Skip navigation

Tampa Bay emerges as formidable business locale

Forget that Tampa Bay just lost out to Charlotte, N.C., in its bid to land a huge operating unit of Teachers Insurance and Annuity Association.

Pay more attention to the seven-county area's success stories of the past two years. So many major corporations have located or announced plans to locate or expanded operations in the Tampa Bay region that it's easy for real estate executives to roll them off: Citicorp, PricewaterhouseCoopers, GEICO, Raymond James Associates, Intermedia, Progressive Auto Insurance.

All the activity caught the eyes of those of us at National Real Estate Investor, so we decided to hold our first-ever Tampa Bay roundtable and see firsthand what's happening. Here's what our participants had to say.

NREI: Stuart, can you give us a quick overview of exactly was the Tampa Bay Partnership considers to be the Tampa Bay area?

Stuart Rogel: I think what you've got represented here is really a group of developers who've got their regional hats on. I think almost every one of our seven counties of the Tampa Bay Partnership supports is here and is part of what is going on today, with John [Swart] literally anchoring and balancing both Manatee and Sarasota on the South, and obviously Hillsborough and Pinellas being the real strong drivers in the marketplace. And Polk County to the east, being a market that's just taking off and has just begun to hit any sort of stride, and it sits between Orlando and Tampa Bay in the catbird's seat. The communities to the north, particularly Pasco and Hernando, which have been good bedroom communities but are beginning to see some real commercial activity - particularly Pasco. That seven-county area, which is about 3.2 million people is really a key market here on the west coast of Florida.

A couple things from an economic development perspective that are happening in this marketplace: Our strength has been the back-office operations, the call centers, now the shared-services operations. That's been the real bread and butter for this entire region. Not only has it been activity that's occurred in Hillsborough and Pinellas counties, but we're beginning to see that in the smaller markets, and in some pretty big ways. I mean GEICO announcing , I believe, 1,600 jobs in Polk County is major. I think that's the largest single announcement of its kind in the region. What's really underneath all of that also is the whole technology base that's been driven off the telecommunications companies, the information-technology companies, the electronics manufacturers and assemblers that are here. Another thing that's happening is that these two regional marketplaces of Tampa Bay and the seven counties that I refer to and Orlando and the four or five or six counties in that marketplace are literally coming together through a whole variety of activities.

NREI: PricewaterhouseCoopers has just expanded in Tampa, and Carter & Associates was involved. Shane, will you tell us about that?

Shane O'Neil: We're very excited to have been able to work with Pricewaterhouse on their development project down here. They were already in the area, as most of us know, in the Tampa Bay Park area. A lot of their folks were coming down for training, their consulting, their high-technology. So, what they thought, in order to consolidate everybody, was that one campus would be a much more effective forum. They created a worldwide consulting training center down here in Tampa, and at the corner of Hillsborough and Eisenhower, we sold them 18.5 acres of land, and we won the bid to do the development for them, which really comprises two projects. We were involved on the office side of things. The office building is about 132,000 sq. ft., rising four stories. It's actually the second building in Florida that's built four-story tilt-wall, where they actually lift the building up. We had to bring in the largest crane in Florida in order to erect the building. It's extremely high-tech intensive. At this point, it's just being completed; we did it in 9.5 months.

NREI: Speaking of buildings for high-tech and telecom companies, Steve tell us about your project for Intermedia Communications.

Stephen Meyers: We've been very fortunate to grow an existing tenant into a new campus. We have a two-phase project that we're actually starting next month [February]. It's 800,000 sq. ft.total. The first phase is about 400,000 sq. ft. It's going to be delivered over the course of about a year, and it will be the corporate headquarters for Intermedia Communications, which is based here in Tampa. The approach we've taken with the project: You know you're dealing with a company that's growing incredibly rapidly, and that's always a challenge. It's a wonderful situation for a landlord to be in. At the same time, in any environment, we also have to be cognizant of the special requirements of the tenant. In this case, we've worked out an arrangement with Intermedia where we're investing some dollars to building the campus, the buildings, what might be viewed as standard office finishes, and Intermedia - because of the specific nature of their requirements - is going to invest at least as many dollars in improvements as we are because of their requirements for state-of-the-art telecommunications and computer services for their space.

NREI: What advantages does the Tampa area enjoy in its efforts to attract businesses to fill office space?

