East Washington Street near-term catalyst development plan
ReEnergize East Washington Street
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ReEnergize East Washington Street | 18 officE + industrial market induStRiAl outlook At the end of 2012, the vacancy rate of the Indianapolis industrial sector was 3.3% and has remained low into 2013 (4.2% as of the second quarter of 2013). Due to this, rents were expected to increase by 1.6% in 2013. These low vacancy rates have led to a significant amount of speculative industrial development (3.2 million square feet) under construction as of January, 2013. This compares with 1.7 million square feet in Chicago, 900,000 square feet in Cincinnati, and 350,000 square feet in Minneapolis during the same period. As a distribution hub at the convergence of more interstate highways than any other U.S. city, Indianapolis is well-positioned for industrial growth REcovERy Decreasing Vacancy Rates Low New Construction Moderate Absorption Low/Moderate Employment Growth Neg/Low Rental Rate Growth EXPAnSion Decreasing Vacancy Rates Moderate/High New Construction High Absorption Moderate/High Employment Growth Med/High Rental Rate Growth hyPER SuPPly Increasing Vacancy Rates Moderate/High New Construction Low/Negative Absorption Moderate/Low Employment Growth Med/Low Rental Rate Growth REcESSion Increasing Vacancy Rates Moderate/Low New Construction Low Absorption Low/Neg Employment Growth Low/Neg Rental Rate Growth 1 2 3 3 3 3 2 2 2 1 1 1 Employment growth is expected to be limited in the East Washington study area, requiring the are to be competitive with other growing areas in Indianapolis. Creative efforts will be necessary as the corridor rates significantly lower than the county average in educational attainment, household income, and home ownership levels. Metro Area Marion County
Study Area Metro Area Marion County 2020 Study Area 760,008 468,125 1,020,770 - 34% GROWTH 494,770 - 6% GROWTH 2,277 3,000 - 32% gRoWth EMPloyMEnt gRoWth 100K
1M 100K
1M Indianapolis’ industrial and office markets are in the first stage of recovery, characterized by decreasing vacancy rates, low new construction, moderate absorption, low to moderate employment growth, and low to negative rental rate growth. The industrial market, however, has seen significantly more speculative construction than other Midwestern cities.
89+0+17+60+91+46+86+30+58+25+38+57+490+0+0+0+0+0+0+0+0+0+0+16+0 10 8
4 2 0 (2) Millions
10% 8% 6% 4% 2% 0% 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 AnticiPAtEd dEMAnd foR officE SPAcE iS loW... Uncertainty and slow growth for the future have left Indianapolis’ office sector somewhat stagnant. Vacancy rates in both the city and suburbs hover around 20%. Job growth is expected to be flat, and speculative development is rare at the moment.
VACANCY % And nEt AbSoRPtion 0+53+43+45+0+28+47+49+24+29+34+19+38+82+0+0+0+0+0+0+0+0+0+33+0+0+0+65+56+24+0+06+26+0+0+0+25+59+32+0+42+69+24+14+8+71+18+38+11+0+0+0+0+0+0+0+0+0+2+0+0+0+18 2005 1Q 2006 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 1Q 300
200 100
0 (100)
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5% 0% Source: Cassidy Turley Research officE VACANCY % And nEt AbSoRPtion Source: Cassidy Turley Research coMPEtitivE EnviRonMEnt foR nEW jobS 2013•2020 | 19 industrial land use i1u - Restricted industrial urban • Manufacture, Assembly, Repair of Light Goods (clothing, audio/video equipment, small appliances, etc...) • Warehousing, Wholesaling, Distribution • Agricultural • Data processing, Labs (Dental, Research, or Engineering) • Railroad, Heliports, Wireless Towers, Billboards • Industrial schools or training facilities • Mini-warehouses • Offices, with a permitted industrial use • Day care center i2u - light industrial urban • Manufacture, Assembly, Repair of Medium Goods (Motorcycles, Biological products, Computers, Cosmetics, Electrical components, Medicines, Paper products, Signs, Medical supplies, Tools, Toys, Printing, Upholstering • Private / Commercial Radio or TV Antennas • Broadcasting studios or offices • Bottling of beverages • Construction companies & their storage • Secondary processing and packaging of food products initially processed off the premises i3u - Medium industrial urban • Industrial Bakery, Canning, Processing, Granaries, Mills, Coffee Roasting (Does not include slaughtering) • Electric transmission and distribution • Machine, Tool and Die, Welding, Sand blasting, Transmission shops • Rolling, extruding, stamping, electroplating, heavy fabrication of metal • Manufacture, Assembly or Repair of Heavy Goods (Major household appliances, Boats and Autos, Containers, Clay products, Paint and varnish (no tar), Communication equipment, Construction machinery, Elevators, Fabricated metal and glass, Furniture, Machinery, Brewing, Natural gas, Paper, Textiles, Tobacco products. • Motor truck terminals less than 10 acres, Vehicle storage (new or operable only) • Storage of heavy equipment (as a primary use) • Power plant; electric, steam, thermal • Propane gas storage. • Recycling facility (not auto or construction material) • Refrigeration and service industry machinery. i-2 zoning
area 1-65/1-70 medium INDUSTRY
i-3 zoning area i-1
zoning area
i-1 zoning area medium INDUSTRY
i-3 zoning area pr mallory area light INDUSTRY i-2 zoning area state to rural light INDUSTRY i-2 zoning area red cats light INDUSTRY
i-2 zoning area neighborhood LIGHT INDUSTRY i-2 zoning area transition to office area light INDUSTRY i-2 zoning area shredding site medium INDUSTRY i-3 zoning area 0
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0.25 m iles 0.5 m iles 1. 0
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WhAt uSES ARE cuRREntly AlloWEd indy REZonE + thE Study AREA futuRE Zoning iSSuES Nearly the entire length of the corridor in the study area and significant parcels north and south are designated I-2 (Light Industrial) or I-3 (Medium Industrial). This does not reflect the current land uses, which are more diverse and evolving, nor the area plans, which are more mixed-use in nature.
