Indianapolis Outlook
Stadium, Airport, Medical Put City in Overdrive

by Craig Barner

The corner of Meridian and Washington streets in downtown Indianapolis has long been known locally as "The Crossroads of America."

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In terms of its construction outlook, the central Indiana city appears to have its foot on the accelerator and is racing through the intersection.

"Our pipeline has been very strong and will continue to be strong," said Terry Sweeney, vice president of real estate development for Indianapolis Downtown Inc., a nonprofit that promotes the city.

But red lights might be encountered ahead because of a possible labor shortage and increased competition from out-of-state contractors.

High-Octane Activity

Indianapolis starts are the high-octane fuel in the construction economy's tank.
Data show the metropolitan area experienced a 13 percent increase in starts in 2005 vs. 2004, to approximately $6 billion. It is probable that the construction output in 2005 was the highest in the history of the metropolitan area.

"Indianapolis had a busy year (in 2005) and will have a busy year this coming year and in 2007 and 2008," said Jeff Hagerman, president of Indianapolis-based Geupel DeMars Hagerman and executive vice president of Fort Wayne-based Hagerman Construction Co., which partly owns GDH.

The big engines driving the industry include the approximately $1 billion expansion of Indianapolis International Airport. Some infrastructure upgrades are complete and the new 340-ft.-tall control tower -- the second tallest nationwide -- is done, and crews have started building the Midfield Terminal and other infrastructure.

A major boost is also coming from the $500 million Indiana Stadium project, which when complete in 2008 will house the National Football League's Indianapolis Colts and the National Collegiate Athletic Association's men's and women's March Madness basketball tournament. Indianapolis has been named a permanent backup site for the tourneys' Final Four games.

South of the stadium project is the related $275 million expansion of the Indiana Convention Center, which will be connected to the stadium when construction is done.

It is not just megaprojects that are straining contractors to find field personnel.
Life-science and medical organizations, long economic strongholds of the Hoosier City, continue to announce and turn out significant projects.

Indiana University School of Medicine, the second-largest teaching hospital in the nation, has recently started two major projects, the $150 million IU Cancer Center and the $80 million Research III facility, which will be complete in 2008 and 2009, respectively. Work is projected to be complete at the end of this year on the $42 million Medical Information Sciences Building, a project profiled in this issue.

Riley Hospital for Children recently announced the $235 million Phase V Bed Tower expansion, a project expected to be complete in 2009. Eli Lilly and Co., the pharmaceutical giant, has two projects expected to be complete in 2007, the $311 million Biotech Pilot Manufacturing Plant and the $200 million Biotechnology Research Lab.

Community North Hospital has started a $170 million expansion. And, Clarian Health Partners, a partnership among the IU School of Medicine, Methodist Hospital and Riley, will finish a $68 million laboratory on Canal Street in the second quarter.

BioCrossroads is a public-private effort to boost investment in the life sciences, and 40 projects worth $1.9 billion were completed between 1995 and 2005, Sweeney said.

"In the pipeline for the next five years are nine projects worth $1.1 billion," he added.

In addition to medical construction, residential construction is solid. Starts in 2005 were up 4 percent over 2004, to $2.9 billion.

In the downtown alone, 33 projects -- condominiums and apartments -- are under construction. The most significant is the $120 million One Market Square Tower
Residences and Lofts that will bring 268 units to the northeast side.

Education is also strong. The Indianapolis Public Schools is continuing its $832 million upgrade of facilities, a project expected to last through 2011. Indiana University-Purdue University Indianapolis has three projects under construction that total $66 million, including a $50 million campus center.

Hagerman said that the large amount of construction planned has resulted in an increase of 30 to 40 percent of GDH's backlog from the same time just one year ago.

"We have a backlog until 2011," he added. "We've been fortunate."

The company is looking to hire people in the field and its office.

Applying Some Brake

The overall strong picture does not come without the possibility of having to apply the brake to runaway enthusiasm.

The immense amount of activity itself is a negative because some construction consumers and other organizations in the construction field are worried about the potential for a labor shortage.

The Indianapolis-based Indiana Construction Roundtable Inc., a nonprofit organization of construction consumers, has announced in its recently updated Indiana Craft Labor Study that 6,500 construction jobs will be available in central Indiana in the next three years. It cites the airport, stadium and convention center projects as the main movers behind this possible shortfall.

Further adding to the strain is the rebuilding of New Orleans and the Gulf Coast and the enticements to construction workers being offered in the wake of Hurricane Katrina.

"We are worried about a labor shortage," Hagerman added.

According to the ICR, initiatives have been launched to attract workers to a construction career in the Hoosier State, including out-of-state workers, public and vocational school students, laid-off workers and prisoners.

Another negative for local contractors is that competition is increasing because of Indianapolis' boom, said Larry Roan, vice president of business development of
Indianapolis-based F.A. Wilhelm Construction Co. Inc., a general contractor.

"Two St. Louis contractors are sniffing around, and a Cincinnati-based contractor is establishing an office here," he said.

Also on the downside is the 20 percent decline in engineering starts in 2005 vs. 2004, to about $700 million. Indianapolis Downtown Inc.'s Sweeney expects a rebound with improvements to accompany the Indiana Stadium project and others, the Market Street ramp and the ongoing combined sewer overflow project. The sewer project, which involves tunneling, could reach $1 billion in cost.

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