Sweet Moves at Sweetwater

Denholtz Properties has developed a reputation for buying well and repositioning projects that often are overlooked in the market.

Such was the case when the Red Bank, New Jersey-based firm and Convergent Capital Partners acquired the 240,000-square-foot 490 First Ave. South, office building in St. Petersburg, for $19 million in 2016.

At the time, the eight-story building — the longtime home of the Tampa Bay Times — was just 46% committed. But $13 million in renovations, a key lease renewal and more than 100,000 square feet in new leasing to the likes of Bank of the Ozarks, Taylor Media and the successor company to L3 Technologies later, the duo was able to sell the property in late 2018 to a Lincoln Property Co.-led partnership for $39.35 million.

More recently, Denholtz in March of 2020 bought the nine-building Thompson Center for $26.54 million, or $115 per square foot — a significant discount to replacement costs.

“We thought this was just a great location, two miles north of Tampa International Airport, and 12 miles from downtown Tampa, in a growing market,” says Jordan Wean, Denholtz’s director of leasing and business development in Florida.

“The company loves this product type — single-story office and flex space, we find that very attractive and it’s something that Denholtz knows well. And it’s older product, which the company also knows how to properly modernize.”

The 225,651-square-foot business park — renamed Sweetwater Business Center because of its close proximity to Sweetwater Creek — was completed in 1987.

First Industrial Realty Trust, from whom Denholtz acquired the 5455-5557 W. Waters Ave. project, had owned it since 1997, according to Hillsborough County property records.

The property today is roughly 90% occupied by more than two dozen tenants, including Home Depot Inc., BayCare, Eckerd Youth Alternatives, Keller and Terracon.

Wean says Denholtz has invested in excess of $1 million into Sweetwater to upgrade the business park’s windows and landscaping, change color schemes, replace façade and install new signage.

“The idea was to make physical improvements that would really pop at the street level and make the location a more attractive place for businesses and employees alike,” Wean says.

He adds that properties such as Sweetwater fit Denholtz’s long-established business model throughout the state.

Currently, the company owns just over two million square feet of commercial real estate in Tampa, Orlando and Deerfield Beach. Denholtz also maintains a Florida regional headquarters in Orlando.

In addition to Sweetwater, the company also owns the Pinellas Business Center in St. Petersburg and The Times Building, in Tampa, according to its website.

“Sweetwater is a value-add project from a rent growth perspective, but we’re also anticipating further market growth overall as a result of the dynamics at work,” Wean says.

“Denholtz has been in Florida for over 20 years now, and we’re looking to ramp up our presence in the state going forward,” he says. “We’re hungry to find deals in the select markets that we like. With the population growth and the job growth the state has had, it has a lot of economic tailwinds in its favor.”

Wean, who joined Denholtz last October from North Carolina-based real estate investment trust Highwoods Properties, says the company also will consider development opportunities under certain conditions. To date, all of Denholtz’s development activities have been in New Jersey, according to its website.

To further its growth in Florida and elsewhere going forward, Denholtz also is preparing to launch a real estate fund with $50 million in equity, which it will use, in turn, to finance roughly $200 million in acquisitions.

The fund is expected to target the office and industrial sectors that Denholtz knows well, but also explore opportunities in the multifamily rental space, as well.

Wean says the fund will help Denholtz complete for properties against larger buyers and institutional acquirers.

In all, Denholtz today controls 39 properties totaling just over five million square feet in New Jersey, Florida and Pennsylvania, its website states.

But it is Florida where the company sees the most opportunities moving forward, in places like Sweetwater and beyond.

“Central Florida is definitely in the path of growth, and it’s a story that’s easy for us to get behind, in part because the company has operated here for so long,” Wean says.