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Coronavirus pandemic clouds future for Tampa Bay’s downtowns

Commercial office space has shown signs of struggling. But urban cores are still appealing to new residents.
 
No pedestrians can be seen in downtown Tampa near E Twiggs Street and N Franklin Street at 1:30 p.m. on Friday at 1:30 p.m.
No pedestrians can be seen in downtown Tampa near E Twiggs Street and N Franklin Street at 1:30 p.m. on Friday at 1:30 p.m. [ SCOTT KEELER | Times ]
Published Oct. 5, 2020|Updated Oct. 5, 2020

Even with the commute from her home in Dunedin, Vanessa Huber, a paralegal, loved working in downtown Tampa.

Pre-pandemic, she and her boyfriend worked in the same skyscraper at 201 N Franklin St. — she for a law firm, he for a software company — and they had settled on a beloved rotation of restaurants and bars, and often sipped beers while watching concerts in Curtis Hixon Park.

Now, six months into working from home with no end in sight, she’s worried about their favorite spots.

“We had a regular taco joint, a regular Chinese food joint,” said Huber, 42. “There was a lot of commerce involved in just being located downtown and all that’s gone.”

In both Tampa and St. Petersburg, business owners, patrons and analysts alike are wondering whether the face of the region’s downtown areas will be forever changed by the coronavirus pandemic and its forceful shift of many employees to remote work.

While the answer to that question is still coming into focus, there are early warning signs that Tampa Bay’s downtown economies have taken a blow.

Vanessa Huber and her boyfriend, Kent Narvaez, 42, take a selfie at the Gasparilla Music Festival in downtown Tampa in early March. Since the pandemic hit Florida, the couple has been staying home to protect the health of Huber's 71-year-old mother, who lives with them.
Vanessa Huber and her boyfriend, Kent Narvaez, 42, take a selfie at the Gasparilla Music Festival in downtown Tampa in early March. Since the pandemic hit Florida, the couple has been staying home to protect the health of Huber's 71-year-old mother, who lives with them. [ Courtesy of Vanessa Huber ]

In Downtown St. Petersburg, asking rents for multifamily apartment buildings were down in early September by about 2.5 percent compared to before the pandemic, which means that new tenants in the area could get a unit last month for about the same prices as mid-2018, according to numbers from CoStar Group, a national commercial real estate data company with an office in Tampa. The numbers have improved since then but still sit at mid-2019 levels.

It’s the first time in about six years that this area has seen a prolonged dip in asking rents, said Brian Alford, CoStar’s director of market analytics for Florida, who pointed to the large increase in new apartments right before the coronavirus took hold as a major culprit. There’s also been a major increase in so-called “concessions,” like apartments offering months of free rent as an inducement to sign a lease.

Additionally, while office space sales are starting to come back from the dramatic slowdowns of months past, subleasing is also up for the entire Tampa Bay area, asking rents are increasing more slowly and the average vacancy rate has ticked up.

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There’s currently about 1.8 million square feet of office space available for lease in Tampa and St. Petersburg’s downtowns combined. Tampa’s office market has shown continued strength, while St. Petersburg’s space available for-lease has increased since the pandemic began. Alford emphasized that generally, Tampa Bay’s metrics are outperforming national averages, especially when it comes to retail.

“Other than just a couple of anecdotal examples, data isn’t showing a mass seismic shift yet,” Alford said.

But some observers say this area isn’t isolated from large-scale changes that may come.

“If I had to predict long-term things that are affected the most by this, it would be business travel and office space,” said Brad Kamp, chairman of economics at University of South Florida.

Fellow USF economist Chris Jones said he can foresee scenarios in which offices have “some support staff and some meeting space, and maybe the CEO’s in there,” he said.

“Many of these finance, insurance and real estate and other professional service organizations, they’ve now figured out the model about how to survive in this COVID-driven world that’s actually going to transform them in the post-COVID world,” Jones said. "A lot of those employees are going to continue to stay home. You know why? Because it’s a gigantic overhead savings. It’s a capital savings for those corporations and for those businesses, because they don’t have to pay for prime office space at the magnitude that they’ve been doing it at historically.”

