An announcement from IBJâ€™s Property Lines last week raised eyebrows when the author revealed that MainSource Bank, the new tenant in the Barnes and Thornburg Building, was using its half of the leased space on South Meridian Street formerly occupied by Borders and embellishing it with a busy array of awning signs.Â The article noted that the bank has installed more awnings than it originally proposed in the approval document.Â Many commenters were vexed that the Planning Department still seems to be giving the new tenant a pass, claiming that the Department of Code Enforcement should have intervened in an obvious violation of the Cityâ€™s Sign Ordinance.Â At this point, it appears the City is letting the visual clutter stand on its own terms.
What garnered far less attention and opposition, however, is the final paragraph of this article: the notification that the remaining half of the old Borders spaceâ€”the most prominent part, with the mezzanineâ€”is unlikely to secure a tenant.Â According to the article, Barnes and Thornburg, the law firm that owns of the building (which houses its HQ in the upper floors), has decided against securing a tenant and is likely to use it instead as â€œa new upscale lobbyâ€.Â An interview with a representative from BT Building LLC, the separate agency that manages Barnes and Thornburg properties, revealed that the IBJ might have been a bit premature in its announcement: the firm is still keeping its options open and has made no definitive decision regarding the mezzanine wing of the old Borders space.Â Regardless of its future, its current limbo state is worthy of further scrutiny.
But what does it look like?Â No doubt most of the readers here are familiar with the location, but here are a few photographic reminders if it doesnâ€™t ring a bell:
Notice the busy signage of the MainSource Bank to the left of the doorway; the focus here is on the still vacant space to the right.
While the interior is closed to the public, itâ€™s not too hard to peer inside, but I managed to get permission to access from BT Building LLC.Â From there, I was able to take a number of photos of the interior.Â The outside doorway leads to a small foyer with elevators, and hereâ€™s the view upon entering from those doors to the right of the foyer.
The space was originally a Merchants Bank, and many of the marble teller counters remain from its subsequent uses as Borders and, prior to that, a Paul Harris womenâ€™s clothing store:
Hereâ€™s looking back at the door from which I entered:
The ceiling details and light fixtures give the room energy even when it is more or less empty.
I donâ€™t get as excited about the street-level entryway, but a creative interior designer could make better use of it.
The stairway to the mezzanine seems a bit dulled by the homogenizing influence of a national chain like Borders, but it could be quite grand under the right treatment.
Though not huge, the mezzanine is wide enough to adapt to a variety of uses.
Particularly useful is the fact that a separate elevator links the first floor with the mezzanine, so that future tenants will not depend on the core elevator in the foyer to get around.
It would be a respectable space even with minimal alterations; in the right hands, it could be inspiring. And it sits on Meridian Street, the cityâ€™s primary north-south spine and right in the heart of the Wholesale Districtâ€™s restaurants and nightclubs.
The lack of success in securing a tenant since Borders has indubitably impelled the firmâ€™s leadership to consider whether retail is worthwhile at all.Â Barnes and Thornburg owns the building and already occupies over 90% of the leasable space.Â Whoever occupies the storefront would need to respect the integrity of the interiorâ€™s architectural details as well as the firmâ€™s overriding mission.Â My conversation with a representative from the firm indicates that they recruited a powerful retailer like Apple to occupy the space with one of its stores, but Cupertino didnâ€™t bite.Â A restaurant seems to be the most likely tenant but, according to the representative, the firm is not keen on the idea for a number of reasons: the smells waft up to higher floors, logistics regarding food delivery are often burdensome, and the restaurants keep different hours that typically require heightened surveillance through the night.
From an outsiderâ€™s perspective, Barnes and Thornburgâ€™s possible decision to withdraw the space seems to defy the logic of the management of real estate: why relinquish what should be some of the most lucrative retail in the entire city for an enhanced lobby?Â Essentially the law firm would be jettisoning 22,000 revenue-generating square feet by taking it off the market.Â Admittedly, for as long as remains untenanted, it offers little more than an eyesore and a maintenance liability for the firm.Â It is an albatross.Â But once it becomes a mega-lobby, it will revert to common area, guaranteeing that it will never generate revenue on a pro forma balance sheet and will actually prove an added expense through CAM (Common Area Maintenance) costs.Â Bear in mind that Borders could easily have paid utilities like electricity and heat while a tenant, or, at any rate, the landlord BT Building LLC would most likely have passed those costs onto them.Â As a lobby, BT Building LLC will incur all those maintenance and operational costs.
In the absence of any real insight into the nature of the deal, the decision here seems puzzling.Â Perhaps Barnes and Thornburgâ€™s leadership is convinced that a glamorous lobby will attract enough of a client base to compensate for this lost leasable space. Was the firm asking too much for the space in this persistently sluggish economy?Â Maybe retail is hopeless until population density in downtown Indianapolis justifies it.Â After all, South Meridian should be a prime space, yet this building has remained vacant for a year and a half.Â The Nordstrom down the street has been vacant almost as long, with nary a peep from Simon Property Group in recent weeks.Â Perhaps we are overconfident in our downtownâ€™s magnetism?Â But is that a reflection of intrinsic weaknesses to South Meridian retail or characteristic of a broader trend: American retail is always soft because we have such a wretched excess of supply?Â And will it get any better as more people purchase goods online? Â Was Barnes and Thornburg so eager to secure a tenant that both it and the City did anythingâ€”including forgo signage codesâ€”in order to attract MainSource Bank in the rest of the old Borders space?Â Even the BT representative admitted that, by most metrics, the most likely tenant would be a restaurant at this point in time.Â One can only hope the leadership at the firm can either overcome some of its prejudices against restaurants or will be able to forge a deal with an established, well-run national chain with deep pockets, which would be willing to lease the space at a premium that, in turn, would allow Barnes and Thornburg to absorb some of the restaurant’s perceived negative externalities.
Iâ€™m not sure the decision is yet confirmed, and, in my ignorance of the potential complexity of deals-gone-bad, Iâ€™ll withhold from any vituperations.Â I leave this analysis open-ended both with the hope that further discussion will help to answer these questions or brainstorm other possible tenants.Â If anyone has an argument in favor of the law firmâ€™s potential decision to build an enhanced lobby, Iâ€™m all ears (or eyes).Â But it sure seems that significantly fewer pairs of eyes will have the privilege of seeing this beautiful old Borders space if becomes restricted from the average consumer or passer-by.