Sunday, February 18, 2018
Business

Should this key block of downtown St. Petersburg be turned into office space or more apartments and condos?

ST. PETERSBURG — For a decade, the big question about the 400 block of Central Avenue was: How do you get rid of the decrepit old buildings there to allow room for redevelopment?

Now that demolition is underway and the site soon will be cleared, the question is: What kind of redevelopment would be best for a block in the heart of one of Florida's most vibrant downtowns?

Mayor Rick Kriseman has an answer: a hotel and especially office space.

"Our offices downtown are virtually 100 percent occupied and as we are trying to attract more businesses to the city and a lot of that wants to be downtown, we need places to put them,'' Kriseman said in a recent interview. "And obviously there's a lot of folks who visit the area who want to stay in the heart of downtown and walk."

Related: As development deal nears for 400 block of Central Avenue, a look inside the St. Pete buildings frozen in time

In the near future, though, the mayor might not get his wish, at least when it comes to a new office building.

Although several downtown St. Petersburg buildings are almost totally occupied, the area's overall vacancy rate is 7 percent, the brokerage Cushman & Wakefield reports. The rate could rise even further when 113,000 square feet of space hit the market next year after renovations are competed in the 490 First Building, which the Tampa Bay Times sold in April. (The paper will continue to rent three floors.)

Previous coverage: Tampa Bay Times sells St. Petersburg headquarters, will remain as tenant

And though it's gone up, the average rent for prime Class A office space in downtown St. Petersburg is just $25.67 per square foot — well below the $33 to $35 needed to justify the cost of new office construction, experts say. At the same time, the rents are high enough and parking space scarce enough that some businesses are leaving downtown instead of moving in.

Put all those factors together and "St. Pete is not ready for a new office building now — that is, a smaller building that may hit the market within 12 to 24 months,'' said Wendy Giffin, a Cushman & Wakefield director. "However, if a building were announced and it came out of the ground in two to three years, we will definitely be ready barring any large unpredicted vacancies.''

The Red Apple Group, a New York company headed by billionaire John Catsimatidis, is under contract to buy the 400 Central block after workers finish demolishing a long-vacant hotel and bank. Catsimatidis did not return calls for comment for this story, but he previously indicated he's thinking bigger (not smaller) and residential (not office) when it comes to a new building on the site.

Related: Photo gallery: Remembering the Pheil hotel building

''St. Pete needs a skyline,'' he said in July as Red Apple released a rendering of a soaring tower that would dwarf everything around it. Catsimatidis spoke admiringly of ONE St. Petersburg, a 253-unit condo tower under construction a few blocks away.

"I think it's 60 or 70 percent sold-out already,'' he said. "If it's 60 or 70 percent sold, I guess there is a need" for more residences downtown.

Related: Billionaire developer says St. Pete needs a skyline in revealing soaring tower to replace 'cheesegrater' building

How would Kriseman feel if Red Apple opted for a primarily residential project? "It's certainly not my first choice,'' he said. "I think we have ample residential when it all comes online. That's certainly not our greatest need.''

Kriseman, said, however, that Red Apple seemed open to suggestions and wanted to do a project "that is great for the city.'' A possible compromise: a tower with ground-floor retail space and offices and residences above.

"If I were Red Apple, I would be looking at a strong mixed-use component,'' Giffin said. "I think we'd be ready for some office product in a few years — not a full office building but several floors of offices before residential. That would be a convenience factor to people who live above.''

Related: How long can the good times roll for Tampa Bay's housing market before the bubble bursts?

An absolute must for any major new downtown project is parking, Giffin says. Among the structures being demolished on the 400 Central block is a garage that provided 200 or so parking spaces for nearby businesses. The loss of those spaces has enabled other downtown garages to push their monthly reserved parking rate to $100 or more.

Parking in downtown St. Petersburg is "very limited and getting more limited,'' Giffin said. "Between the combination of that and increasing (office) rental rates, we've seen some tenants move out of the central business district and look at locations north on Fourth (Street) and in the Gateway area.''

On the flip side, the departure of some businesses from downtown has opened up more space for those still there that are seeking to expand, Giffin says.

Kriseman's wish for a hotel in addition to office space raises another question: Could downtown St. Petersburg draw enough visitors to fill two new upscale hotels within three blocks of each other?

Developers of ONE St. Petersburg are building a 174-room Hyatt next to the condo tower. Kent Schwarz, executive vice president of Colliers International Hotel, calculated that the Hyatt alone would need almost 22,000 "stays'' a year — a guest checking in for at least two nights — to meet revenue projections.

"They need to do that either by pulling from other hotels or by increased demand,'' he said. "St. Pete is becoming such a wonderful area that Aunt Emily does come to visit but how often does Aunt Emily need a hotel room?''

