Dmitry Gordeev believes in downtown Indianapolis. And to prove it, the company that he founded and serves as managing director — Fairbridge Properties — earlier this summer spent $21.5 million to buy the 12-story Landmark Center Class-A office tower in Indianapolis.
Fairbridge purchased the 304,946-square-foot office tower at 1099 N. Meridian St. in the city’s Central Business District at a cap rate above 10 percent. That’s more than 50 percent below the building’s replacement cost.
The building is now 94 percent leased. Gordeev, though, says that the building’s location and mix of amenities makes it an attractive location for tenants. And with downtown Indianapolis in the middle of a growth period, Gordeev says that he expects the Landmark Center to be fully occupied by the end of this summer.
“We look at a lot of potential properties when we look to make an acquisition,” Gordeev said. “Maybe we acquire one out of every 1,000 properties we consider. This particular building stood out. We are looking for buildings in downtowns. Indianapolis might be considered a secondary market, but it is a strong area in a large metropolitan city.”
Special circumstances also made the Landmark Center a relative bargain for Fairbridge Properties. The Landmark Center had fallen into receivership before Indianapolis’ Ambrose Property Group purchased the office tower in late 2013.
This means that Ambrose was able to pay a fairly low price for the property — about $8 million or so. Ambrose was then able to make a solid profit when selling the office tower to Fairbridge Properties for just $21.5 million.
“We are very averse to risk,” Gordeev said. “Ambrose was able to sell the property at lower than market price. At the same time, the building was now stabilized thanks to Ambrose’s ownership. So we were able to get a stable, high-quality office property at a price below market.”
Gordeev points, too, to the large floor plates that the Landmark Center offers. Tenants can take advantage of 25,000-square-foot floor plates, far larger than the average floor plates in office properties throughout Indianapolis’ Central Business District. This should prove a draw that will help fill the remaining space at the tower, Gordeev said.
The Landmark Center also boasts a strong parking ratio for downtown Indianapolis. Gordeev said that the building has four parking spaces for every 1,000 square feet of space. Most downtown Indianapolis office buildings can only offer one parking space for every 1,000 square feet of space, Gordeev said.
Finally, Fairbridge liked the price-per-square-foot of the Landmark Center. It would cost $150 a square foot to build the Landmark Center, Gordeev said. Fairbridge bought the building for just $70 a square foot.
“That gives us a competitive advantage,” Gordeev said. “It gives us a competitive edge against new construction. When people build a new building, they have to charge a rate at least double what we can offer to make up for their costs.”
