INDIANAPOLIS — Virtually since its founding in 1876, the drug maker Eli Lilly’s stature as this city’s most prominent corporate resident has rarely been questioned. Still, it has been decades since the people who work at the company’s headquarters have been offered a strong connection to the city’s downtown, which has steadily developed into one of the most engaging business, trade and entertainment destinations in the Midwest.

That could soon change.

Next month, the first two mixed‐use retail and residential buildings will open at CityWay, a $155 million, 600,000‐square‐foot new urban neighborhood. CityWay is rising from 14 acres of land, owned by Lilly and used for years as a parking lot that separated the company’s corporate campus in southeast Indianapolis from Monument Circle, the core of downtown. With its eye‐catching angles, colors and textures, and with trees and flower beds decorating sidewalks and new streets, the CityWay project certainly presents Indianapolis with a striking new standard for neighborhood design in this city of 827,000, the nation’s 12th‐largest. And instead of facing an exposed and discouraging expanse of asphalt, the 5,500 employees at Lilly’s headquarters and the young researchers the company is busy recruiting and trying to retain will have an inviting neighborhood to stroll to.

“We’re close to the center of Indianapolis but we haven’t felt so close,” said Steve Van Soelen, Lilly’s director of strategic real estate, who helped develop the concept of CityWay. “There was a lot of open space between us and the downtown core.” Because Lilly needed to find ways to attract young people “who wanted to be part of an active urban place,” he said, “we decided that a new urban neighborhood on the site made a lot of sense.”

In addition to these first two buildings, the CityWay development will also include the Alexander, a $44 million, 209‐room, 161,000‐square‐foot, four‐star hotel scheduled to open in January; a third retail and residential building that is under construction and scheduled to open in January; and a 24,000‐square‐foot mixed‐use office and retail building that will start construction next March. The development’s master plan encompasses 40,000 square feet of street‐level retail space, a $22 million, 75,000‐square‐foot Y.M.C.A. that is under development and two parking structures large enough to handle 750 vehicles.

The construction of CityWay represents a number of firsts for Lilly and for Indianapolis. In pursuing the construction of a new neighborhood, Lilly took on planning, promotion, development and job retention responsibilities that until very recently were largely the purview of municipal governments. Another example of such company‐led urban redevelopment is in downtown Las Vegas, where Tony Hsieh, the founder and chairman of, the online shoe and apparel retailer, is spending $350 million to transform a deteriorated section of the city into a new headquarters, as well as an active residential and retail neighborhood for his young staff.

For its project, Lilly turned for help to the city and to Buckingham Companies, a local developer. Mayor Greg Ballard, a Republican elected last year to his second term, liked the idea of CityWay and his economic development staff constructed a creative package of financing. The largest piece, awarded in the midst of the national real estate recession, was a 10‐year, $86 million construction loan, the first and largest loan of its type ever awarded by the city. According to Michael Huber, the former deputy mayor for economic development who negotiated the financing package, the state of Indiana also provided a $5 million loan. The Y.M.C.A. is investing $22 million. And the local tax increment financing district, or TIF, is investing $9 million, most of it to construct roads, decorative sidewalks and other infrastructure. Lilly’s 14 acres, which it is leasing to Buckingham, were valued at $14 million. Buckingham also invested $4 million.

“Lilly told the mayor the project is critical to their future success,” said Mr. Huber. “They were recruiting talent, and they needed to do more to showcase the downtown. The big parking lots were a psychological barrier.” Consequently, he added, “the mayor instructed us to find ways to get the project done.”

Critics in conservative Indianapolis have raised concerns about public investments in private projects, arguing that if the development was worthwhile the market alone would support them. But city officials have made the case that public investments are needed to support specific facets of private projects, like street improvements and parking. The city’s track record in supporting successful projects has made it possible to overcome local objections.

In fact, Indianapolis, which this year hosted the Super Bowl in four‐year‐old, $720 million Lucas Oil Stadium, built largely with public financing, has a strong record of using the city treasury to leverage new development. Across town, Flaherty & Collins Properties, another local developer, is preparing to build an $85 million, 305,638‐square‐foot mixed‐use building with 500 apartments, a 42,000‐square‐foot grocery store and 15,000 square feet of retail space. The financing package includes a proposal, still in negotiation, for $11 million in city financing to build a parking structure.

The city’s signature downtown walking mall and Bankers Life Fieldhouse, where the Indiana Pacers play, also were built with more than $100 million each in public financing, said Mr. Huber.

The result of these and other projects is a city that has gradually developed a regional brand as a livelier place to live and do business, in a state that is doing better economically than most. In June, Indiana generated 10,700 new jobs, more than all but three other states, according to the Bureau of Labor Statistics. Indianapolis’s unemployment rate is 7.5 percent, below the state and national jobless rates.

Michael J. Fox, the president of Buckingham’s construction division, notes that the primary market for CityWay’s apartments, hotel rooms and retail spaces are visitors to the city’s sports arenas, and employees of Lilly and three other big corporate offices that are all within a 10‐minute walk of the new neighborhood.

One of those companies is Rolls‐Royce, which consolidated six offices on Indianapolis’s perimeter and late last year began moving 2,500 engineers and information technology employees downtown into its largest operation outside Britain. The company leases two buildings, 440,000 square feet, that Lilly built a decade ago at a cost of about $75 million. They are so close to CityWay it’s easy to envision Rolls‐Royce staff walking over for morning coffee or a salad at lunchtime.

Mr. Fox said that all of the one‐ and two‐bedroom apartments in the project’s first two buildings had already been rented at prices ranging from $900 to $1,300 a month, and that there was a lengthy waiting list. The retail spaces have not been entirely leased but he expects them to be full by the end of the year. “We see this as kind of a missing piece of the development that’s been occurring here for years,” said Mr. Fox. “The interest we’ve already seen in the residential units, in hotel bookings — it gives us confidence that it will be a welcome addition to our downtown.”