Indianapolis Public Schools (IPS) had decided to decline two offers to buy its downtown headquarters, saying the bids came in too low.
The state’s largest school district put its central office out for bid last fall as part of a larger effort to shed some of its superfluous real estate, IndyStar.com reports.
The school district attracted only two bids, and these were far below what the IPS had hoped to earn from selling its seven-story building at 120 E. Walnut.
“The high bid of $2.4 million doesn’t cover near-term relocation costs and the first year or two worth of rent,” IPS special projects director Joe Gramelspacher was quoted as saying.
Gramelspacher said the district thinks the building’s value should be about $7.6 million based on comparable properties and recent sales. “We think it’s a very defensible median value of $92 per rentable sq. ft.,” he said.
The highest bid from developer Onyx + East was slightly more than one-third that number, at $33 per rentable sq. ft. The developer planned to build a 63-townhouse project valued at $18.5 million. Meanwhile, Core Redevelopment submitted a $2.2 million bid for an $18 to $20 million project to rehabilitate the current structure and add new construction for 150 apartments with first-floor commercial space.
The bidders were looking at mixed-use and multi-family projects, rather than rentable housing space, and so were focused on the underlying land value. Commercial real estate group CBRE reports there are more than 1.5 million sq. ft. of vacant office space downtown.
Gramelspacher said the district will continue to evaluate its options and needs for central office space. The IPS school board will consider what next steps to take, including rebidding the building, or it could rebid the property with the school district offering to become a tenant, which would raise the building’s value.
Under the best of conditions, IPS won’t leave the building until 2020, and it plans to lease rather than purchase new office space, with an estimated annual cost of $1.2 million. The district also owns a property in Forest Manor, and it plans to sell that structure eventually, as well.