Related: Tampa Bay co-working spaces rebound as many tire of the home office

That has ripple effects on businesses that cater to daily commuters.

Restaurateur Roger Perry has opened two downtown St. Petersburg restaurants, Dr. BBQ and Datz, and another Datz at the Tampa Convention Center, since 2018. He relies more on downtown residents than workers, but said the lockdown still opened his eyes.

“It was like Chernobyl. There was nobody on the streets,” he said of the pandemic’s first few weeks. “All of the people who have second homes there went back home to be closer to their doctors. The hotels are closed, so we’re not getting any tourists. The offices are closed. People are working from home. So in a downtown business that relies on the people that live and work there, there was just nobody.”

The lesson Perry took away: “I would be worried if I owned commercial real estate downtown.”

* * *

Construction continues on Water Street Tampa on Oct. 2, 2020.
Construction continues on Water Street Tampa on Oct. 2, 2020. [ SCOTT KEELER | Times ]

Others, like David Dixon, believe there’s still plenty of room for downtowns to grow.

The vice president of urban planning group Stantec is a lead figure in the development of Water Street Tampa, the $3.5 billion multipurpose project whose backers include Tampa Bay Lightning owner Jeff Vinik and Bill Gates.

At their best, downtowns foster “collisions that spark innovation,” he said during a recent virtual panel organized by the Tampa Downtown Partnership. This person bumps into that person, that person bumps into another person, and startups start to blossom.

“Inadvertent, unplanned meetings led to great new ideas,” Dixon said. “And since our knowledge industries, innovation industries, are leading our economic growth — and will for the next 20 years — I think it’s important to remember that while offices will change, and retail will change greatly, offices may not change as much as we would have anticipated.”

One reason, he said, is that the young tech and creative workers that city leaders hope populate their downtowns tend to prefer areas that are easy to get around in, with walkable spaces and public transportation and a sense of community.

Downtown Tampa’s population is up 36 percent since 2000, while its housing inventory has risen by a third since 2010. But its retail is down. Businesses' square footage has dropped 67 percent since 2010, according to a study last year from the International Downtown Association.

And construction on Water Street — with its 1 million square feet of office space, 1 million square feet of retail and cultural space, plus 3,500 new housing units — has forged on in spite of the pandemic. In late September, developers topped off a 23-story, 388-unit apartment tower at 1011 E Cumberland Ave.; and unveiled renderings for Heron, a 420-unit complex with a rooftop garden and Greenwise Market by Publix at the bottom. Initial leasing will begin later this year, with move-ins scheduled for March.

This rendering shows a rooftop pool at Heron, an apartment and retail complex at 815 Water St. in Tampa. The 420-unit complex in the Water Street Tampa development will feature a Greenwise Market by Publix and other restaurants and retail sections at the bottom, and a rooftop garden at the top. It will begin pre-leasing in late 2020, and be ready for move-in by March 2021.
This rendering shows a rooftop pool at Heron, an apartment and retail complex at 815 Water St. in Tampa. The 420-unit complex in the Water Street Tampa development will feature a Greenwise Market by Publix and other restaurants and retail sections at the bottom, and a rooftop garden at the top. It will begin pre-leasing in late 2020, and be ready for move-in by March 2021. [ Strategic Property Partners ]

“There’s as many cranes in downtown Tampa as there are in Miami,” said Perry, the Datz restaurateur. “They can’t put the buildings up fast enough.”

Feldman Equities owns several high-rise office buildings in both downtown Tampa and St. Petersburg. Mack Feldman, a company vice president, said while a few tenants in the tourism or marketing sectors put up space to sublet, in general, the company has been surprised with how stable business has been. August was the firm’s strongest month for new leases, which Feldman partially attributes to pent-up demand.

