The Star Plaza Theatre, the Radisson at Star Plaza and the Twin Towers are being wiped off a landmark Northwest Indiana interchange to make way for a shiny new redevelopment project, and the ripple effects are being felt in the Region's office and tourism markets.
The closures at the northwest corner of U.S. 30 and Interstate 65 in Merrillville have shaken up those markets, left surrounding restaurants with as many as 3,400 fewer prospective customers a night, and caused an estimated hit of at least $20 million a year to the Region's economy.
The South Shore Convention and Visitors Authority estimates Northwest Indiana is losing out on 83,000 room nights a year by visitors who would spend an average of $250 a day because of the Radisson's closure, as well as 90 conferences that brought big-spending business people to town.
Concertgoers no longer are dining at the sit-down restaurants clustered near the Star Plaza on weekends. And more than two dozen professional firms that occupied the Twin Towers have scrambled to find new office space in an already tight market.
One vision realized
The late billionaire hotel and billboard magnate Dean White had a vision when he built a hotel, conference center, concert hall and office towers in a Merrillville cornfield in the late 1970s.
As Northwest Indiana's population shifted south and east, away from the industrial cities that built it up, White saw U.S. 30 in Merrillville as a new "main street," a downtown for a more suburbanized age.
His Holiday Inn transformed Merrillville into a hospitality center that now hosts more than 2,100 hotel rooms along the interstate. The Radisson at Star Plaza conference center grew to host 90 different conventions a year, including statewide and national ones. His 3,400-seat Holiday Star Theatre, later the Star Plaza Theatre, once drew A-list acts before the music industry changed. White's Twin Towers spurred a boom in office construction, including the Centier Corporate Center, and 8585 Broadway, the tallest building in Merrillville commonly known as the Chase Tower, because the bank's name is emblazoned on the side.
White's investments, as well as Southlake Mall, helped transform the area into Northwest Indiana's hub of commerce, hospitality and white-collar office jobs.
But buildings age, time marches on and White Lodging decided to raze the landmark structures at the interchange to make way for a development to include a hotel, at least one stand-alone restaurant, green space and possibly more unannounced features.
The closures prompted by the redevelopment project displaced many law firms, accounting firms, banks and corporate offices. It also has had a big impact on tourism, forcing the South Shore Convention and Visitors Authority to, at least temporarily, shift focus to pursuing more youth sports events instead of conferences that typically bring bigger spenders armed with company credit cards.
The Radisson at Star Plaza, famed for its waterfall, grand pianos and grander ballrooms, was reduced to a pile of rubble last year. Everything else at that corner will be razed this year.
"There are still tenants in the towers, and we won’t begin demolition of the towers until the tenants' leases are completed," White Lodging spokeswoman Kathleen Quilligan Sebastian said. "The theater demolition will begin in late May or early June, and we expect the demolition of the towers to begin in the late summer or early fall."
The seven-story Twin Towers, their gold-colored glass facades visible for miles, had been the single largest office complex in Northwest Indiana, according to Merrillville-based Commercial In-Sites. About 220,000 square feet of office space there is going away.
With more than two dozen professional firms displaced and office vacancies tightening to 14 percent, far less than the 20.9 percent vacancy rate across the greater suburban Chicago area, full-service office rents in Northwest Indiana rose last year to $22.99 per square foot, an increase of 40 cents per square foot.
Northwest Indiana Forum President and Executive Director Heather Ennis said the loss won't necessarily affect efforts to recruit new businesses. New offices have been going up, such as ATG Real Estate Development's 2929 Carlson Drive in the Oxbow Landing development off Interstate 80/94 in Hammond, and Dr. Claude Gendreau's Cardinal Campus that will place seven two-story office buildings in Highland.
"There is more pressure on the office space, with the Twin Towers coming down," Ennis said.
"But developers have recognized there are more folks looking into office space, and you're seeing projects like the new ATG office in Oxbow Landing. You're seeing more investment like that, and it's extremely exciting. There also are some great opportunities for anyone looking for office space in business parks like the AmeriPlex at the Port in Portage."
The closing of the 85-foot-tall towers, the second-tallest buildings in Merrillville, has displaced many longtime tenants such as the Legacy Foundation. The nonprofit is moving nearby to a new office under construction for the Internal Revenue Service at 370 E. 84th Drive, Merrillville.
