Phil Sealund was just looking for space for his computer software company last year when he came across a deal he couldn't pass up.
For only $2-million, he bought the three-story Centres at Feather Sound office building in Pinellas County's Gateway area from a federal receiver.
Since his company needed only part of the 66,000-square-foot building, Sealund found himself in the office leasing business.
"Our only other experience in real estate was a duplex," he said with a chuckle. "But when opportunity knocks, you step in and take it."
Sealund, whose building now is about 80 percent leased, couldn't have picked a better place in Tampa Bay to get into the office business.
Split by Interstate 275 and bounded roughly by Gandy Boulevard, Ulmerton Road, U.S. 19 and the shores of Tampa Bay, the Gateway area has turned red hot when it comes to office leasing these days.
Thanks to expansions and new leases by Xerox Corp., MCI Communications Corp. and lots of smaller companies, about 90 percent of the office space in the Gateway area was full at the end of September, according to real estate research company Black's Guide. A year ago, only about 73 percent of Gateway office space was full.
By comparison, offices throughout the rest of Tampa Bay were about 81 percent full at the end of the quarter, according to Black's. (See chart, 2H.)
Black's monitors local office leasing _ an indicator of business growth and one measurement of the commercial real estate market _ on a quarterly basis for the Times.
"It's been crazy," said Cheri Herring, who handles leasing at Feather Sound Corporate Center I for Newport Partners-ONCOR. "We are seeing a minimum of two new prospects a day."
Herring's six-story, 80,000-square-foot building is about 80 percent leased, she said. A year ago, it was only about 57 percent leased.
In the Tampa Bay area, only Tampa's West Shore region comes close to matching the Gateway area when it comes to full office buildings. West Shore offices were about 86 percent full at the end of September, up slightly from a year ago, according to Black's.
While Gateway and West Shore are the region's strongest office markets, office buildings throughout the Tampa Bay area are in better shape than they were a year ago, the Black's figures indicate.
Office occupancies slipped only in downtown St. Petersburg and in Pasco County in the past year, according to Black's.
Downtown St. Petersburg offices were about 71 percent full at the end of the third quarter, down 1 percentage point from a year ago.
In Pasco, occupancies fell to 81 percent, down from 86 percent a year ago, according to Black's.
Port Richey broker Allen Crumbley said whatever the numbers are, though, Pasco County's office market is still tight.
"You might find some vacant office space around here, but not much," said Crumbley, whose Prudential Tropical Realty is considering building a new office building in Port Richey because space is so scarce.
"If there's much space around, I'd like to find it," Crumbley said. "We can sure lease it."
Why is the Gateway area so much hotter than other Tampa Bay office markets these days?
Mostly, it's the roads.
In the real estate business, location is usually more important than anything else.
Gateway has long been in a good location _ close to Tampa International Airport and the cities of St. Petersburg, Clearwater and Tampa.
But recently, Gateway's location got better.
First, the Howard Frankland Bridge expansion was completed, making Tampa International Airport an easy 15- to 20-minute drive, a trip to downtown Tampa less than 30 minutes.
Then the Bayside Bridge opened, providing a new connection between Gateway and Clearwater and the rest of north Pinellas. And now, another route to Clearwater and the North Suncoast counties, McMullen-Booth Road, is being widened.
"It's all about location, but I think the infrastructure (improvements) is also key," said Herring of Newport Partners.
Also attracting tenants to the Gateway area were several large, vacant buildings that have since been occupied.
Xerox took 107,000 square feet at the Carillon business park. MCI took 129,000 square feet at the Gateway Centre office park. And Raymond James & Associates recently agreed to move into another 45,000 square feet in Carillon.
Along with driving up occupancy rates, the big companies also helped attract smaller tenants to Gateway.
"The high-profile moves to the area definitely gave the entire area a boost," said Tom McGeachy, general manager of Koger Equities, which has a 15-building office park in Gateway. Occupancies at Koger Executive Center have increased 10 percentage points to 93 percent in the past year, according to McGeachy.
"I think those companies just kind of validated the desirability of the area," he said.
But now that the only big vacant buildings in Gateway are gone, some real estate brokers worry that Gateway's growth can't be sustained very much longer.
"My concern is that we're not going to get attention from outside the area anymore . . . because we just don't have the buildings left for anybody to go into," said Jane Dizona, who handles leasing of several Carillon buildings for CB Commercial Real Estate Group.
Dizona said it's unlikely that any new multi-tenant offices will be built in Gateway for a while, either. That's because lease rates, now hovering around $13 to $15 a square foot, aren't high enough to pay for construction of a new building, she said.
Until lease rates increase _ they eventually will as space becomes more scarce _ leasing agents will simply try to fit tenants into what space is available.
And they'll lose some potential tenants, too.
"I have a few people looking around (for space) in that area now," Dizona said. "But, unfortunately, I can't provide it to them.
"It's just not available where they want to be anymore."
The Gateway to office leasing
The west Pinellas region led Tampa Bay in lowering office vacancy rates in the third quarter this year. Other areas, except for downtown St. Petersburg and Pasco County, showed improvements, too.
Area Total Space Percent Percent
office available vacant vacant
space (sq. ft.) (3rd Q '93) (3rd Q '94)
Downtown 7.1-million 1.96-million 28.86% 27.53%
West Shore 9.4-million 1.3-million 14.82% 13.94%
Hillsborough 22.2-million 4.1-million 20.26% 18.55%
Downtown 2.2-million 625,500 28.01% 29.03%
Downtown 1.0-million 256,600 32.56% 25.14%
Gateway / mid 3.3-million 302,700 27.54% 10.13%
Pinellas 11.0-million 2.1-million 24.85% 18.78%
Pasco County 674,500 127,100 14.28% 18.84%
Note: County totals are for municipal and unincorporated areas.
Source: Black's Guide