Schwarz notes, though, that nearby office buildings can be a prime generator of business for hotels that are not in major tourist areas like the beaches or Orlando.

"So if there is an office building there (on the 400 Central block) that would certainly help'' a hotel, he said.

Also helping is the fact that downtown St. Petersburg is booming so much that the average square foot office rent needed to justify new construction might be reached sooner than expected.

"It's trending to be a very popular work-live-play destination,'' said Melanie Jackson, director of office services for Colliers International. "A lot of companies downtown are hiring people, and people are moving into those 2,000 (new) apartments and townhouses and condos. We have a lot of movement in the downtown market but there's a pretty big delta between $26 and $33 a square foot.''

Contact Susan Taylor Martin at [email protected] or (727) 893-8642. Follow @susanskate

 
Comments
Trump administration recommends stiff penalties on steel, aluminum imports

Trump administration recommends stiff penalties on steel, aluminum imports

The Tampa arm of Brazilian steelmaker Gerdau S.A. was cautiously optimistic Friday after the Trump administration took a big step toward a policy Gerdau has been vocally advocating for — higher tariffs on imported steel. "We’re hopeful that President...
Published: 02/16/18
Facebook forges ahead with kids app despite expert criticism

Facebook forges ahead with kids app despite expert criticism

Associated PressNEW YORK — Facebook is forging ahead with its messaging app for kids, despite child experts who have pressed the company to shut it down and others who question Facebook’s financial support of some advisers who approved of the app. Me...
Published: 02/16/18
Inexpensive Tampa Bay homes gain the most value of any in U.S.

Inexpensive Tampa Bay homes gain the most value of any in U.S.

Owners of affordable homes in the Tampa Bay region are seeing the biggest gains in equity among the nation’s top 20 housing markets. A bay area home now worth $110,000 rose 20 percent in value over the past year while a house now worth $337,400 incr...
Published: 02/16/18
Amid CareerSource controversy, allegations of a love affair, big raises and family favoritism at the top

Amid CareerSource controversy, allegations of a love affair, big raises and family favoritism at the top

The anonymous letter described a possible love affair at the top of the local jobs center. President and CEO Edward Peachey was in a romantic relationship with top administrator Haley Loeun, it said.It described how Loeun was seen at a conference co...
Published: 02/16/18
Outback Steakhouse, Carrabba’s experimenting with takeout-only locations

Outback Steakhouse, Carrabba’s experimenting with takeout-only locations

Outback Steakhouse and Carrabba’s Italian Grill have become household names in casual dining. Now, their parent company, Tampa-based Bloomin’ Brands is taking the "dining" part out in a concept that it’s bringing to Tampa Bay for the first time. A ne...
Published: 02/16/18
Which Tampa Bay ZIPs had the priciest, least expensive and most house sales in 2017?

Which Tampa Bay ZIPs had the priciest, least expensive and most house sales in 2017?

If you bought or sold a house in Tampa Bay last year, you were a player in one of Florida’s hottest real estate markets.Even though prices eased a bit from their torrid pace in 2016, the median cost of a single family home shot up 11 percent. That’s ...
Published: 02/16/18
Florida’s liquor license lottery can make you a ton of money. So why is it such a secret?

Florida’s liquor license lottery can make you a ton of money. So why is it such a secret?

Every year, millions of people play the Florida Lotto. Their chances of winning are about as great as those of being struck by a comet. Fewer than 12,000 enter a much lesser known lottery that also is run by the state. Yet the odds of winning are vas...
Published: 02/16/18
Travel insurance company brings tree houses, beer kegs and creativity to former church

Travel insurance company brings tree houses, beer kegs and creativity to former church

ST. PETERSBURG — Neither the Lutherans who first occupied the 4300 block of Central Avenue, nor the evangelical congregation that followed could ever have imagined tree houses sprouting in their church sanctuary.Yet that’s one of the plans of new own...
Published: 02/16/18
Prosecutors drop drug case against ConnectWise co-founder David Bellini

Prosecutors drop drug case against ConnectWise co-founder David Bellini

TAMPA — ConnectWise co-founder David Bellini won’t be prosecuted on a drug trafficking charge filed by Tampa police this week, the Hillsborough State Attorney’s Office announced Thursday. The county’s top prosecutor instead applauded police for helpi...
Published: 02/15/18
Tropicana Field may be named for a Pepsi product, but it will now only serve Coke

Tropicana Field may be named for a Pepsi product, but it will now only serve Coke

ST. PETERSBURG — The Tampa Bay Rays’ stadium may be named for PepsiCo’s Tropicana orange juice, but that’s not stopping the baseball team from switching its pouring rights to Coke.The Rays said Wednesday the ballpark would begin serving Coca-Cola pro...
Published: 02/15/18