Regions Tower building facing foreclosure. Here's what that means for Indianapolis.
The owners of the Regions Tower building, a fixture in the Indianapolis skyline, are facing foreclosure amid alarming financial problems for the country's commercial office real estate industry, according to a lawsuit filed in Marion County Superior Court.
Indianapolis has struggled for decades to fill office spaces even before an unprecedented pandemic kept office employees working from home, a change that has persisted even as restrictions lifted.
The owner of the 36-story building, the New York-based commercial real estate investment company Nightingale Properties, is also facing a myriad of legal and financial problems. The Wall Street Journal over the summer reported that the company was at the center of a scandal in which $63 million in investor cash has gone missing.
Nightingale, which bought the Indianapolis building in 2014, did not return multiple requests for comment. Wilmington Trust, which represents holders of the loan, has sued the company for failing to pay the $75 million loan.
Companies in Regions Tower
The building is home to Regions Bank and a number of other businesses, including the IT cloud services company Levementum and medical tech company Trifecta. A real estate listing for Regions Tower lists some 26 office units available for rent.
In the last few years, several downtown offices have been transformed into hotels and apartments, including the iconic Gold Building, which is being redeveloped into apartments. The latest figures put the city's office vacancy rate at 22%, according to a local analysis by Cushman and Wakefield.
More: As work-from-home persists, developers rethink Indy's high rises
What could happen to Regions Tower?
Typically, a foreclosure means the building will go up for an auction so investors can recoup as much of the loan as possible, said Sara Coers, the associate director of the IU Center for Real Estate Studies.
With the low demand for office space, it's unclear who the likely bidder would be, she said.
Another investor could come in and renovate the building to include the amenities that companies are looking for in office space, she said. Or the space could be converted for other uses.
What does Regions Tower foreclosure mean for Indianapolis?
If many more commercial real estate buildings default, that's when Hoosiers may need to worry about their own finances, Coers said.
"One building is not going to ruin the economy," she said. "This is something that happens every day across the country."
However, she said, the industry's troubles could spill over and cause bank failures, setting off a domino effect that could hurt the U.S. economy. In cities like New York City and Chicago, the commercial real estate business is in even deeper disarray than in Indianapolis.
"It could be the beginning of the avalanche," she said.
Tony Cook and Alexandria Burris contributed to this story.
This article originally appeared on Indianapolis Star: Regions Tower building faces foreclosure. What it means for Indianapolis