The current zoning shown above and all zoning in Marion County is currently being addressed by a process called Indy Rezone. “Indy Rezone is a project undertaken by the City of Indianapolis to update the city’s zoning ordinances and associated development regulations to be more sustainable and more livable.” (www.indyrezone.org) Rather than align land use plans and zoning districts, Indianapolis has historically relinquished any zoning changes to property owners, which results in ad hoc and inefficient land use patterns. However, Indy Rezone promises to revise 1970s era zoning to a 21st century regulatory framework to support Indianapolis’ economic development strategy.
ReEnergize East Washington Street | 20 Market Segment incubAtE innovAtE + cREAtE fAbRicAtE SERvicE MAnufActuRE WAREhouSE character Mind
Mind + hand Mind + hand + Machine hand + Machine Machine
Building + Lot value creation $$$$$
$$$$ $$$ $$$-$$ $$ $ barrier to Entry Very High Moderately high Moderate low Low
Low differentiation Very High Moderately high Moderate Moderate Moderately Low Low
PhD, Masters Masters, bachelors, Associate bachelors, Associate, high School Associate, high School Associate, High School High School
High
high-Moderate Moderate < Moderate < Moderate > Minimum Quality of Space Inspired, boutique; campus; Co-creative environments; Access to knowledge, lifestyle
Factory; Buffers and separated uses Large lot; Buffers and separated uses
Education, housing, live/ work, service retail, office, light industrial Education, housing, live/ work, service retail, office, light industrial Education, housing, live/ work, service retail, office, light industrial Service retail, office, light industrial Service retail, office, light industrial Service retail, office, light industrial
Multiple modes, including transit within 1/4 mile
Shipping corridors - rail/ highway/air Shipping corridors - rail/ highway/air
Diverse, agile and high investment space; new construction Small-medium footprint space; tech infrastructure; adaptive use Small-medium footprint space; tech infrastructure; adaptive use Medium footprint sites; simple low-investment buildings; low cost Large-footprint sites; simple low-investment buildings; utility infrastructure Very large footprint sites; simple low-investment buildings
University R&D; knowledge clusters
Raw material providers; utility infrastructure; storage and waste recyclers Transportation
ANGEL Learning Angie’s list harvey cycle Works horner industrial group Coca Cola Enterprises Amazon.com evolving office + industrial use segments PRoPoSEd MARkEt SEgMEntS to tARgEt Source: Urban Land Institute; Urban Green LLC; Greenstreet Ltd. PRoPoSEd tARgEt SEgMEntS Over time, many East Washington Street industries left for suburban locations for various reasons - larger parcels, easy truck access, lower taxes, and new highway infrastructure. Today some new employers are moving into the area, notably Angie’s List and expansions by Horner Electric. Others businesses, however, continue to consider other locations. Employment generating land uses have gone beyond conventional real estate asset classifications, such as “Office” and “Industrial” to be defined more by business type, rather than the real estate itself. There’s an opportunity for East Washington Street to focus its resources on the evolving segments where it can be most competitive, in an effort to retain and gain new business in the corridor. Three such sectors that align with the existing assets and strategies for the corridor include Innovate+Create, Fabricate, and Service. While not excluding other sectors, East Washington Street should pursue employers in these segments.
