Back to the City

Back to the City

COMMERCIAL REAL ESTATE by Dave Szymanski | Tampa Bay Editor

More Tampa Bay residents are looking to cities for places to live, play and work and the real estate industry is churning to serve them.

Barry Greenfield moved 10 more miles away from work, but cut his commute to Westshore in half. When home, he parks his car on Friday and sometimes doesn't get back in until Monday.

His new home: downtown St. Petersburg. Urban redevelopment in the city has put a number of activities within walking distance for Greenfield, CFO for developer Opus South, which built one of the condo projects there.

Greenfield, married with older children, is a former Carrollwood resident. He says his situation is becoming more common: Empty nester couples, or anyone in Tampa Bay, looking for more urban lifestyle, a place closer to work, or closer to entertainment and play.

So the commercial real estate industry in the region is trying to provide places to make that happen. Those include condominiums, apartments, stores, offices, parks and more.

"I think people want to live closer to work, or live in a place where work and activities are close by," Greenfield says. "It is having an impact on development in infill development, multi-level retail and other projects."

Despite overbuilding and the failure of some projects, condominium construction continues in both St. Petersburg and downtown Tampa.

Just a block west from the SkyPoint condominium project in downtown Tampa, large public projects, like a new art museum, a children's museum, a riverwalk and a redesign of Curtis Hixon Park, are on the drawing board. A block east, the façade and marquee of the historic Tampa Theatre building have been restored.

Why has this happened? Pat Duffy, president of Colliers Arnold, recently attended a national company meeting in San Diego where new urban development was one workshop topic.

But instead of construction techniques or sales strategies, the discussion aimed at the cause for urban redevelopment: sitcoms.

In the 1950s and 1960s, Americans tuned in to watch Ozzie and Harriet Nelson or Laura and Rob Petrie enjoy and cope with life in the suburbs. Viewers admired the white fences, the big yards, and the two-car garages.

That changed in the 1980s and 1990s as the casts of "Friends" and "Seinfeld" dropped in and out of each other's apartments. Or walked down to the coffee shop, or coped with people they met on the street on the way to the deli or the Chinese restaurant.

In the span of 40 years, U.S. television presented a 180-degree shift in contemporary living: from suburban to urban. And viewers have taken a cue.

"Gen Xers and others find urban life more exciting," Duffy says. "They are bored. They want that coffee shop environment."

Channelside: an evolution

Fifty years ago, building warehouses near the port of Tampa made sense to serve the industrial businesses such as the phosphate industry that used the port. But as the port turned more toward the cruise ship business and as downtown Tampa developed, Channelside's urban role shifted from industrial to more leisure traffic.

Condominium towers are rising today on Channelside Drive in front of the Channelside development, which has offices, stores and restaurants next to the cruise ship terminal and Harbour Island.

"The warehouses in the port were a good idea 50 years ago, but not a good idea today," Greenfield says.

Neighboring Harbour Island continued to build homes and apartments to serve urban demand along the water. The Tampa Bay Lightning chose a downtown location for its new hockey arena, spurning an effort in Westshore.

After a commercial rebirth and evolution in the 1980s from artist haven to bar and club district, developers built apartments in Ybor City in the late 1990s. Companies began moving their offices there in the past 10 years. WBVM, the Catholic radio station, plans to build a new studio and headquarters building in Ybor City.

Along with urbanization, another related trend is gaining momentum in Tampa Bay commercial real estate: rebuilding. Developers are knocking down old buildings to make way for new ones.

As vacant land becomes more scarce and land values rise, Tampa Bay companies are increasingly looking to reuse buildings or knock them down and build anew.

"The urbanization of Tampa Bay is on," says Randy Simmons, chairman of R.R. Simmons Construction Co. in Tampa. "We are working on numerous projects in which some functionally obsolete facility will have to go. The low-hanging fruit of commercial real estate is pretty much exhausted."

The Tampa Bay office market needed to see a spike in rental rates in order for new construction to start. Many new projects, either under construction or proposed, are on the sites of former office properties, which had to further justify added demolition costs.

Westshore developments

In Westshore, they include the new Highwoods Bay Center of 208,000 square feet on the former site of the long-vacant Seagrams Building, and the proposed West View Corporate Center of 500,000 square feet on the former site of the Executive Square office complex on Reo Street.

The challenge for developers now will be to see who delivers to market first while it is still a landlord's market.

There will be some short-term impact from the bubble in the residential market in the form of office space being vacated by mortgage-related companies. How much space this is and how long it will take to be absorbed has yet to be determined, says Bill Obregon, senior vice president of CB Richard Ellis Global Corporate Services, a Tampa real estate brokerage.

The rebuilding is more prevalent in more densely populated counties, such as Pinellas and parts of Hillsborough.

"I'm certainly starting to see that," says Nelson Guagliardo, vice president of the A.S. Austin Co, a developer and landlord in Westshore. "Land is very scarce, especially in Westshore."

Other than being new, the rebuilding projects are usually a trade up from their previous use. In some cases, they are a big trade up.

The most recent example: The MetWest International project on the northeast corner of Boy Scout Boulevard and Lois Avenue in Westshore. MetLife is taking down a two-story office building there, near Tampa International Airport.

The development will include:

• A 250-room business-class hotel.

• 74,000 square feet of restaurant and retail shops in a village environment.

• 750,000 square feet of new office space in three buildings. The existing 240,000-square-foot One Metrocenter building will remain. The new office buildings are expected to be three 10-story buildings of 250,000 square feet each.

• 254 apartments.

The scheduled completion date for the first phase of the project is late summer/early fall 2009.  The first phase may include the retail, one office building and the hotel.

Another example: One Buccaneer Place, the multi-million-dollar headquarters for the NFL's Tampa Bay Buccaneers. The state-of-the-art complex, which includes a training facility, practice field, offices, cafeteria, meeting rooms and film room, sits on what used to be the two-level Tampa Bay Center mall.

Also in Westshore, to make way for the International Plaza mall and surrounding development, the Taubman Co. bulldozed the Hall of Fame Golf Course. The former Jim Walter Corp. building, a multi-story two-tower Westshore fixture, came down for a series of big-box retail stores.

Westshore renewal?

In the coming years, the bulldozers will likely make their way south and start taking down older office buildings and hotels in Westshore. The West Shore Hotel on West Shore Boulevard recently changed hands and may have seen its last days as a hotel, sources say.

"I cannot imagine that we are too far away from the Westshore renewal program," Simmons says. "The underlying real estate is far too valuable to host some of the '70s vintage buildings. Westshore is going to look very different soon if the demand holds up."

In Pinellas County, a number of older shopping centers have been bulldozed or will be to make way for mixed-use developments. Entire malls in Clearwater and Pinellas Park have come down, replaced by open-air developments with big box stores. Smaller retail developments in Pinellas are also slated to come down.

Along the beach in Pinellas, developers have bulldozed older mom-and-pop beach hotels and replaced them with condominiums. Waterfront land is especially valuable in redevelopment work.

"That's what happens with valuable land," says Barry Greenfield, CFO of developer Opus South. "A developer will look at highest and best use that the market will take."

REVIEW SUMMARY

Industry: Commercial real estate

Trend: More people are moving into downtown Tampa and St. Petersburg, driving demand for commercial and office nearby.

Key: Respond to demand for urban redevelopment.