Options Open

Options Open

By David R. Corder

Associate Editor

Roger Gatewood might consider a joint venture. If the price is right, he might even entertain other opportunities. Either way, he's anxious to sink the first piling for his Seaboard Square condominium project.

It's been about a year since Gatewood quietly assembled the small parcels of mostly vacant warehouse space in Tampa's Channel District for about 370 condos he proposes. Yet the only visible sign of progress on the site adjacent to the Port of Tampa parking garage is the vacant lot where he demolished an old warehouse to make way for the first-phase of residential construction.

Progress on this promising mixed-use development has not met Gatewood's expectations. It's apparent the St. Petersburg developer would rather be racing the clock against the neighboring Towers of Channelside condo project, where construction cranes are busily at work on 255 new condos.

"I tend to be overly optimistic," Gatewood says. "You have to be in this business. Builders are always behind on schedule. I would like to be further along, but realistically none of the delays are critical to the success of the project. It's jut taking a little longer."

These are just two of the multifamily projects local politicians and economic development officials tout as the beginning of a new era in downtown Tampa. Mayor Pam Iorio, for instance, frequently exclaims the virtue of such developments as the catalysts for transforming Tampa into a city where workers also live and play. She joins a cascade of mayoral predecessors who have uttered similar exclamations but saw little results.

Once again, the forces that guide the market are producing mixed results in the Channel District section of downtown.

On the positive side, work progresses on the 225 units proposed in two 30-story buildings at the Towers of Channelside. The same is true at Grand Central at Kennedy, where work has started on the 392-unit mixed-use project.

On the other hand, Miami's Crescent Heights Inc. halted plans earlier this summer to build 855 condos in two, 30-story buildings. It put out for sale signs. Company officials did not respond to a request for comment.

Nothing has occurred, either, at O2 at Pinnacle, a 400-unit project proposed near Seaboard Square at Channelside Drive and Brorein Street. None of the partners in the project, which includes Tampa developer Ken Morin, were available for comment.

Gatewood is also facing challenges.

For one, construction costs have become a bigger issue, particularly in the Channel District where developers sometimes encounter special engineering challenges. In some instances, soil composition there requires deeper pilings and reinforced footings.

"Construction costs and prices have gone up," Gatewood says. "We're seeing 40 to 50% more than the estimates that were made a year ago."

Such costs would have posed a severe challenge to the Seaboard Square project if Gatewood had locked into buyer contracts for individual units. He didn't. Instead, he simply amassed a client list of interested buyers.

"We have a huge waiting list," he says. "We're in the final throes of getting the price on the first building."

Just recently Gatewood submitted a building permit to the city in advance of changes that took place this month in the building codes. Since many builders rushed to meet that deadline, Gatewood says, no one in the city can tell him when they'll get around to reviewing the permit.

"Right now, we're finishing up plans and meeting with the general contractor," he says. "We're trying to make sure the pricing is good. It is substantially higher than the original projections."

It's not just construction costs that have posed a challenge for Gatewood. Another problem involves the electrical lines that traverse phase two of his project.

When he first proposed Seaboard Square, Gatewood found some willingness among city leaders to offset his costs to either relocate or bury those power lines. He offered to pay all upfront costs, if the city reimbursed him later. Now he's facing some opposition.

"That's taken a lot longer than I anticipated," he says. "We got caught in the formation of the community redevelopment agency and a study on the issue."

This is an issue that affects more than just Gatewood's project. Those electrical lines also feed electricity to Harbour Island. The city doesn't expect to complete the study until later this year.

Meanwhile, Gatewood tapped into the creative entrepreneurial wherewithal that produced the success he achieved as founder of Westfield Homes Inc. Standard Pacific Corp. acquired Westfield Homes in 2002 for almost $57 million, and Gatewood left the company two years later to build Seaboard Square.

Rather than let the market dictate his success, Gatewood took immediate action when it became apparent these market forces posed a challenge to the Seaboard Square project.

For one, a hotel group has acquired an option to purchase the parcel he proposed for a 120-unit hotel. The deal hinges on a successful rezoning of the parcel from warehouse to hotel use.

Then he began talks with potential joint-venture partners for the commercial-retail component of the Seaboard Square project. That's an area he lacks expertise in and might be willing to cede to someone else.

The idea of selling off components of the project is not really that unusual. The partners behind Grand Central at Kennedy, for instance, are trying to sell the project's office component - about 60,000 square feet of proposed space.

"We've talked to different people about different things," Gatewood says. "I've had a number of people approach me about buying [the project], but it's not on the market, per se."