Larry Richey: I'd start any conversation by saying one of the most important things we can do whether we are economic development executives or developers or service providers is to have a keen understanding as to what drives the decisions of corporate America today. It really hasn't changed that much. At the top of virtually everybody's list, with few exceptions, is the labor - the availability of labor and skilled and sometimes not-so-skilled labor. I think the benefit that we have here in Florida and Tampa in particular is that our availability of labor- the denominator in that formula, the population - continues to increases every day. Even though our unemployment rate is lower than the national average and comparable to some of the cities we compete with, when people come in and actually get into Stuart's and his counterparts' statistics and details, they learn that truly the labor advantage is here. It's as good here as anywhere if not better, and there's certainly a herd syndrome in this side of the business that I think is impactful. Our labor market is probably the most important thing that's impacting our performance in the office market.

Lee Arnold: We're looking at a vibrant market, but the capital market disruption in the fall put a pause, which we think is very healthy. We saw what could have been an overbuilding situation stabilize so that we have as close to true equilibrium in the Tampa Bay market as we have seen since pre-1986. This equilibrium is coupled with a job growth that we've experienced in the Tampa Bay area last year of 4.6%. That's a remarkable job growth when we compare that to the national statistics. During the same period, the national statistics are 2.5% job growth. So Tampa Bay will enjoy continued absorptions. While we look at the total number of square footage that we calculated around 2.5 million that's going to be built in 1999 - and take us to almost 40 million sq. ft.of office space - that amount of space is not exorbitant given the amount of actual job growth we have. We're now talking about a $59.6 billion Tampa Bay economy. Couple that with what Stuart was talking about and put that with Orlando's $44.7 billion economy, put those two together, and you've got an economic engine that runs through the center of the state down through the Fort Myers with commonality and absorption that is quite exciting. We have sunshine; I think that's a major selling point. We have a lifestyle that goes with that sunshine. We have a low cost of doing business; there are a number of different ways to demonstrate that. We have a great work force.

Julia Rettig: I just want to add to that. I think it's safe to suggest that the corporate culture has changed where the days of the white shirt and the tie are pretty much over for our culture. It's becoming more of a - we hear the word X-generation. The type of users that are coming into our market are the younger, high-tech users. And I think that Tampa as a region really promotes the casualness. We all saw that Monday Night Football game. Everybody who was freezing up North saw people down here in shorts. This is really a community where that casual atmosphere can be taken care of. And a lot of our developments, I think, - the Highwoods doing stuff for Intermedia, and we are doing our spec building - all of the users that are coming in are the casual-culture type of users, and I think our region can attract that type of company. So we'll continue to be strong in that pursuit.

NREI: Eric, can you offer some historical perspective. How have you seen the area change as it grows?

Eric Eicher: I came to Tampa in 1980, and I think truly we saw Tampa emerge as an urban city. We saw the first 21-story apartment building built. We saw a Saks Fifth Avenue come in. We've got Nordstrom's coming; we've got Lord & Taylor coming. We've got tremendous office deals. During the '80s, we never had 700,000 sq. ft. office deals. We never had companies like Progressive that came into the market. They started with 60,000 sq. ft., went to 120,000 sq. ft. Now they have built 312,000 sq. ft. I'm concerned about the economy a little bit, too, but I also think Tampa is postured better than almost any city I can think of to continue to grow. We've got a vibrant port. The University of South Florida has a $400 million budget to double the size of the campus - the physical campus itself. We've got 120 new movie screens being built, which is just unbelievable. We've got $110 million expansion of the West Shore mall that's under way. We've got another new mall opening - the Citrus Park Mall. We've got another regional mall that's looking at our fairgrounds, to relocate there. The place is on fire with development. Compared to the '80s, I think, the one thing I'm starting to see is that we're running out of land. Almost at every intersection on I-75 there's transactions under contract. Brandon is an area that's just on fire with development in the I-75 corridor. It represents 47% of all the residential starts in Tampa Bay. It has about 3.5 million sq. ft. of retail. It's got a ton of activity around it - over 10 apartment projects in varying stages of development. It's becoming a very urban environment that we live in. It's changed a lot for the '80s in that regard.

NREI: Let's talk more specifically about development. Darryl, what's going on in Carillon and in Pinellas County?

