Commercial Real Estate - Q&A

Ian Black formed the eponymously named Ian Black Real Estate, A Sarasota-based commercial real estate brokerage and management firm, in 2003. In the years since, the firm has become one of the region's largest commercial brokerages, representing landlords Fred Starling Inc., Ibis Group, TerraCap Management and others. The firm's most notable transactions involve a 30-acre property sale at the entrance to Gasparilla Island and the $18 million deal for the mixed-use Main Plaza office and retail complex in downtown Sarasota.

How would you describe the overall state of the commercial real estate market in Sarasota and Sarasota County at the present time?

It was a very healthy 2017 all around, with most sectors of the market performing as well as I have ever seen them in more than 30 years of working here. The only possible exception to that statement may be with downtown office leasing, which has been flat over the last several years with little or no positive absorption. Smaller spaces in Sarasota seem to have no trouble leasing up, but spaces of 5,000 square feet and above often present challenges. But every other segment has been very healthy. Multifamily speaks for itself with the proliferation of development we're seeing, it's been very hot and people are taking advantage of the shift toward rentals. Investment sales have been solid thanks to an influx of 1031 exchange money that's come into the market. Going into 2018, we're finding that some significant properties we have listed are attracting interest where they hadn't before. To me, it's indicative that the market should be good for this year going forward. I think part of the feeling of well being has sprung from the tax reform act, because it's generated a degree of confidence in which people are increasingly feeling good about doing business and investing.

Do you think the multifamily rental market in Sarasota is being overbuilt? There are more than 1,500 new units that have either been delivered in the past 18 months or are under construction for 2018.

Obviously when you look around town, there are a number of new multifamily rental projects being built. But what strikes me is they're mostly all coming from established, institutional players. I have to believe they have access to demand data that I don't, and that they wouldn't be able to obtain financing without a solid idea of what the market can support. The other thing to keep in mind, with multifamily rental, is that Sarasota had little or no multifamily development occur in the county for 20 years. But it will be interesting to watch that market going forward and whether it's now oversupplied or if the growth will continue.

What about new hotels? Sarasota has added more than 1,000 new keys, after losing just 600 during the previous cycle, and most are in the downtown core, not in traditional beach areas.

It's a concern, especially downtown, because in the absence of a new convention center or meeting space, one has to wonder what is contributing to demand? That said, Sarasota has gained in popularity as a destination, thanks to marketing and the designation of Siesta as best U.S. beach over the past decade. Out east, Benderson Park and the Premier Sports complex have generated increased demand, and downtown properties have to get some spillover from that. Again, it's something to watch, but I think that urbanization and other trends bode well.

Sarasota has been hit by retail closures, especially at its malls, but the area hasn't experienced the retail apocalypse other places have had to grapple with. Why?

The retail market here has been relatively healthy overall. Some traditional mom-and-pop merchants may find themselves endangered species going forward, but for the most part, the whole segment is making a shift more toward entertainment or service-based concepts. It used to be that if your retail center had a restaurant or a gym in it, you couldn't get it financed. Now, you can't get financing without them. That tells me the market is adapting to trends. Traditionally, it's always been considered that we're underserved in retail, and if you look at the University Town Center submarket, there's not much vacancy there, despite the amount of new supply. If the location is right, there's demand, and developers have caught on to that and are catering to it.

What about the industrial market? Sarasota isn't exactly known as either a distribution center or manufacturing hub, though some projects, like the Meridian warehouse off Clark Road, have done quite well.

If you want Class A industrial space, for the most part, it's not available in Sarasota. There's just no inventory. But we're seeing that loosening. Harrod Properties is building in Lakewood Ranch, and Benderson Development is adding product in Ellenton. I think developers are recognizing there's a gap in the market and are responding.

Does it seem to you as if Sarasota is fulfilling the potential that was outlined in the Downtown Master Plan 2020 developed in 2000 and 2001?

Sarasota never ceases to amaze me. The number of people who discover Sarasota and determine it's a place they want to live continues to increase year after year. Sarasota is in the midst of gaining 2,000 to 3,000 new residents just in downtown. But we're going to have to be smart about taking care of our infrastructure needs. In the short term, the roundabouts being installed downtown will impact our collective ability to get around, but I think the main issue will be in adjusting our thinking. We need to work on educating people about the benefits of decreasing their reliance on their automobiles.