For a decade, it has been a dream. For several years, it was comprised only of massive holes in downtown Indianapolis. And for years, people in Indianapolis wondered, would Circle Centre mall ever be built?

Construction -- actually filling in holes, putting up beams, constructing storefronts -- has been under way for more than a year. This fall Circle Centre opens for business, the biggest real estate story in Indianapolis in years.

Simon Property Group Inc. and the city of Indianapolis, co-developers of the 800,000 sq. ft. project, have a lot riding on Circle Centre. So do 19 local companies who have also invested in Circle Centre, in part as a civic commitment.

"There's no question it will help downtown Indianapolis," says David Goodrich, president of the commercial real estate division of F.C. Tucker.

How far will the boost extend?

"It's going to form this new retailing pocket that's going to be very viable," says Connie Niessink, a retail associate in the Indianapolis office of CB Commercial Real Estate Inc. "I am a believer that it will bring people downtown."

Goodrich says some downtown retailers and real estate projects will be helped by the new mall. But he says it remains to be seen whether the mall will boost all of downtown or only the sections immediately adjacent to Circle Centre.

The project's big draws are a 208,000 sq. ft. Nordstrom department store and a 145,000 sq. ft. Parisian store. Parisian is new to the Indianapolis market, with a store at the Fashion Mall in the northern Indianapolis suburbs. Another 60,000 sq. ft. to 70,000 sq. ft. will be taken up with stores run by The Limited, with the remainder of space comprised of specialty stores, movie theaters and other shops.

Project supporters hope Nordstrom will attract customers because the chain is new to the area. Backers also say Parisian could draw suburban shoppers, especially those who live far away from the north side Fashion Mall. Circle Centre's main base of customers will be downtown office workers, but the mall also is being marketed regionally with the aim of attracting consumers who live 50 miles to 100 miles away from Indianapolis.

"It will be another amenity that exists in the downtown area," says Michael McKenna, who heads CB Commercial's Indianapolis office. "Certainly for the first year or two it will have a very definite affect on downtown."

The downtown area could use a boost, real estate-wise. Union Station, a festival marketplace of specialty shops, has struggled the past several years. The train depot, still a functioning train station, was redeveloped nearly a decade ago, but the property has changed hands a few times since. Earlier this year, USA Group, a Fishers, Ind.-based guarantor of student loans, bought Union Station in an auction. But the company only wanted to keep Union Station's parking garage in connection with plans to move its corporate offices to downtown to the former Ayres building. Union Station is operating as normal but its long-term future will probably be determined by the city. The development is about a block away from the Circle Centre project but isn't connected to the new mall.

"The good thing about the Union Station deal is that it gives the city control over that property's redevelopment," says Gus Miller a CB executive who deals with downtown properties. "This city has a track record that's pro-development and pro-downtown."

Downtown office space remains somewhat soft, with vacancies exceeding 20%. "We do think there will be some positive impact from the mall," says F.C. Tucker's Goodrich. "How positively will be hard to tell."

Over the next few years, though, there could be some activity, even if little or no new building occurs. That's because 1998 is expected to be a major year for downtown lease expirations, including some long-term leases. Tenants may have the opportunity to jockey around over the new two years in anticipation of the lease expirations.

According to CB Commercial, asking rates by downtown building owners average $18.59 per sq. ft. for Class-A buildings, $12.24 per sq. ft. for Class-B and $11.13 per sq. ft. for Class-C.

Finally, downtown is to see a new sports facility. The city is building a new stadium for the Indianapolis Indians minor league baseball team. One reason for construction of the new stadium is that the American Association threatened to move the team to greener pastures. The new stadium, as yet unnamed, will be on the western edge of downtown.

Similarly, the Indiana Pacers, the city's National Basketball Association team, say the 21-year-old Market Square arena isn't suitable for the long run because it has no corporate skyboxes, a big source of revenue for other teams. But the city, which faced some taxpayer criticism for the new baseball stadium, hasn't decided what to do about any basketball arena. A decision may not occur for some time.

In the suburbs, traditionally strong northside office areas, as Keystone at the Crossing and Meridian Street/Carmel, have remained so. In fact, Keystone at the Crossing's vacancy has slipped as low as 8%. Such tight space has caused some tenants to expand their search. The northwest/College Park area has been a beneficiary, seeing its vacancy dipping from 17.2% early this year to around 11.9% by midyear.

Construction of office projects has mostly been build-to-suit. For example, over the past year Thomson Consumer Electronics, owned by France's Thomson SA, moved it headquarters from Indianapolis to Carmel, an upscale northern suburb.

In the suburbs, the asking rates for Class-A office space average $17.05 per sq. ft., according to CB, while Class-B averages $13 per sq. ft. and Class-C averages $10.31 per sq. ft.

Other projects strong in suburbs

For example, North by Northeast, an office park developed by Trammell Crow Co., has only nine acreas left from an original 177-acre site. Recent projects include a 192,000 sq. ft. bulk distribution building.

In fact, the suburbs generally are seeing bulk projects being built on spec. Two years ago, local real estate officials feared that a lack of capital would choke off Indianapolis' reputation as a strong distribution center. But sources of capital have opened up, especially because the vacancy rate remains tight -- 5% or less.

"You're starting to see a little bit of growth of rental rates," says Tom Cooler, a CB Commercial executive who works on industrial projects.

Bulk distribution space had been leasing last year in the $3 to $3.50 per sq. ft. range. Now, according to CB, it's closer to $3.50 to $4 per sq. ft.

"You could see a big jump in rates if there is continued strength," Cooler says of the industrial market.

F.C. Tucker's Goodrich says 4.9 million sq. ft. of distribution space was absorbed during the first six months. During all of 1994, 8.3 million sq. ft. was absorbed. Also, Goodrich says, this year has seen 15 lease transactions of 80,000 or more sq. ft.

Duke Realty Investments won the contract to build a distribution facility for Thomson Consumer Electronics north of Indianapolis International Airport. The facility, which will total nearly 600,000 sq. ft. and will cost nearly $15 million, has been leased by Thomson for 10 years.

Major industrial projects include a new production building being constructed by Indianapolis Newspapers, a unit of Indianapolis-based Central Newspapers Inc.

Suburbs remain magnet for retail

"Big box" developments, free-standing stores of 20,000 sq. ft. or larger, continue to be built in the Indianapolis area. Lowe's, a home supply chain, has entered the market during the past few years, as had Mejer, a Michigan-based chain of mega-stores that mix in everything from traditional discount stores, drug stores and other types of retail.

The big retail developments have been spread around, but are most prevalent on the city's northern suburbs.

Despite all this activity, however, the real estate community still finds its atttention coming back to downtown and Circle Centre. The mall is to open in September, in time for the Christmas shopping season. Determining whether the project was worth a decade of work, though, will take longer than just one Christmas shopping season.