Predicting Potential: Inside a 15-year journey to transform the Old Henry Road corridor into a commercial hot zoneOctober 2, 2020
This article was written by Marty Finley and originally appeared in Louisville Business First on October 2, 2020.
The Old Henry Road corridor in eastern Jefferson County has experienced hundreds of millions of dollars in commercial investment.
Tafel Motors Owner David Peterson could see his future in 2004, but it would take more than a decade to bring his ideas to bear.
Peterson held a prominent spot for his Mercedes-Benz dealership in St. Matthews, but the property was limited in size and would make it hard for his business to maximize the limits of its potential if it stayed put indefinitely.
“The automobile business, pretty much like every business, has things that work for a specific period of time and then smart companies evolve,” Peterson said during a recent interview. “It’s impossible to fit 10,000 potatoes in a five-pound bag.”
Peterson started looking around Louisville for a new home and said it soon became clear that he should use the Gene Snyder Freeway as his compass, giving himself boundaries between Interstate 64 and the Ohio River as the guidance for his search.
Talks about new bridges and tunnels connecting Indiana to eastern Jefferson County, he noted, were already circulating.
“The stories were out there that a lot of smart developers and smart money were buying up properties over there and in Southern Indiana,” Peterson recalled.
He also was convinced Old Henry Road and Factory Lane would be a focal point of this growth as improvements were being considered along that corridor.
He hired an architect and started molding an early vision of his plan, walking this corridor at least half-a-dozen times in knee-high boots because the grass was severely untended and long.
Peterson, who insists he’s not a developer, said every assessment he ran pointed to Old Henry Road being the best fit for his future business.
“The math just seemed to be compelling,” he said.
Peterson purchased his first parcel in the area during the mid-2000s as he worked on his architectural plans, but he held onto the land for a decade or so. As he waited, more developers and projects surfaced for the area, and Peterson’s leap of faith started looking like a worthy risk.
“The longer I did that the more confident I became that it was going to be the good move,” he said.
Today, the Old Henry Road and Factory Lane corridor is bursting with commercial activity as the Lewis and Clark Bridge has connected the east side of Jefferson County via the Gene Snyder to Southern Indiana — creating more transportation options for the immediate and surrounding areas, such as Anchorage.
Office buildings, apartments, hotels, car and motorcycle dealerships and corporate headquarters are either open or under development within the area, representing hundreds of millions of dollars in total investment. The corridor is highlighted by a 100-acre development spearheaded by local developer Kevin Cogan that is slated to cost $200 million or more.
And there is still plenty of land and opportunity left along the corridor as some investors estimate traffic counts could more than double to 120,000 cars daily.
Peterson ended up buying 20 acres or more surrounding that first parcel. He wanted the site control so he could choose his business neighbors, and he has now started selling off some of those parcels to real estate investors and developers. New deals, he hinted, are pending that will bring future activity.
Meanwhile, his dreams came true last year when he opened a large Mercedes-Benz of Louisville dealership on Terra Crossing Boulevard off Old Henry Road. The 73,412-square-foot complex employs nearly 100 people, retained its clientele and added new customers with the move.
“In general, this area is still very fresh,” he said. “I am surprised that restaurants haven’t been a little more aggressive coming this way.”
Cogan’s Jefferson Development Group has almost become synonymous in recent years with Old Henry Road activity.
JDG purchased 100 acres at 13508 Factory Lane from The St. Joseph Catholic Orphan Society for $11.9 million in summer 2017. JDG had the property under contract for more than a year as it worked through the planning stages of a large mixed-use commercial and residential village concept.
Then Cogan’s firm filed a development plan with Louisville Metro Planning and Design Services in March for 307 apartments on nearly 10 acres along this site that is part of the Vinings of Claibourne apartment complex. The second phase of the project will exceed 460,000 square feet across four buildings, according to the plans.
Phase two of this project comes after the original plan for 274 units was unveiled by Cogan in May 2017. Cogan has dubbed phase one The Ivy Apartment Homes, which has opened to residents.
He has anticipated construction costs for the two phases to fall between $110 million and $120 million.
Furthermore, Galen College of Nursing is nearing completion of its new Louisville headquarters (more on that later) in the development, while Bluegrass Harley-Davidson plans to relocate its Louisville dealership in 2021 from 11701 Gateworth Way, at Blankenbaker Parkway and Interstate 64, to a larger facility on a 4.3-acre site along Terra Crossing Boulevard inside Cogan’s development.
Evan Schipper, who owns Bluegrass Harley-Davidson, has said the footprint of the new dealership is roughly 33,000 square feet with an additional 10,000 to 12,000 square feet on a second-floor mezzanine. Its current facility, he said, has about 32,000 square feet of space. A riding academy with an outdoor training course also is planned at the new facility.
Cogan’s savvy land buy a few years ago is reaping dividends now, but the development is not an overnight success. He has been monitoring the Old Henry area since the early 2000s.
