Company that developed Bottleworks District makes a deal to buy Circle Centre Mall

Correction: This story has been updated to correct the spelling of L.S. Ayres.

Wisconsin-based Hendricks Commercial Properties, the developer behind the Bottleworks District on Mass Ave, has struck a deal to acquire Circle Centre Mall for roughly $85 million and redevelop the building into a mixed-use property, the company's chief executive officer said Wednesday.

More: Launched with confetti and fireworks in '95, Circle Centre eyes grim future without change

Under the terms of the deal, Hendricks, which also developed Ironworks at Keystone, would purchase the remaining interest in the mall held by the Circle Centre Development Co., a limited partnership of 17 businesses and corporate investors and the Circle Centre Mall's original investors.

The company anticipates that it would spend about $600 million overall, including acquisition costs, to redevelop the dying mall. That amount could go up or down depending on the final design, construction timeline and economic conditions. The deal would give Hendricks ownership of the mall building.

Rob Gerbitz, CEO of Hendricks Commercial Properties, said he hopes to finalize the deal by the end of the first quarter in 2024. Construction work could begin as early 2025.

"There's a lot of moving pieces to this — many of which we don't totally control either," Gerbitz said. "It's a pretty good team effort amongst all those parties to kind of come to the end and then we would be the owner of it."

"The partnership between this administration, the Indiana Economic Development Corporation, and Hendricks really secures the future of the largest asset in downtown for what I believe will be the entirety of the next generation," Hogsett said. "That is why the opportunity to reimagine Circle Centre, which does in fact, sit on two city blocks in the very heart of the downtown community, represents a monumental transformation. And, it also continues our commitment to strengthening the economic and cultural core of the state."

In a telephone interview with the IndyStar, Indianapolis Mayor Joe Hogsett called Hendricks' investment in the property transformational and said it will continue the renaissance of downtown.

Getting away from the mall concept

Circle Centre Development Co. announced in February 2022 that it would solicit ideas on how best to redevelop the nearly 30-year-old mall, which had steadily declined over the years as retail tenants like Nordstrom and Carson's department stores closed their locations there.

The ownership group also announced that Indianapolis-based Simon Property Group, the largest mall owner in the US, had sold its minority stake in the property —of approximately 15% — to the remaining owners in December 2021. The terms of that deal were not disclosed.

“Hendricks Commercial Properties is the best caretaker and redevelopment partner we could have wished for. Their track record of stewardship and transforming public spaces in Indiana is unparalleled, and their vision will be critical in reimagining Circle Centre, one of our state’s crown jewels," Adam Collins, partner at Wallack, Somers & Haas, and legal counsel to CCDC, said in a news release.

Hendricks was approached in early- to mid-2022 and asked to put together a proposal outlining a vision for the mall's future, Gerbitz said. The company wasn't interested in just doing cosmetic work or finding tenants to lease the existing space.

"Indianapolis isn't any different than any other big city that did the malls back in the late '80s and '90s," Gerbitz said. "A lot of those malls, they've run their course and they've become obsolete, and so we wanted to bring the city grid back to that particular area."

Instead, Hendricks will seek to transform the more than one-million-square-feet space into a mixed use development with retail, housing, office and entertainment concepts as it strives to bring back as much of historic downtown Indianapolis as possible. The plans, which are tentative and could be revised, include removing the current roof and all enclosed hallways to create an open-air property. There will be an outdoor elevated street spanning a two-block length from Georgia to Washington streets and greenspace where people can gather.

The plans do not include room for department stores. Gerbitz said the retail component of the redevelopment plan incorporates small-format stores mostly of local and regional concepts, and some national retailers could be included as well. Retail offerings could consist of women and men apparel stores, restaurants and larger concept entertainment groups.

"We want to remove the mall aspect altogether," Gerbitz said.

A large staircase envisioned for the corner of Maryland and Illinois Streets will lead to an elevated pedestrian street with retail, restaurants and entertainment — both at and above street level.

"That's kind of like the 'Monument Stair Entrance' into that upper street level. There'll be elevator access and stuff like that from the main street all the way up there as well," Gerbitz said. "Because the street is elevated, we wanted to make something that was really impactful at that corner so everyone coming in would be able to see it and there'd be no question that they're going up that direction."

Apartments would be incorporated in different locations throughout the property. How many is a detail that has yet to be worked out.

"We definitely want to have a mix of housing in there — from apartments, affordable apartments to bringing in condominiums as well —and really get the living aspect in this part of the way immediate Central Business District to kind of grow exponentially," Gerbitz said.