A review of segments within the corridor revealed that while there is a wide variety of businesses types, primarily clustered in four sectors: • innovate + create 1 Large-scale Office Business • fabricate 2 Mid-sized Businesses • Service 6 Small Businesses • Manufacture 2 Businesses, 1 Small, 1 Mid-size In addition, there is a multi-business complex, industrial suppliers, and a cluster of various sized service industries located on the western edge of Holy Cross Neighborhood. MARkEt SEgMEntS 2013•2020 | 21 office + industrial STRATEGIES dEclinE in dEMAnd foR tRAditionAl officE SPAcE Demand for traditional office space has seen a decline, however, other types are on the rise. The Indianapolis office market has a large supply of traditional office space available. This is indicative of the rise of small business start-ups that prefer either co-working space, or shared spaces such as those managed by Regus. The average office space per worker has declined from a few hundred sq. ft. to about 150 sq. ft. in recent years as technology advances have pushed workers out of the traditional cubicle. In contrast, Regus, which provides flexible workspace for short term rent, virtual workspace, and other mobile working services, has expanded worldwide. They opened 243 new locations in 2012 alone, signalling fast-changing needs for 21st century businesses. Attracting new businesses is vital for the future health of East Washington Street. Large-scale businesses can sometimes be used to recruit their suppliers to nearby locations. Two support businesses that Angie’s List would benefit from are business-IT integration services and commercial printing. As Angie’s List continues to expand, so will their supply chain. Keeping these services nearby not only better supports existing business, but may attract other businesses with similar needs. WhAt iS buSinESS-it intEgRAtion? Business-IT Integration aims to reorganize the structure of a business around value streams, with both the business and IT sides of the enterprise constantly working together as one to innovate and adapt quickly. This has been shown to reduce IT costs, bring products to market quicker, and foster innovation and communication with an enterprise. This is different from the old model, when business teams would come up with a new idea, and someone would have to “throw it over the wall to the IT dept” to figure out how to implement it. coMMERciAl PRinting SERvicES Angie’s List produces a monthly periodical and various other print media, so having a commercial printer nearby would improve operations efficiencies. These companies generally require 7,500 square feet to 50,000 square feet in light industry zoning. The Speak Easy in Broad Ripple Image Courtesy of twentysomethingindy.com 700 600
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100 0 8% 6% 4% 2% 0% 2012 2011 2010 2009 2008 2007 induStRiAl EASt SubMARkEt VACANCY % And nEt AbSoRPtion Source: Cassidy Turley Research EASt SubMARkEt conditionS Conditions have improved vastly since the recession in Indianapolis’ East Submarket for the industrial market. Once peaking around 7%, vacancy is now down to 4%, reflecting economic recovery.
Co-working is office space for single users to share amenities, including basic office supplies and services. Examples in Indianapolis include Indy CoZ in Castleton, DeveloperTown and The Speak Easy is South Broad Ripple, Launch Fishers, and The Bureau in Fletcher Place. Some of these are simply co-working spaces that provide shared services, like a mailing address, copiers, etc, for a monthly or yearly fee, allowing for less overhead. But some are business incubators or accelerators, which actively try to invest in, coach, or train entrepreneurs starting a business. goAl 2: focuS on EXiSting buSinESSES + thEiR SuPPly chAin Ivy Tech Community College is a significant anchor institution on the corridor. Currently, Ivy Tech operates an automotive program but the college is resource constrained. The current 35,900 sq. ft. facility on three acres is too small to meet current program demand and Ivy Tech has limited funding for capital projects. Ivy Tech may relocate its automotive program and, if so, the corridor would lose an important and stable center of activity, with 300 students and 7 faculty and staff. An opportunity exists to develop a ‘blue collar’ incubator for skilled tradespeople to develop other important skills to support entrepreneurial ventures. Many so-called blue collar jobs require years of experience to develop a high level of expertise, which can be transferable. Further, by developing the skills required, former skilled tradespeople can become entrepreneurs through the development of new products or services. EXAMPlE incubAtoR A relevant example exists in Detroit - the Blue Collar Innovation Center provides workers with skills to move into emerging industries such as alternative energy, green industries, life sciences, and energy efficient automotive products. The center assists workers in developing new skills necessary to participate in these emerging industries. goAl 1: REcogniZE Evolving WoRkPlAcES goAl 3: incubAtE ‘bluE collAR’ jobS The center assists start-ups in three ways: • Provide a resource for existing businesses to physically build out their product ideas and prototypes. • Provide a feeder for new startups. • Assist start-up companies in becoming successful for- profit or sustainable nonprofit entities. The Center’s services and resources include: • Office space • Technical support • Grant writing • Access to capital • Leadership, professional, and development training • Legal framework to support patent and licensing activities • Managerial, law, and business expertise • Assistance acquiring capital, grants, and/or investors ReEnergize East Washington Street | 22 industrial corridor case studies Element of the Plan: Bishop’s Creek is located on a former tannery site that now houses 55 apartments and on-site family and children’s services. Source: Milwaukee Dept. of City Development. Contrary to East Washington Street, the Park Hill area lacks a central spine road for interstate access. An extension of 12th street to Industrial Road helps both existing users and the visibility of under-utilized parcels. Source: Louisville Economic Development Dept. A new green roof has been planted on the Metro Archives building. Source: brokensidewalk.com Reusable building stock is one of Park HIll’s strengths. This can allow for competitive pricing and a unique character for reuse.
Source: Louisville Economic Development Dept. Element of the Plan: Century City is the proposed redevelopment strategy for a large, under-utilized industrial area along a rail corridor. A new truck access road through the middle of the site gives good access to industrial users, while moving truck traffic away from residential areas to the east. A competitive marketing strategy was developed for the proposed modern business park. To the east, a linear park with green stormwater management solutions improves the buffer between the industrial and residential areas. The residential street grid is improved with connections along this park, and multifamily residential provides a link between the neighborhood and the new park. Source: Milwaukee Dept. of City Development.
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