South Bend's 'Madison Lifestyle District' to replace parking lots with apartments, hotel

SOUTH BEND — City officials on Thursday approved plans for a dense residential and commercial district on the two blocks south of Memorial Hospital, calling it the largest redevelopment project in downtown South Bend's history.

The "Madison Lifestyle District" seeks to transform two surface parking lots between LaSalle Avenue and the hospital into about 240 new apartment units, a 100-room hotel and more than 40,000 square feet of commercial space up for rent. Parking needs will be met with 925 new spaces in public garages, replacing the current low-value use of land that isolates Memorial Hospital on downtown's northern edge.

A mix of public and private money will pay for the development. Great Lakes Capital, a real estate firm based in Granger, has agreed to invest at least $102 million in the the 300 and 400 blocks of North Main Street. Memorial Hospital sold the relevant parcels to the developer for $1.

The city of South Bend will spend $24 million of redevelopment bond money approved by the South Bend Common Council to build the public parking garages. The state of Indiana, through its Regional Economic Acceleration and Development Initiative, will contribute $11.78 million to the garages.

The city will set aside 300 parking spaces for Beacon Health System employees and pay $2.5 million to demolish the nearby South Bend Medical Foundation building, on Lafayette Boulevard, to make room for additional parking for hospital staff.

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First reported by The Tribune in October 2021, the new district is designed to supplement the hospital's ongoing construction of a new 10-story patient tower that's projected to cost roughly $232 million and create about 500 new jobs. Memorial expects to finish construction of the new 300,000-square-foot tower, which will double the capacity of the hospital's intensive care unit and add 53 acute care beds overall, by summer 2026, a spokeswoman said.

"We're drawing patients from 22 to 24 counties away, and they have family that come to support them," Memorial Hospital President Larry Tracy said. "To be able to have a hotel that's right there on our campus, so to speak, and in walking distance (for people) to be able to support their loved ones is very therapeutic and healing for the patients that we're serving."

All told, the north side of downtown is set to garner more than $334 million of private investment and about $36 million of public money.

In a conservative estimate, city officials said, the Madison Lifestyle District will pay $2.2 million in annual property taxes. Right now, those two blocks are "a sea of parking" contributing little to city coffers, according to Caleb Bauer, executive director of South Bend's Department of Community Investment.

"Unfortunately, much of our downtown became surface parking lots over time as we saw population loss, as we saw historic buildings being demolished," Bauer said. "So we're looking forward to filling back in the urban core. Structured parking is an important piece of making sure that we're still providing the parking needed, but we're doing it in a more efficient way."

Construction of the Madison Lifestyle District is to begin next year, pending approval of a tax abatement plan by the Common Council. The entire development on the two blocks of Main Street wouldn't be finished until 2028, but construction of the northern block could be done by the end of 2026.

As part of the agreement, the city will pay $4 million to buy the Memorial Leighton Healthplex, at 111 W. Jefferson Blvd., from Beacon Health System. Beacon plans to relocate its physical therapy programs from the Healthplex to the Memorial Hospital campus by the end of 2025, so it will lease the building from the city until then.

To grow its public parking portfolio, the city will also buy the Wayne Street Garage, at the intersection of Main and Wayne Streets, from Great Lakes Capital for $2.75 million. Bauer said that price is the average of two independent appraisals.

"We're making sure we can continue to see the exciting growth in downtown while also providing the parking that's necessary to support it," Bauer said of the purchase.

How the plan to transform two blocks will come together

Interest in the site grew after Memorial Hospital publicly announced its plans for a new patient tower two years ago. Anticipating the need to hire hundreds of new employees, hospital leaders were eager to support hundreds of new housing units right next door, Tracy said.

Audra Sieradzki, a managing director at Great Lakes Capital, said the apartments will compete with nearby luxury units but also set aside rooms for workforce housing, which targets people who earn 80-120% of the area median income. South Bend's median household income hovers around $49,000, according to 2022 census bureau data.

Such density wouldn't be possible without parking garages, Sieradzki said. But the buildings are designed to wrap around and conceal the garages in the core of the development, not to show them off.

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The city's first step is to demolish the former South Bend Medical Foundation building this year, Bauer said. Then it will begin construction of a 625-space parking garage set to finish in 2026, when Memorial plans to open its patient tower. A second 300-space garage is to open by the end of 2027.

Great Lakes Capital aims to finish 150 apartments, 35,000 square feet of office space and 1,400 square feet of retail space on the north lot by 2027. The remaining 91 units and 7,000 square feet of retail space are to be built on the south lot by 2028.

Michael Divita, a principal city planner, said the two blocks south of Memorial Hospital were primarily residential until the 1950s, when smaller-scale commercial uses began to take over. By the 1970s, the northern block was home to the multi-story Town Tower Motel.

The last of the commercial buildings disappeared around 2010, Divita said. Since 2015, the site has looked more or less like it does today. Burger King operates a store on the southern lot along LaSalle Avenue. The only other building is the former Northern Indiana Public Service Company site, which Memorial also owns.

"Historically, before automobiles became our central mode of transportation, we had much denser downtown cores," Bauer said. "Over time, as cars became our primary form of transportation, we really focused on making sure we had a lot of cheap parking."

"Now we're seeing cities realize that hollowing out our urban core really can eliminate the vibrancy we need in a downtown," Bauer added, "and so we're working to fill back in those missing teeth."

Email South Bend Tribune city reporter Jordan Smith at JTsmith@gannett.com. Follow him on X: @jordantsmith09

This article originally appeared on South Bend Tribune: New apartments and hotel near Memorial Hospital in downtown South Bend