Strategic Property Partners, the developer of Water Street Tampa, said Friday that it was laying off some of its staff and is moving its chief executive to a new role.
The company said the changes were prompted by several buildings nearing completion in its first phase of development, which was its “largest and most intensive phase, representing a total investment to date of approximately $2 billion across 10 distinct new buildings.”
Now that phase one is coming to a close, the company wants to shift its resources toward “leasing, management, and operations of the newly delivered buildings” as well as finding new development projects in Tampa and elsewhere, according to a company statement.
The company did not specify how many people were included in the layoffs, but added that some of the remaining staffers were also being shifted to new jobs.
CEO James Nozar will also be leaving that job to become a strategic advisor to the board of directors, where he will help with efforts to identify new projects, according to the statement. Water Street Tampa was Strategic Property Partners' first project.
“I am more passionate today than I ever have been about SPP, our vision, our values, and the potential to bring that same enthusiasm and knowledge to new projects,” Nozar said in the statement.
Strategic Property Partners is a partnership between Tampa Bay Lightning owner Jeff Vinik and Cascade Investment, a fund controlled by Microsoft founder Bill Gates. The development aims to be the first “WELL-certified” district in America, constructed with the health and wellness of its residents and workers in mind. (Vinik also is a member of FBN Partners, a group of local investors who have loaned $15 million to the Times Publishing Company, which owns the Tampa Bay Times.)
In construction since 2016, Water Street will include 9 million square feet of development, including apartments, condos, restaurants, offices and retail and educational space. About 5 million square feet of that is under construction or already open, including the waterfront dining destination Sparkman Wharf and the University of South Florida’s Morsani College of Medicine.
Scheduled to open in 2021 are two residential complexes, the 420-unit Heron at 815 Water Street and a 388-unit building at 1011 E Cumberland Drive; two upscale hotels, a 519-room JW Marriott and the five-star Tampa EDITION Hotel and Residences; and various retail projects, including the area’s first Greenwise Market by Publix. On track for 2022 is a third, 497-unit residential tower at 1050 Water Street.
Friday’s announcement did not indicate any changes to this timeline.
“We continue to be excited about supporting the economic growth of the Tampa Bay region while offering new opportunities to experience and enjoy downtown Tampa," Charlie Rollins, Strategic Property Partners’ executive director of development and construction, said in a statement released Nov. 9.
Rick Homans, president of the Tampa Bay Partnership, a coalition of local business leaders, said the moves appeared strategic, rather than a sign of any problems.
“Many development companies at this point in the cycle could run into some real cash flow issues, and I don’t think that Strategic Property Partners has that problem in front of it,” Homans said. “I think this actually makes a lot of sense for them. Any company that is going to intentionally grow needs to reposition its team to make that happen. That’s what appears to be happening.”
Andrew Wright, the CEO of national commercial real estate services company Franklin Street, which is based in Tampa, agreed that the announcement made sense, since building construction and building management are two different skill sets that might require changes in personnel.
“You’re talking about a $3 billion project, I wouldn’t say that project is normal out of the gate,” said Wright, who is also the managing partner of Ally Capital Group, which owns Westshore City Center. “(Strategic Property Partners) has come in and built a city, essentially. And the partners there are some of the most successful people on the planet."
Early in Water Street’s development, Vinik made clear his desire to lure an anchor corporate tenant like a Fortune 500 company. More than once, as far back as 2014, he’s hinted they were close. But nothing yet has been signed.
“When you’re talking about a Fortune 500 headquarters, there’s not that many that move in any given year — or any given five years,” said Steve Morey, senior vice president of economic development at the Tampa Bay Economic Development Council. “But the activity that we have had around those, I think, is positive. It’s probably a matter of time.”
The fact that Water Street has sprouted up so much in recent years can only help the recruitment process, Morey said.
“It becomes more realistic for prospects," he said. “It’s closer.”
At the same time, Water Street is facing increased competition from other projects around Tampa. By mid-2021, the region will have 1 million square feet of new commercial real estate on the market, not just at Water Street, but in major developments like Midtown Tampa and Heights Union.
Bringing that much new office space online “has made us way more competitive” as a region, said Craig Richard, president and CEO of the Tampa Bay Economic Development Council, even if much of it has not yet been pre-leased.
“Our office developers probably wish we didn’t have so much product availability right now,” he said. “But in the long run, it’s going to help us be even more competitive.”