ST. PETERSBURG — More than $8 million worth of property has changed hands along a busy stretch of Fourth Street N in the past two years, altering the face of the corridor and attracting heavy interest from developers.
So far, the turnover has resulted in a new Trader Joe's, two new medical buildings, the razing of decaying structures and the clearing of lots now ready for construction. The corridor stretches from Fifth to 38th avenues N.
"We're seeing a tremendous amount of activity on Fourth Street. The market is certainly surging back," said Scott Dobbins, a principal at Hybridge Commercial Real Estate.
Dobbins is representing the new owner at 3540 Fourth St. N, who paid $599,000 in October for the Villa Royal Motel next to El Cap Restaurant. The structure, built in 1948, has since been torn down and the owner plans to construct 6,400 square feet of space for a restaurant and retailer. Dobbins declined to name the national tenants but said the space leased quickly.
"There is an interest in St. Petersburg and Fourth Street, particularly because of its proximity to the downtown core. People who work there can drive up Fourth Street for lunch and get back in time," Dobbins said. "That, combined with the nighttime and permanent population in the Old Northeast, Snell Isle and Placido Bayou, creates a convergence of demographics that are very appealing to national retailers."
Local developer J Square Partners paid $2.5 million for a block between 27th and 28th avenues N and razed several buildings to make way for the new Trader Joe's. Additional residential parcels behind the site were acquired to build enough parking spaces, which points to a drawback for the popular strip.
Many Fourth Street lots lack depth, Dobbins said, and buyers often have to assemble parking to make their properties attractive.
"Parking is the holy grail," he said.
The second coming of Trader Joe's
Three years ago, when Trader Joe's was scouting the Tampa Bay area for locations, the California-based grocer wasn't necessarily determined to be in St. Petersburg.
"Clearly, South Tampa was on their hit list," said developer Jay Miller, who eventually put together the deal for 2742 Fourth St. N. "I think most of what they had seen in St. Petersburg was downtown and they weren't quite sold on it."
Location scouts for Trader Joe's, and most businesses for that matter, visit during the week when downtown is less active. Even with weekday office workers, the streets aren't teeming with people as in many other cities.
"Grocery stores are really dependent on residents," Miller said. "People shop from home more than from work."
He knew the block of Fourth Street between 27th and 28th avenues north was controlled by one owner, so he called Trader Joe's and asked if they would consider the location.
"They said: 'If you can get us close to Publix and Fresh Market,' " Miller recalled, adding, "Fourth Street is now considered one of the top two to three locations in the Tampa Bay area by many retailers."
Developers feel the pull
Pinellas Park-based Belleair Development Group has bought five parcels of various sizes within an 18-block stretch of Fourth Street N. The company has lured Pei Wei Asian Diner, BurgerMonger and AT&T to open stores in a 9,000-square-foot building going up this year at 14th Avenue and Fourth Street. The site once was occupied by an assisted-living facility.
Company president Carlos Yepes plans to raze the former Arby's at 3900 Fourth St. N soon and the nearby Pizza Hut, which is still open with no plans to close, at 4001 Fourth St. N.
He's also renovating a former bike store next to Fresh Market. That building, and one he plans to build in place of Arby's, are leased. But he said it's too early to name the tenants.
"We are very excited about what's happening on Fourth Street," Yepes said. "It will be interesting to see how all the pieces come together."
"National companies are coming to town and they are looking for a developer to build to suit" a building that can house their business, said Frank Malowany, a Smith & Associates Realtor. Malowany is listing property on Fourth Street between 13th and 14th avenues for $2.6 million.
Prices are going up, but outside investors especially are willing to pay them, Malowany said, because they have seen other cities take off in residential and retail popularity.
Jonathan Daou, a New York investor who is bullish on St. Petersburg, recently bought the old Monticello Motel at 1700 Fourth St. N for $825,000 and the vacant North Ward Secondary School at 11th Avenue and Fourth Street for $1.7 million.
Both are listed for sale. Daou, who couldn't be reached for comment, is looking for partners interested in joint venture developments, according to his real estate agent, Renee Celli of Re/Max Metro.
"(Daou) has really taken to the city and believes it's a good place to invest," said Dave Goodwin, the city's economic development director. "He's met with us. Right now he's got some ideas and trying to figure out what to do first."
There won't be too much speculative building, surmised Jon LaBudde, a real estate agent and owner of Reno Beach Surf Shop at 1301 Fourth St. N.
"The smart guy isn't going to break ground until he has a couple tenants teed up," he said.
LaBudde said he is pleased with all the activity on his end of the corridor but also is concerned about what happens when an area gets really hot.
"The only thing I'm cautious of is landlords wanting so much money for leases. Like on Beach Drive and Sundial, (rates) are around $45 a square foot. Fourth Street is approaching the high teens and low $20s," per square foot, he said.
Even at half the price of top-tier downtown retail space, he said, independent businesses won't be able to afford Fourth Street if rates start climbing.
"As a retailer myself, I think the franchises can stomach that cost," LaBudde said. "But you are going to limit your potential tenants and take out the mom and pops."
Contact Katherine Snow Smith at [email protected] Follow @snowsmith.