At the beginning of the pandemic, “we were joking it would be April Fool’s Day and no one would send rent on the 1st of (April),” he said. “We had surprisingly strong rental collections and it’s really been slow, steady improvement since then.”

Feldman added that Tampa Bay’s office markets have been among the most densely packed in the country for years. So while the pandemic doesn’t seem to be causing companies to abandon their office space, it is changing how they use it, by having more generalized work stations that any employee can use, rather than permanent desks.

Transit will be a key part of how downtown Tampa evolves, said Vik Bhide, the city’s mobility director. If the coronavirus ends up driving businesses away from downtown, creating an environment with better, more efficient public transportation options — something that can get people from Water Street to Armature Works without breaking a sweat, for instance — might entice them back.

“Businesses look for connectivity and better transportation options when they’re thinking about relocating,” Bhide said.

So do prospective residents. If downtowns feel more like neighborhoods than cubicle farms, people will keep moving in.

“Job growth, investment, is driven by the access to talent,” Dixon said. “That talent wants to be downtown. Jobs and investments will follow. Clearly, how many folks work in an office or don’t is going to change. But everyone we’re working with expects this formula to be fully in place.”

* * *

Julie Mastry, photographed on Oct. 1, 2020, recently left her Snell Isle neighborhood to move to a downtown high-rise, ONE St. Petersburg. She likes the amenities and being in the heart of downtown without a big house and yard to maintain.
Julie Mastry, photographed on Oct. 1, 2020, recently left her Snell Isle neighborhood to move to a downtown high-rise, ONE St. Petersburg. She likes the amenities and being in the heart of downtown without a big house and yard to maintain. [ MARTHA ASENCIO RHINE | Times ]

Julie Mastry lived in a waterfront St. Petersburg high-rises for years before getting a place on Snell Isle four years ago.

The longtime educator and former superintendent of Pinellas County Schools wanted a place with a yard for her family to play. But it was too much upkeep, so in February she decided to return to “a little jewel box downtown.”

Then came the coronavirus — and with it, some hesitation.

“Maybe for a New York second,” said Mastry, 71. “I thought, ‘Well, I’m happy that I’m out here, a little bit away from everyone.’ I was able to isolate myself. But if you’re smart, I believe you need to do the math. I believe in the isolation, all of that stuff. But life has to go on.”

Last week, Mastry sold her home and bought a condo in ONE St. Petersburg, the city’s tallest residential tower. Amid the hustle of closing and moving in, she said being close to the waterfront made the difference.

“That’s a little different from New York City’s downtown, when you look across and all you see is buildings,” she said. “Here, we can walk down anywhere off of North Shore Drive. I walk and run and ride my bike and do my kayak. It’s really convenient.”

It’s not reasonable to think people will simply abandon all densely packed urban spaces, said St. Petersburg developer Blake Whitney Thompson.

“It’s great that we’ve all been able to adapt and use technology to keep doing our jobs," he said. "I don’t believe that the need for collaborative human interaction and socialization is over with.”

By its geographical nature, the city will always be more tightly packed than other cities, Thompson said. Yet its amenities keep drawing new residents.

“St. Pete’s a peninsula,” he said. “It’s in the most densely populated county out of 67 counties in Florida. You picked the wrong place. If you’re moving to St. Pete, you appreciate density, and you’re going to be part of a society.”

Mastry believes St. Petersburg’s downtown core will remain livable and walkable, even more so as life returns to something approximating normal.

“It’ll be back, alive, and maybe on steroids," she said, "truly more of a big city within a little city.”

Julie Mastry recently left her Snell Isle neighborhood to move to a downtown high-rise, ONE St. Petersburg. Here, she is photographed on her large balcony overlooking the pool, where the tops of the palm trees brush her second bedroom windows.
Julie Mastry recently left her Snell Isle neighborhood to move to a downtown high-rise, ONE St. Petersburg. Here, she is photographed on her large balcony overlooking the pool, where the tops of the palm trees brush her second bedroom windows. [ MARTHA ASENCIO RHINE | Times ]