Blake Hillemeyver, executive vice president for HEARN, sees significant potential for the company's latest acquisition.

Instant Insights /

Big Downtown Office Sale in Indy

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