CLEARWATER — The downtown apartment complex long hoped to be a catalyst for residential growth in the urban core has a new owner.
Orlando-area based NM Residential bought The Nolen apartments on Cleveland Street on July 25 for $46.8 million, according to property records.
The 257-unit complex has hit about 85 percent occupancy, said Peter Collins, managing principal for Forge Capital Partners, which built the project. But since construction was officially completed in 2017, the former owners failed to recruit any retail tenants to the 11,500-square-feet of ground floor space.
That's where NM Residential President Michael Niederst said he saw the opportunity.
Niederst said his company plans to build an indoor "market street" concept of four to five food vendors with a brewery or winery along with outdoor space for music and gathering. The concept is similar to the Plant Street Market in Winter Garden or Armature Works in Tampa, which hosts indoor vendors in an upscale urban design.
"We're trying to really create the whole local internal type scene where there's going to be a restaurant with people who want to open, whether it's a pizza venue, a sushi venue, a bakery, where people could go and grab food and hang out there and enjoy the atmosphere," Niederst said.
There's quite a bit of public investment riding on the Nolen's success.
The original developers, Prospect Real Estate Group, paid $2.5 million for the city-owned site in 2014. But the city paid a significant amount into the partnership aimed at spurring urban living downtown.
The city reimbursed the developer $700,000 to build out the retail space, issued a $725,000 credit at closing for organic muck cleanup, paid about $250,000 to relocate utilities on the parcel, and in 2016 waived a $235,700 stormwater buy-in fee to make up for unforeseen soil remediation.
Niederst's goal of landing vibrant retail is also one the city has tried to achieve for years. The city is currently in the design phase of Imagine Clearwater, a roughly $52 million waterfront redevelopment plan aimed at improving greenspace, building nature trails and walkways, and a gateway plaza near the waterfront, hoping in turn to lure businesses to fill empty storefronts downtown.
But Niederst said entering a market that is not exactly booming does not deter him.
"Our company specializes in coming in before everyone else," he said. "We look at this as an up-and-coming market. We look at the growth in St. Petersburg, where it's almost overgrown. Clearwater is the next market to see that type of demand."
The city is preparing to recruit developers to build multi-family projects on two Community Redevelopment Agency-owned properties downtown. And across the street from the Nolen, a 15-story gutted highrise stood abandoned and vacant for more than a decade before new ownership began renovating it this year, renaming it the Apex 1100.
Apex 1100 developer Larry Debb, managing principal of GSP Development, is planning to fill his 6,000 square feet of ground floor retail by its target opening of September 2019.
CRA director Amanda Thompson, hired Jan. 31, has said bringing attractive residential projects downtown and luring more residents who want a walkable district is key to landing restaurants and retail businesses.
She said she sees Niederst's proposal as viable for the unique experience it could offer.
"Those kinds of operations allow for smaller businesses to start up because there's less upfront costs for buildout," she said. " You tend to attract more patrons overall because they have multiple choices. If I'm with a friend and I want ramen noodles but they want a steak sandwich, we can both eat there."
Collins said he struggled to recruit retail to the Nolen because of the lack of available parking. In May, the city acquired an empty lot that can hold about 50 spaces adjacent to the Nolen. The city gave three small downtown parcels to the Church of Scientology in exchange for the lot, which the church owned.
Niederst said he is comfortable with the lot and current street parking but that some of these retail developments in multifamily projects require a parking garage. He said he hopes to start construction on the retail renovation within 90 days with restaurants open and running by the end of the year.
If he runs into the same challenges recruiting retail as Collins did, Niederst said he plans to open food vendors in the Nolen space under his company's umbrella.
NM Residential specializes in residential and commercial projects in Ohio and Florida and has 5,000 units of Class-A space in the state, he said.
"The difference is we are owner-operator, not an investor in real estate projects where somebody else is trying to put this together for us," he said. "We are literally there involved in the project at the site every day. It's a challenge. That was the excitement in buying the deal."
Contact Tracey McManus at email@example.com or (727) 445-4151. Follow @TroMcManus.