Darryl LeClair: We had an interesting year last year also. We were pleased to be able to help facilitate ABR's 'non-move' if you will, out of the west coast of Florida into Florida Power's main campus. That was a 400,000 sq. ft. play there that we are currently constructing and rehabing right now with ABR moving in there, which then allowed us to facilitate 250,000 sq. ft. development to move Florida Power back into downtown St. Pete and help take some product that was on the market and rehab all of it or build it completely. That was also 250,000 sq. ft. Plus, we had the deal that we cut with Franklin Templeton. We're really pleased with that because we didn't want to loose an entity like Franklin Templeton outside the state. They're a good example of some of the things you heard from Larry and Stuart. Once they decided that they were going to look for an eastern seaboard headquarters, they kicked it out to the whole eastern seaboard. And, they did a pretty massive study of where they would locate, what they would do and what have you. They ranked the markets, and Tampa Bay was in the top three on the eastern seaboard, because that is their whole eastern seaboard headquarters. That allowed us to, in effect, bring them back and put us in position to build them 280,000 gross sq. ft. of which they've already moved into. We've now facilitated another deal which we have just turned over to them - we took it up to the pad level. They're going to be building 309,000 sq. ft. behind it. You probably read in the paper that Franklin Templeton got caught up in the August issue also, but the interesting thing for us is it actually helped us because of the points that everyone's making here. They started looking, and they said, 'Gee, let's see. Cost of San Francisco vs. cost of Tampa Bay.' What you're now seeing, the reason why they're moving forward with the 309,000 sq. ft. is a major shift of all their operations. Their lead operating center is going to be Carillon for Franklin Templeton.

NREI: Neil, what are you seeing up in the New Tampa/I-75 corridor?

Neil Rauenhorst: Well that's an area that began to be quite attractive to us when we were looking around the Tampa Bay market for some new development and office development opportunities. I should say that initially, we started looking at the West Shore area. We have been located in West Shore for about 15 years, and that's where we really thought the office market was going to come back first. We certainly wanted to be in a position to take advantage of that. What we found was that due to a lot of the land constriction, it was very difficult to begin anything new in West Shore. Just about anything now seems to be a redevelopment of some sort. You have to take something off the site to get started. There are very few available sites. I think a lot of that has driven opportunities to the east, over to the I-75 corridor. We can all see how up along the I-75 corridor from the north up where we are to Fletcher (Avenue) and across from mid-river, all the way down to where Eric is, that there are a lot of organizations that are locating on the I-75 corridor. That seems to be the emerging area in Tampa. We were looking at the corridor. We liked the property that used to be the State Street property at Fletcher and I-75, the southwest quadrant. So, we bought that about a year ago. We're planning on putting in about a million sq. ft. Hopefully that will include a hotel deal. There will be four or five office buildings, four or five stories with decks. Our first building has recently been completed. It's 160,000 sq. ft. with a little over half leased, and prospects look good for the remainder of that building. We hope to get the second project under way here shortly. If we can get the third one started by the end of this year, I think that will be on track with what we expect. The types of tenants that we're seeing are the types that we might have seen at West Shore 10-15 years ago. It just happens to be where they can go next. I think there are other opportunities up and down the I-75 corridor. You see some very large build-to-suits locating there - the Citicorp deal. We see things going that direction.

NREI: Let's shift to the other end, the extreme south areas of Sarasota and Manatee counties and hear from John.

