Calculated risk

Larry Feldman's first solo project for his family's New York-based development firm was a 40-story office building on 45th Street in Manhattan that opened just as a crippling economic recession hit the Northeast.

The year was 1990, and Tower 45's $120 million in debt was racking up interest charges of $43,000 — each day. Making matters worse, the building was only 8% occupied at opening.
That's when Feldman had an epiphany.

“I realized my customer wasn't the tenant who'd be occupying the space: It was the real estate broker who brought them to the building,” says Feldman, 61, president and CEO of Feldman Equities LLC, one of the Tampa Bay area's largest office landlords.

“A lot of developers see brokers as a necessary evil,” he adds. “But I came to see them as critically important allies. It made all the difference, and has to this day.”

At Tower 45, Feldman began paying broker commissions on deal signing. Most developers staggered commission checks, paying half upon signing and the balance at tenant move-in, which left brokers waiting sometimes months to be paid. He began lavishing brokers with gifts, including cutting-edge electronics, and taking them to dinners, too.

The strategy worked. A year after opening, Tower 45 was 90% full.

Feldman intends to employ the same tactics at Riverwalk Tower, a planned 52-story skyscraper that would be Tampa's tallest structure at 630 feet and its first mixed-use development, combining Class A office space, ground-floor retail offerings and residences.

Feldman hopes to begin work on the $200 million project, a joint venture with Tower Realty Partners, later this year and complete it in 2018.

If completed, the building on the former Trump Tower site on the Hillsborough River — the last undeveloped waterfront site in Tampa — would be the first new downtown office tower built there since 1992. Feldman and Tower have proposed 215,000 square feet of office space and 203 luxury apartments housed in 31 floors of the building.

Perhaps not surprisingly, Feldman has local commercial real estate agents rooting for him.

“He's a very honorable guy, a very straight-forward guy,” CBRE Inc. investment sales broker Dale Peterson says of Feldman. “And he's a deal guy. He wants to get deals done.
Everything he does is intended to increase the value of his buildings, and that's admirable.”

And while questions have been raised about whether Tampa's office tenants will pay the $36 per square foot Feldman and Tower plan to ask for space — the market rate hovers around $30 per square foot — Feldman is confident Riverwalk Tower's amenities and technological prowess will win over cynics.

Design firm Gensler, for instance, plans to include a high-speed elevator that will go faster than any other in the city. A state-of-the-art air filtration system will make breathing indoor air easier, too.

“The building will be so far advanced that I think people will pay a little extra for the extra quality,” Feldman says.

He also plans to target office tenants that require between 2,000 square feet to 20,000 square feet of space, which Feldman contends is “90% of the market.” Feldman and Tower's primary competition downtown, a skyscraper proposed by Jeffrey Vinik and Cascade Investment's Strategic Property Partners in the Channelside district, conversely, has stated it hopes to land a regional or world corporate headquarters.

“He really spends energy and time to make sure both sides in a transaction are happy,” says Cheri O'Neil, a senior vice president of commercial brokerage firm Savills Studley, in Tampa. “He really cares, and it's so very smart the way he takes care of his tenants from day one.”

Feldman's career began in New York, but he appears to have honed his skills even further in Tampa and St. Petersburg, where he started investing in 2009, even as economic recession kept a stranglehold on the region's office market.

“I got Miami and I understood Orlando as a market,” Feldman says. “To me, back then, Tampa was a dead end on the west coast of the state. But then I came to realize what a great buying opportunity it was.”

Feldman's first foray into Tampa Bay area commercial real estate was in Tampa's Westshore district, where he, Tower and Dallas-based TriGate Capital LLC acquired the 134,000-square-foot Fountain Square II building out of bankruptcy.

Within two years, the partnership had signed roughly 50,000 square feet of new leases and obtained renewal commitments on about the same amount of space. In June 2014, the team sold the property, then 98% occupied, for $24.75 million.

From there, Feldman and Tower, sometimes with other partners, purchased the City Center building in downtown St. Petersburg for $16.5 million; the Wells Fargo Center in Tampa for $44.8 million; the Morgan Stanley Tower in St. Petersburg for $20 million; and St. Petersburg's First Central Tower, for $29.15 million.

In each case, Feldman and Tower spent millions of dollars to improve the properties — the 17-story First Central is in the midst of a $10 million capital program — and focused on raising occupancy levels.

City Center went from 44% occupancy to more than 94%. The 17-story Morgan Stanley Tower was just 65% committed when Feldman took over. It's now more than 90% leased. The 22-story Wells Fargo Center's occupancy rose from 75% to 94% under Feldman's stewardship.

“His success is no surprise,” says brokerage firm JLL Senior Vice President Brent Miller. “He's engaging and accommodating and very responsive, and he pays attention to minute details. He's the most hands-on landlord in our market.”

Not everything has broken his way, however. Feldman notes he lost money on a mall venture around 2000 when both tenants and lenders went bankrupt around the same time.

Now, though, he believes firmly that the time is ripe for Riverwalk Tower, thanks to demographic changes skewing more to younger residents, the growing cohesion of Tampa's Riverwalk, city leadership and the growing economy.

Even so, he fully realizes that embarking on a 52-story tower is a risky venture -- regardless of regional trend lines.

“I guess you either have to be a fool or a visionary,” Feldman says. “Though maybe only a fool would spend two years assembling land and another six months on architectural plans only to spend the next two years in construction to deliver a building into an uncertain economy.

“But you have to take risk and believe in the future — and I believe in this town's future,” he adds. “In Florida, I've learned that if you're first to market, you can do very well. If you're the last out of the ground with a new building, you can lose both your shirt and your underwear.”

The same adage seems to apply to New York City. Last year, then-owner SL Green Realty sold Tower 45 for $365 million, according to news reports.

- K.L. McQuaid