Two developers have made similar proposals to turn a vacant downtown Franklin building into at least 20 small offices which tend to attract attorneys, insurance brokers or real estate agents.
The courthouse is just a block away, the city has a low amount of vacant office space and both developers also have plans to encourage more entrepreneurs and start-up businesses. Both expect the office building would fill up quickly and stay full.
Now the Franklin Development Corp., an organization that was created and funded by the city with tax dollars, will decide which proposal to approve and help pay for.
Envoy Inc., an Indianapolis construction firm, would spend $2.2 million to create 26 small offices and room for 30 businesses that could share space and resources. The building would also include a room to run a business incubator program, where people who want to start a business could get help forming a plan and launching a shop or service from local organizations such as the chamber of commerce or Franklin College.
A different proposal from former Franklin Development Corp. board member Lisa Fears and business partner Jeff Holt also would create 20 offices for small businesses, as well as some first-floor retail space that could include a restaurant and small shops. That plan would also include space for co-working, where technology or other professionals could work in a shared space and exchange ideas. The renovation would cost about $2 million.
The Franklin Development Corp. has been looking for a developer to renovate the building at 97 E. Monroe St. for a new use and will consider funding some of the project with city tax dollars.
Indianapolis developer Indreno had planned to turn the building into a cocktail bar, shops and upstairs condominiums but backed out of the project.
The building previously housed Padgett’s Signs and Design, which moved out in February 2013. It’s been vacant since, and the Franklin Development Corp. is helping owners Robert Ellett and Gordon Brown find a buyer.
Both developers who proposed a new project said new offices can easily be filled with business professionals or small start-ups who want to locate near the courthouse or in the downtown. Smaller offices are in higher demand throughout central Indiana, and either of the new office ideas could be a good fit for Franklin, which has an office vacancy rate of about 6 percent, Cassidy Turley regional vice president Jason Tolliver said.
For example, Greenwood Office Suites has 93 small offices and the building has typically been 97 to 100 percent full since 2012, building manager Ashley Christian said. That building is owned by Yeager Properties, which works with Envoy. Envoy vice president Scott Baldwin had pitched a similar Yeager Properties project in downtown Franklin for the former G.C. Murphy building last year. He said the nearby courthouse and vibrant downtown would help make a similar office building succeed in the city.
“We’re attracted to this area because of the courthouse and the city building and vibrant downtown area,” Baldwin said.
City residents and officials have been wanting to attract restaurants or new shops to downtown, but new offices would also bring more people to the downtown every day, Mayor Joe McGuinness said. Any project that would renovate and fill the vacant building would benefit the downtown, although McGuinness would want to see some retail shops at least in the front of the building, he said.
Office vacancy rates on the south side of Indianapolis are about 19 percent, but that region includes a wide area stretching from just south of downtown to Greenwood, according to a recent study by Cassidy Turley real estate group. That vacancy rate includes several large office buildings near the downtown core, and vacancy rates are much lower in Johnson County, Tolliver said.
Since Franklin doesn’t have several office buildings with available space, the city shouldn’t have a hard time filling 20 to 25 small offices with low rents of $400 or $500 per month, he said.
“You’re not overdeveloped. You’re a small market. You don’t have those huge buildings going up and don’t have a lot of empty space,” Tolliver said. “When you look at downtown Franklin itself, I think it has one of the more vibrant downtowns around. It has a vibrant square and a lot of places don’t have that.”
Both groups are asking for the Franklin Development Corp. to fund a portion of the project. Envoy is requesting the organization donate the building, valued at $227,000, as well as provide $500,000 to help with the renovation. Fears requested the group provide half, or $1 million, toward her project with the other half coming from private funds.
The Franklin Development Corp. has about $746,000 available for projects, which means the organization likely won’t be able to fund either project immediately, board president John Ditmars said. Once board members decide which project they prefer, they could get more information about costs and then approach the city redevelopment commission for more tax dollars from the city’s tax-increment financing districts, he said.
Envoy’s proposal would turn the entire building into new offices, while Fears’ proposal included retail space at the front of the building. The main entrance would be for a new restaurant, while part of the building could be renovated into space for a new bakery, bookstore or other retail shop. The back end of the first floor could contain a few offices, but most of those would be located on the second floor.
Both proposals also include ideas that would help new business development. The incubator space proposed by Envoy would allow people to come
in and get help launching a business from local agencies or other local entrepreneurs.
In Fear’s proposal, the co-working space would allow professionals working on different projects or employed with different businesses to come together in a shared space, Fears said. The idea is similar to the Speak Easy in Indianapolis, which functions like a social club for entrepreneurs, according to its website.
Board members will review the two proposals and will make a decision at its next meeting May 22 about which project they prefer and then begin negotiations with that group. The board could also reject both proposals.
Members will also consider whether any conflicts of interest exist in considering Fears’ proposal. Fears was appointed in fall to serve a one-year term but resigned effective May 1 because she planned to submit the proposal, she said.
Board attorney Rob Schafstall said Fears request does not pose a conflict. Even if she was still a member of the board, the organization’s bylaws state the group could still consider projects that benefit a board member as long as the issue is disclosed in a public meeting.
Ditmars also said he doesn’t think Fears’ proposal should be rejected due to a conflict, but it’s one more aspect board members will have to consider when reviewing the two projects.
“I don’t know without further thought or discussion. From a perception standpoint I think there will be questions. Personally I’m about doing the right thing as long as its the appropriate thing,” Ditmars said.