3 years after plan to redevelop Lafayette Square revealed, little change at mall site

Three years have passed since relatively unknown developer Fabio de la Cruz pledged to revive the Lafayette Square Mall property on the city's northwest side.

In the fall of 2021 — in front of television cameras, photographers, reporters, neighborhood advocates and other curious onlookers — de la Cruz announced his ambitious plan to fund the transformation of the struggling mall and surrounding properties along Lafayette Road into a $200 million mixed-use destination neighborhood.

The renovated mall would, literally and figuratively, be a Window to the World, del la Cruz said, with hallways mimicking paved streets from around the globe. He said the goal was to create a "live-work-play" environment celebrating the diverse people, cultures and cuisine of the International Marketplace district where the property is located.

De la Cruz's company, Sojos Capital, said work would occur in phases. The company started by upgrading the mall's roof and the electrical and HVAC systems. Cracks in the aging parking lot were sealed, and the mall's exterior was repainted. But as time passed, projected construction deadlines came and went with no substantive progress. Some merchants left while a few lingered in the makeshift pop-up market Sojos Capital set up in the former Sears space until that closed, leaving the mall largely empty for the past two years.

Since then, the fresh coat of paint applied to the exterior has lost some of its pop. The parking lot cracks have started to reappear. Retail traffic is limited to Shoppers World, a discount department store, located on the back side of the property and facing Interstate 65. A drive to that part of the property means dodging potholes and crumbling chunks of asphalt.

Earlier this year, de la Cruz held another press conference to announce an even grander vision of the mall transformation. The new development, he said, would no longer be called Window to the World. Instead, he rebranded the project as The Square and announced the price tag had balloon to a nearly $1 billion. The revised plan calls for demolishing roughly half Lafayette Square Mall while adding apartments, dining and retails options, a boutique hotel, office space, a film studio, soccer stadium, movie theater and more.

This time, de la Cruz said he and his silent partner, who he has so far refused to name, would seek city and state dollars to help finance the project.

But more than nine months after that second announcement, there's still no visible progress at the mall site, leaving some wondering what, if anything, will ever happen at the large vacant site in Pike Township.

"I don't know anything that's going on with it," said township trustee Annette Johnson. "I just know it's kind of like sitting there dormant."

So here's what happening?

If you ask de la Cruz, the project already is exceeding expectations.

In a statement provided through a spokesperson, de la Cruz, who owns a number of properties in the International Marketplace area near the mall site, said the first phase is nearing completion.

Nearby properties affiliated with de la Cruz's various companies have been developed. Pointing to the IMPD Northwest District Police Headquarters at 4005 Office Plaza Blvd., completed in spring 2022, and the International District Community Center at 3540 Commercial Drive, finished in July, de la Cruz claims roughly 150 acres of commercial real estate in the area has been revitalized. Occupancy rates were surpassing 90%, his statement said.

Also in the pipeline is Alamo Drafthouse Cinema, a 13-screen theater with reclining seats, restaurant-style food and a bar menu. The new movie theater, formerly Georgetown Cinema, is expected to open this month.

But when Johnson drives by the mall, the largest parcel in the de la Cruz's master plan, what she notices is the apparent lack of activity. She said neither de la Cruz, nor anyone from his company, has met with her or the Pike Township Board — a point echoed by the board's president.

Johnson, who was elected trustee in 2018, grew up in Pike Township. She remembers Lafayette Square Mall as a destination for shopping, dining and entertainment for westside residents, making it unnecessary to crisscross the city to shop in malls such as Glendale, Castleton and Greenwood. She said investors are key to bringing a project such as The Square online.

"That's how you move projects forth," Johnson said. "You have investors that have invested in doing things. When you don't have any investors, then it's going to be a challenge."

Mary Clark, executive director of the International Marketplace Coalition, which promotes businesses and cultural events in the ethnically diverse district, declined to comment for this story. While she has previously spoken positively about the project, Clark said she couldn't speak to the impact because she does not know the current plans.

Mall site and nearby properties rezoned

Initially, de la Cruz said he would fund the project with cash — with the backing of his partner, a private anonymous investor. But early this year, he said the first redevelopment plan stalled because of increased construction costs and feedback he received. To make the numbers work for what's now The Square, de la Cruz said he had to go bigger, find partners and take on debt.

A spokesman for the Department of Metropolitan Development confirmed that staff has met with Sojos Capital, but it has yet to receive any formal application for incentives as of Oct. 31. Demolition permits also have not been issued for the mall, according to public records.

Still, attorneys representing PFFO QOZB LLC, one of de la Cruz's many limited liability companies, successfully lobbied to rezone the mall and at least 11 nearby commercial properties spanning 126.55 acres from individual commercial uses to special commercial district. Indianapolis-based apartment developer Birge & Held, which did not respond to a request for comment, notes on its list of properties an apartment complex at Lafayette Square as a future project.