Cogan said during a recent interview that he bought his first parcel there in 2005 or 2006, noting Medical Center Jewish Northeast was a major early development along the corridor.
But the economic recession that rocked the country in the late 2000s impaired Old Henry’s ascent as lending and construction activity slowed for several years and banks reeled from a national housing crisis.
“Everything was poised to really blossom and go, (but) it was like a big swimming pool of water doused the energy,” Cogan recalled.
While the idea of a vibrant commercial center along Old Henry Road was temporarily stifled, Cogan’s ideas never disappeared. The Eastpoint Business Center — a 700-acre Class A business park off the Gene Snyder Freeway in northeast Jefferson County near Old Henry — and its thousands of jobs had proven successful. and Cogan was convinced this section of the corridor would eventually get its due.
The tides and momentum started shifting with the Ohio River Bridges project, and Cogan estimated his company has invested $20 million in new infrastructure, including water lines, road and road extensions that he said has become a major conduit for development.
“The crescendo was our 15-year effort and the attempt to acquire the old St. Joe’s property. We had our eyes set on that acquisition,” he said.
Cogan said he remains bullish on Old Henry’s future despite the ills brought upon the city by the Covid-19 pandemic and said more project announcements are expected for his property before year’s end.
Likewise, he said undisclosed restaurant groups have expressed interest in the area and he’s confident they will stake their claim to land here. He also envisions future demand for additional office space in the area as he suspects professional services firms will gain interest in having a presence along this section of the East End.
“There’s so many things that have happened and we will see great things happen over the next five to 10 years, fingers crossed,” Cogan said. “We know those scars will heal, and we know this challenging moment of great anxiety and — I would add — great debate will end. How can we all participate better and work better?”
A centralized sweet spot
One of the most eye-opening moves for Old Henry was the news that Galen College of Nursing would establish a new East End headquarters inside Cogan’s development, relocating from Zorn Avenue. The roughly 140,000-square-foot building sits on 11 acres and is nearing completion.
Mark Vogt, CEO of Galen College of Nursing, said Galen will start moving some operations onto the new campus by mid-November and should start classes in January 2021.
The Louisville campus will have the infrastructure to support Galen’s more than half-dozen locations around the U.S. and will be the most advanced nursing campus in the region when it is completed, Vogt said.
The HQ will be equipped with 17 classrooms, seven skills labs and a large advanced simulation hospital to train students. A cafe and community room also are planned, he said. The building was designed by BHDP Architecture out of Ohio, which counts higher education projects among its specialties. Investment costs in the project have not been disclosed.
Vogt said Galen chose the Old Henry Road corridor because it is a centralized location for its growing student population, which expands out to Bullitt, Shelby, Oldham and Henry counties. He also said the East End bridge has created an easy commute for its Southern Indiana students.
Galen has more than 7,000 students nationwide, a little more than 1,500 of which are in the Louisville area.
Galen, Vogt added, worked closely with Louisville Forward, the city’s economic development arm, for more than a year in scouting sites all over Jefferson County before narrowing it down to a few.
“What really sold it for us was the visibility and access to the interstate and where our student growth was coming from,” Vogt said.
The construction of a La Quinta and Residence Inn by Marriott hotel properties in this area is another selling point as Galen brings in people from all over the country for continuing education that need a place to stay. The number of nearby health care resources, he added, was another plus.
Once open, he believes Galen’s robust employee and student base could create additional demand for restaurants.
“The economic opportunity in this area is pretty substantial with additional housing developments going up,” Vogt said. “This moves the commute a lot closer for residents in our region. I think that’s something we all care about today. How long is our commute?”
‘In difficult economic times, the location must be right’
A New York City-based private investment firm with Louisville connections has also rolled the dice on Old Henry Road with the construction of a 120-room Residence Inn by Marriott extended stay hotel on 2.5 acres at 2510 Terra Crossing Blvd.
The four-story, 85,000-square-foot hotel represents an investment of more than $20 million by Campisano Capital that is next door to the Mercedes-Benz dealership owned by Peterson.
The project was announced in early 2019 and will host its soft opening in early November, said Louisville native Nick Campisano, who leads Campisano Capital. The company has added a full-service lobby bar to the scope of the project.
Campisano said this corridor is enticing for a few reasons.
“The completion of the East End Bridge from Southern Indiana primarily created my attraction to this area. Interstate 265 has become a critical causeway between all the industrial growth just north of Kentucky and the necessary routes to access other metropolitan areas via highways [Interstates] 71, 64, and 65,” he said. “In addition to these favorable geographic conditions, Louisville families continue to migrate east, enjoying the benefits of suburban neighborhoods. Those include excellent school systems, convenient access to retail and recreation, as well a relatively lower cost of housing.”
And Campisano remains confident in its continued potential despite the challenges created by Covid-19.
“Families desire larger houses and yards, which is forcing them from the denser metropolitan areas,” he said. “The risk of layoffs/unemployment could slow momentum, but that applies to all local geographies.”