“Legacy Foundation has been in Merrillville for its 25-year existence," President and CEO Carolyn Saxton said.
"Merrillville is centrally located and convenient to I-65 and I-80/94. Since we cover all of Lake County from north to south and east to west, a central location is very important to us and our constituents. Legacy staff and the board of directors discussed current and future space needs to determine a working office that would allow for some growth, but not be too large for our budget.
"Our new location is very close to our current office. We are excited to have a first-floor space with easy entrance. We will also have more visibility with exterior signage that can be lit and seen on Broadway.”
Merrillville remains office hub
Many of the Twin Towers' tenants landed in nearby offices in Merrillville, some within walking distance of their old home, said David Lasser, president of Merrillville-based commercial real estate firm Commercial In-Sites.
Tenants have largely relocated to the 8001 Broadway office building, 8585 Broadway office tower, Ross Commons, Park Tower and Purdue Research Park of Northwest Indiana, all in Merrillville. Even with the loss of the Twin Towers, it remains Northwest Indiana's "downtown office district," Lasser said.
"It's the location, where it's at the middle of two counties," he said. "From Chicago's perspective, it's the southeast suburbs. But it's the downtown of Northwest Indiana. A lot of people commute to Merrillville, including from Portage, Valpo and Chesterton."
One of the Twin Towers' largest tenants, Fifth Third Bank, however, is not staying in Merrillville. It dispersed operations to branches across Northwest Indiana, especially at its four-story office building at 56 Washington St. in downtown Valparaiso.
Though Northwest Indiana's office market is tight, it was able to absorb the Twin Towers tenants partly because White Lodging wound down the building over a period of time, not renewing leases for at least a year before announcing the closure, Lasser said.
It also lost one of the largest tenants in 2016 when Brown Mackie College closed along with so many other for-profit institutions after an Obama-era crackdown. The college for nontraditional students occupied 26,000 square feet, more than a 10th of the rentable space.
Loss of visitors
Closure of the Star Plaza Theatre has meant the loss of many visitors, as it once drew from around the Chicago area and beyond, though it no longer hosted the 185-plus shows a year as it did in its heyday of the 1980s and 1990s, said Speros Batistatos, president and CEO of the South Shore Convention and Visitors Authority.
The greatest loss to local tourism was the Radisson at Star Plaza conference center, which brought in thousands of visitors annually, Batistatos said.
"The market has adjusted to the loss of that 350-room hotel running at roughly 62 percent or 63 percent occupancy, or 200 rooms a night," he said. "That's at least 200 visitors a night, if not more, who were buying three meals a day, shopping and spending at other properties."
Visitors instead are staying at other hotels across the Region, including Merrillville, Munster, Hammond or the Tri-Town area, depending on where they have a loyalty program card, Batistatos said. But lucrative business travel has dried up.
"Without a conference center, we're losing all the spending from the meeting attendees who are normally traveling with a company credit card," he said.
"They were going to Gamba Ristorante, Gino's Steakhouse and Asparagus. We've backfilled that with a lot of youth sports, but they're going to Outback or Culver's, or loading their refrigerators. We lost the high-spending corporate business, which is why we're working with the Regional Development Authority to try to bring a convention center."
Batistatos fears restaurants may close in the area if the conference business doesn't return soon, pointing to vacancies like the old Outback Steakhouse building across the street in Merrillville.
"I look around and see five or six empty restaurant pads in the area," he said. "That's what happens when you have less corporate travel."
Venues like Avalon Manor, Halls of St. George and Patrician Banquets have picked up much of the catering business that the Radisson at Star Plaza once had, but the loss of 11,000 room-nights from conferences has affected restaurants and a number of suppliers such as of food, liquor, flowers and linens.
"We're all in on sports, leisure and SMERF — or, Social, Military, Educational, Religious and Fraternal visitors — but we're not even pursuing those conferences and meetings," Batistatos said.
"Planners have so many options where they can book an event with an attached hotel. They're not going to organize something at the Halls of St. George when the hotel is 4, 5 miles away, when they could go to Fort Wayne or South Bend."