The Artsgarden, a key part of the mall's iconic structure, would remain but Hendricks plans to change its entrance from the mall side. Cosmetic work will likely take place on the L.S. Ayres building, Gerbitz said.

"We're not going to do a full demolition of (Circle Centre Mall). There's too much," he said. "First of all, there's parking underneath all of this which creates other issues for us, but every historical building that we can preserve and actually enhance and bring back to life, we're gonna do that."

Hogsett called the opportunity to reimagine Circle Centre Mall is a "furtherance of a renaissance" taking place downtown.

"(It)is really beginning to create what I believe is incredible momentum that will enable Indianapolis to prosper well into the future," he said.

A surgical effort

Circle Centre Mall would be redeveloped in phases. Gerbitz expects that the project could easily take over a decade to complete after the deal is finalized and ownership is transferred to Hendricks Commercial Properties.

He expects that the company would spend close to 18 months just on planning and design work.

"This is a very surgical effort here. It's gonna take a lot of a lot of time, a lot of effort," he said. "It will change as we go, as we start talking with more and more main tenants.... That generally is what gets us to adjust and do things a little differently, which is great, which is what kind of our job is, but it'll take all that to just to get going here. This is easily a 10-year project."

With an eye toward finalizing its redevelopment plans, Hendricks also is considering the mall's current tenants. Those include IndyStar, St. Elmo's, Harry & Izzy's, Forever 21, Punch Bowl Social, and others, including locally-owned mom and pop stores. Hendricks hopes to retain long-term tenants, but their presence could elongate the project's timeline.

"It's not as easy as Bottleworks. It's just a different way of doing it," Gerbitz said. "We've done this in other parts of the country with our projects where you have tenants in buildings and you're kind of just reimagining and bringing it in life them. It generally takes a little longer because of that — which is fine. That's the reason why we want to keep the tenants because they're important part of the project when it's done, but it will take us time."

Circle Centre Mall opened in 1995 to great fanfare. The property was a major retail attraction in downtown Indianapolis, but steadily declined over the years as business after business closed. Concerns about the mall's future predate Hogsett's first term in office, he said.

"The truth is the mall has never repeatedly lost money. It's always made money. It just was that the profit margin was diminishing and has been diminishing for quite some time, he said.

When Circle Centre Mall first opened, it was a glowing example of what a downtown retail entertainment hub could be, but that was 30 years ago, the mayor said. The changing retail landscape made repurposing of Circle Centre Mall a necessity.

"With the availability of online purchasing and home delivery, you never really have to step foot in a mall again, as they were conventionally known," he said. "With the advent of the change in retail came also, at the same time, the understanding that we needed to rethink and reimagine the space. With the cooperation of all the partners involved, we have the opportunity to make Circle Centre Mall to be a model yet again, 30 years later."

Former Indianapolis Mayor Stephen Goldsmith, who was in office when the mall first opened, echoed Hogsett's sentiments and said he found the announcement exciting.

"The mall's purpose was never just to provide shoppers with options; the purpose of the mall was to be a catalyst to bring people downtown and spur other nearby developments," he said in a statement. "Circle Centre served as that downtown spark for many years, but with the changing retail landscape nationally, the mall as currently configured has outlived its usefulness. I'm hopeful that with the partnership of the City, State, and Hendricks, a bold vision will provide a new spark for our downtown."

In negotiation

The current deal with Hendricks has the backing of the city and the Indiana Economic Development Corp. Hendricks' redevelopment plans are subject to state and city approvals, according to a news release.

A nonbinding agreement between the city and Hendricks Development Corp. is in place. Hogsett said Indianapolis will partner with the IEDC in providing incentives, possibly in the form of a forgivable loan, to help finance the project.

Hendricks and the city also are negotiating a deal for the developer to purchase mall assets and land owned by the city and not Circle Centre Develop Co. Hogsett said that includes the parking garages and the land under the L.S. Ayres building.

More: Take a walk around Circle Centre Mall in Indianapolis

A complicated financial and ownership structure were cobbled together to build the mall. Under that structure, the city owns the land the mall sits on, the shell of the World of Wonders parking garage on Illinois Street and the former L.S. Ayres site at South Meridian and West Washington streets. The city leased the property to the Circle Centre Development company ownership group which owned the inside of the mall. Denison Parking manages the parking garages.

Contact IndyStar reporter Alexandria Burris at aburris@gannett.com or call 317-617-2690. Follow her on X, formerly Twitter: @allyburris.

This article originally appeared on Indianapolis Star: Circle Centre Mall sale: Hendricks Commercial Properties' plans