As the hotel is set to open its doors, Campisano said restaurants, a large grocery store and more recreational and entertainment facilities would be helpful and welcome additions to the area.
And he shared some thoughts for those considering an investment here.
“Start with strong banking relationships and a very good broker. Woodford Hoagland (a partner with Louisville’s Hoagland Commercial Realtors) helped us shop for land for a year prior to completing our transaction and U.S. Bank offered our group an excellent loan,” he said. “In difficult economic times, the location must be right, and the capital structure needs to be patient. Assuming those two factors are appropriately considered, the risk should be worth the reward.”
ARGI Financial Group has had a ringside seat to Old Henry’s growth and has resisted the urge to move elsewhere over the years.
The financial services firm opened its new East End headquarters in early 2019 at 2201 High Wickham Place, just off Old Henry. ARGI is occupying about more than 50,000 square feet inside the three-story building.
The company has relocated a few times as it has experienced growth spurts. It moved into its previous headquarters across the street in 2015 but outgrew that after adding 60 employees. Its headquarters had been in four buildings in just 10 years.
The latest ARGI HQ is about 45% larger than the previous one. It gives the company’s Louisville employees additional meeting rooms, parking and areas for education and entertainment.
ARGI has grown as consumers are looking for several financial services — planning, wealth management, investments management and business services — under one roof, CEO Joe Reeves previously told LBF last year.
As Galen found, this area is centrally located for ARGI’s clients, Reeves said during a recent interview. Outside of that, Reeves noted residential housing is expanding along the corridor and that should dramatically increase traffic to the area, thus increasing visibility.
“We did look around, but we also felt like our clients were used to coming to that area,” he said, noting there is advantages to staying consistent with your location. “This is our third building in seven years, and they’re all within a half-mile of one other. If it hadn’t continued to grow, we would have probably looked harder. But we think it’s an up-and-coming area, and we wanted to be a part of that.”
Reeves also joined the chorus of others who want more restaurants — calling for a mix of sit-down and “quick fire” dining concepts — and said smaller retail stores, such as CVS and Walgreens, would be appreciated.
He also agrees with Cogan that more companies will start courting the area for their offices.
“I think you are seeing a push maybe out of the downtown area and more companies wanting to move out into the suburbs. That will, over time, grow,” he said. “The Covid-19 pandemic changes things a bit, but thinking post-Covid, a continued push to move out into the suburbs where more people live so they have shorter commutes versus having to drive downtown.”
Peterson, the Mercedes-Benz of Louisville owner, describes himself as an unabashed cheerleader for the Old Henry Road corridor. Now his vision for eastern Jefferson County has come full circle with hundreds of millions of dollars in commercial development.
“We have been very satisfied. That’s probably an understatement in terms of the interest coming out here,” he said. “It was nice to have some of the smart people validate my decision.”
A flexible design
New office space designed to contend with the changing, real-life implications of Covid-19 also is in the development pipeline for the Old Henry Road area.
Hillman-Pauly Properties, a real estate investment and development firm, released renderings and plans for The West at Old Henry, a 73,000-square-foot Class A office building inside Cogan’s development in early 2019. The plan has since been reimagined to some extent.
Hillman-Pauly has been working with Louisville-based architectural firm Work Architecture + Design on the building design while also gathering input from general contractor Schaefer General Contracting and others. Development costs have not been disclosed, but Jonathan Pauly, a managing member of Hillman-Pauly, recently said he wants to start construction in the first quarter of 2021 and have the complex ready for tenants by second quarter 2022.
“During the early days of the pandemic, we were given the opportunity to adapt our building to the potential changing needs of businesses and tenants; we really wanted to update the building to suit the way people will want to [work] safely and efficiently, and we are excited to begin the work,” he said. “This spring, our team (Work Architecture, Schaefer Construction, KPFF, Shrout Tate Wilson, & TRIO Commercial Property Group) stepped back from design as we saw the workplace shift; Covid became the catalyst to improve building flow and circulation, and how we perceive it will impact corporate workspaces.”
He said the project has received some “wonderful organic design changes” while maintaining its original vision as refinement continues. It will offer tenants of varying sizes optimal flexibility in this new age and Pauly said productive talks continue with prospective users.
“We had our eyes on the Old Henry corridor for some time. Old Henry has seen solid growth, new developments and continues to do so,” Pauly said. “We chose our current site after a visit with Jefferson Development Group. They have really done a stellar job with their development and their vision aligned with ours. Our building is progressive and versatile, which fits the type of growth you’re seeing in that area.”
Pauly said the Old Henry area has a little bit of everything now but could benefit from new dining options and other supporting businesses, such as dry cleaners.
“The Old Henry corridor is ideally located near major highways and is poised for continued growth. Pioneers like Jewish Hospital, Thorntons, JDG, and Schulte put their stakes in the ground; here there are great developments, created by both established and newer developers who are making significant investments in, and working tirelessly to transform Old Henry,” he said.
— Marty Finley