The DMD staff recommended approval of the rezoning, noting the Eagledale Neighborhood Association submitted a letter of support. The representatives for that association and the Crooked Creek Neighborhood Association responded to requests for comment.

In the statement to IndyStar, de la Cruz said phase two of the project will focus on the mall parcel. It will include the 1,144-unit apartment complex, a 140,000-square-foot sports complex, boutique hotel with 169 rooms and a 78,000-square-foot film studio, among other amenities.

"We've secured rezoning and are working on city incentives, expected in the next few months," he said. "The project has exceeded expectations, growing bigger and better with each step. We're excited for everyone to see the tangible results of our team's hard work."

Questions about funding hurdles remain

Sojos Capital plans to utilize a mix of cash, bank loans, private investors and partnerships to finance the remaining development, de la Cruz said in a statement. The developer said his team has already secured key partnerships and is pursuing more. The company's attorneys are finalizing the incentives application for the first phase of the mall parcel, the statement said.

"We're eager to collaborate with the City," de la Cruz said in the statement. "While banks remain an option for additional financing, we're confident in the current structure to see the project through." Sojos Capital reportedly poured $50 million into the initial renovation work before scrapping plans for Window To the World and shifting to The Square.

Financing could still be an issue. Rob Hunden, president and CEO of Chicago-based Hunden Partners, said the current environment for commercial lending, as well as the project's location, scope and price tag could make it difficult to close any funding gap. Inflation, interest rates and construction costs over the past two years have made financing so-called safe projects harder to finance, Hunden said, noting banks have been cautious about lending to even cookie-cutter commercial development in attractive locations.

"Anytime you're trying to convert one kind of an asset to another mix of assets it's very costly," said Hunden, whose includes career includes nearly three decades in planning and economic development including in Indianapolis. Hunden said he was a bit concerned when he first heard about the plan.

The conversion of a regional mall into a transformational mixed-use development is an untested idea, Hunden said, and that makes The Square risky to underwrite for banks and for the city to invest.

"It's really hard to get banks to lend for commercial real estate, especially if it's unique, different and in a pioneering location," he said, adding that he's not surprised Sojos Capital is seeking government support. "The bigger this gets, to be honest, the harder it's going to be to land debt even if you have some equity investors."

On its own, Hunden said the project appears to fall outside of the parameters of bank lending and to not be financially feasibly without public sector support. The presence of an unknown anonymous private investor is an added hurdle to financing.

"Banks would never lend to something where there was a mystery about where the rest of the money is coming from, and banks are going to do their due diligence," Hunden said. "The city's gonna do their due diligence. Banks need to know who is standing behind a project to recoup dollars if the project doesn't take shape.

"At the end of the day, if this thing goes belly up, they need an individual person who has a very big balance sheet, a bunch of assets that they can go after to go after because they're not going to take the fall," he said.

Hunden's resume includes stints at the Indianapolis Local Public Improvement Bond Bank and working with the Indianapolis mayor's office. He's worked on various projects including the conversion of Glendale Mall, now called Glendale Town Center.

The Glendale property was originally repurposed during a much different economy, Hunden said. There was a public-private partnership and involved owner Kite Realty, a publicly-traded company. "They had a strong balance sheet that they were bringing to the table," he said. "We weren't talking about a billion dollars, even in those days. It was still a big transformation from the mall, but it wasn't this."

'It would do a lot for the area'

De la Cruz previously told IndyStar the International Marketplace neighborhood has been essential to his success in real estate . He grew up in Argentina but left during an economic crisis in 2001 for a new life in the U.S. He was 30 at the time.

De la Cruz first arrived in Miami, then moved to Ohio before landing in Indianapolis where he initially worked as a dishwasher at Don Pablo's Restaurant. He would eventually go on to work as a loan officer and realtor.

He spent much of the past two decades investing the city's northwest side, buying and selling properties, many on and around the Lafayette Road. His holdings include more than 100 parcels of residential and commercial real estate owned by his numerous limited liability companies.

De la Cruz purchased Lafayette Square Mall in late 2020 through his company Perez Realty Group, finalizing the deal early the next year. He reportedly purchased the mall, located north of the intersection of 38th Street and Lafayette Road, for $20 million. With the mall purchase, the property owner, realtor and would-be developer also began publicly using an alias — Fabio de la Cruz — to conceal his wealth and protect his family's safety when traveling abroad to his and his wife's home countries.

Lucille Moore, 90, whose curiosity drew her to attend de la Cruz's January press conference on the redevelopment project, fondly recalls working at two stores in Lafayette Square Mall, which was built in 1969. Moore, who said she's been too occupied with other matters to keep track of the project since, wishes she could have talked to de la Cruz that day to tell him how shoppers drove into the area from smaller towns to shop.

Moore said she thought Sojos Capital would have made more progress by now.

"I figured this area is busy enough that if they can do the mall, and if he gets it done, he would be making some good money," she said. "It would do a lot for the area."

Contact IndyStar investigative reporter Alexandria Burris at . Follow her on X, formerly Twitter, at .