John Swart: I just had to take a big sigh and say, 'Wow! This is really incredible.' If you look back over the years as to what's happening now, it's a great time in the real estate cycle. This is a wonderful place to be. The connecting links to Sarasota and Manatee counties, are I-75, the Skyway Bridge. I was here [at the airport] in about 45 to 50 minutes from the I-75 area. In the two-county area, Sarasota and Manatee, in terms of economic development, a lot of it's hone-grown, and that's what's happening here, as you've mentioned. About 75% of the expansion has really been home-grown, with both office and industrial companies. At Lakewood Ranch and Schroeder-Manatee Ranch, we're fortunate to have about 10 miles of more or less frontage on I-75 encompassing about 28,000 acres, and as we all know it's pushing east. As Neil's mentioned, the I-75 corridor and what Eric started quite a long time ago in the Sabal Park area. That's continuing in our area to the south as well. In Sarasota, there's virtually no offic e space available. You probably can't find 3,000 to 5,000 sq. ft. in one place all together. As a result of that, the city is a little bit behind the curve. There are starts and plans for about 400,000 sq. ft., which is about a 10% addition to the office inventory there. But it's mostly all in small floorplates of 8,000, 10,000, 15,000 sq. ft. At Lakewood Ranch, at the I-75/University Parkway area, we have the advantage of lots of land. We have a corporate business park in Sarasota with 1,200 acres and the Town Center area on the Manatee side with 500 acres. Because of the office expansions, we've been able to attract FCCI Mutual Insurance off the Cattleman Road area, which is planning right now 356,000 sq. ft., 1,200 employees. It's a major expansion for them and for us because of the campus style and the excellent access that we have off the highway. Other insurance companies have expanded like Sterling Cook Insurance in a building that's 28,000 sq. ft. With Neil's help and Stuart's help through the Tampa Bay Partnership, SecurityLink from AmeriTech landed at Lakewood Ranch and is now occupying 100,000 sq. ft. with 5,000 telephone lines.

NREI: Let's talk about something that Atlanta also has a lot of: retail. Michael, why is the retail market so vibrant?

Michael Leeds: What's interesting is that everyone has been talking about all of the exciting office developments, etc., and what's finally happened in Tampa is that retailers are taking notice of that. You've got Citrus Park Mall, which is opening up, an Urban project, in the beginning of March. There's an announcement of International Plaza, a very upscale regional mall. Saks, as Eric mentioned, is opening at West Shore. This is new for Tampa Bay. Tampa has generally been a very middle-market, retail-oriented destination, no upscale except for some small, 'boutiquey' operations. What's been happening with these announcements and these new developments is really evidencing the upscale nature of the clientele and population, or at least a segment of the population, in the Tampa Bay metropolitan area. The mall at Citrus Park, the Urban center, will actually be more upscale than Brandon. The retailers there are higher-end for the most part. They'll be anchored by the same department stores as Brandon, but the smaller retailers will be more higher-end. On sort of a more micro-level, where I focus most of my time, is on the neighborhood-community shopping centers. There's a lot of different aspects to what's going on in that arena. Within the city of Tampa - the older areas - what you see is generally a redevelopment process taking place with grocery stores - Publix, Winn-Dixie, Kash 'N Karry. They're not moving out; they're staying where they are. They're working with their existing landlords and developers to either rebuild, renovate or remodel their existing facilities, which in turn, in a sense, turns around or rejuvenates a shopping center, creates new growth, new activity, new livelihood, new leasing activity, increased rents. Toward the suburban areas, as residential growth is moving out to the north, west and east, you have the shopping centers following that growth.

NREI: Finally, I want to ask the other Michael about the area's investment market. As the REITs have been forced to the sidelines of the acquisition game, has this created opportunity for smaller, private companies such as yours?

Michael Gentile: From the investment side, it is highly difficult to find a property that matches the criteria that the Minieri family, who are my principals, have set out for acquisition. For the longest time, we could not compete because the market's so vibrant, there's so much money around, so few products around, that we were essentially shut out of the market. Last year we closed two transactions, but I had to look at over 500 deals to get those assets that met our criteria.

NREI: That'll do it for the 1999 Tampa Bay roundtable. Thank you all for telling the region's real estate story.

Lee E. Arnold Jr. Chairman and CEO Colliers Arnold

Eric B. Eicher Executive Vice President Oak Creek: A Robert E. Woolley Development

Michael L. Gentile Chief Operating Officer Wyndham Investment Corp.

Darryl LeClair President Echelon International Corp.

Michael J. Leeds Vice President RMC Realty Cos.

Stephen A. Meyers Vice President- Tampa division Highwoods Properties Inc.

Shane P. O'Neil Senior Vice President Carter & Associates Larry D. Richey Operating Manager-Florida area Cushman & Wakefield of Fla.

Neil Rauenhorst President and CEO Opus South Corp.

Julia S. Rettig Area Vice President Weeks Corp.

Stuart L. Rogel Executive Director Tampa Bay Partnership

John S. Swart President Lakewood Ranch Realty Co.

Moderator: Tony Wilbert Editor NATIONAL REAL ESTATE INVESTOR

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish