A handful of major developments proposed for Tampa would nearly double the amount of existing commercial square footage in the city and bring as many new residents as in the Northdale area of Hillsborough County — population 22,587.
Combined, the four projects — Strategic Property Partners’ Channelside development that includes Amalie Arena; a Port Authority tract also in the city’s central business district; the West River property; and the Heights — could contain as much as 22 million square feet in all, including 3.8 million square feet of new office, retail and hotel space at build out.
The projects also are slated to have as many as 12,520 new residences, according to a new analysis from commercial real estate firm Cushman & Wakefield. Of those, the development by SPP — a joint venture between Tampa Bay Lightning owner Jeff Vinik and Cascade Investments — is expected to contain the most residential units, with as many as 5,000 being designed.
In all, the four projects comprise 285 acres, with West River being the largest tract at 150 acres, and at build out will be valued at a projected $4.5 billion. That figure represents a “historically significant” amount of developable land that hasn’t been matched in modern Tampa history, Cushman & Wakefield notes.
But while each project will represent a major investment, key differences among the four projects should keep them from directly competing against one another.
“Because they each have a different product to offer, I think all four will go forward,” says Bruce K. Erhardt, executive director of Cushman & Wakefield’s land brokerage business in the Americas and author of the Tampa analysis.
“Vinik’s project will be A-plus, West River is likely to have a focus on lower-income residential units, and the Heights will have more of a mix of residential and commercial, more of a community feel to it,” says Erhardt, who is based in the firm’s Tampa office.
The four projects come as Tampa has become one of the fastest-growing cities in the nation, attracting technology firms and retiring baby boomers alike, and tourism regionally has soared to pre-recession levels — a phenomenon that is expected to bring in even more eventual residents.
The developments also dovetail with a macro-economic trend of re-urbanization that has focused renewed attention on cities throughout the U.S.
“Urban areas are where people want to live now,” he adds. “Who wants to drive an hour to work? Very few people. I think as long as Tampa continues to have solid population, tourism and job growth, the area will continue to thrive and be a site for new development for years to come.”
Erhardt says the financial solvency of each development’s backers also is key to their viability.
Vinik, for instance, is a billionaire former hedge fund manager. Cascade is an investment vehicle for Microsoft Corp. co-founder Bill Gates. Miami-based Related Group, which is partnering with the Tampa Housing Authority on West River, is among the nation’s largest residential real estate developers.
SPP officials agree that the four projects can co-exist without cannibalizing each other.
“The timing on all these properties will be a little different, so I don’t see them hurting one another,” says Jim Shimberg, a SPP executive vice president and the company’s general counsel.
“The Port Authority, for instance, is in the very early stages of their plans and the other two are much longer-term developments,” he adds. “Our project is taking shape now. We’re beginning infrastructure work, so we believe we have a chance to generate some significant activity before the other projects really get underway.”
SPP is slated to start roughly $35 million worth of road, sewer, lighting and other infrastructure work later this month, with delivery scheduled for early 2018.
Each of the four projects is expected to be well underway — if not completed — by 2026.
Additionally, all four will share a proximity to the Hillsborough River, which Shimberg noted would become the proverbial center of Tampa when all are completed.
Still, as with any large, phased development, challenges abound that could force at least one of the projects to scale back or shift focus altogether.
“Some of the four may not make it, at least as they’ve been outlined or designed,” says Ron Weaver, a Stearns Weaver Miller land use attorney, in Tampa.
“But they also may help each other, especially on the commercial side. If someone is moving to anywhere in the Southeast, they’re going to consider Tampa, and when they do, they’ll have to take a look at those four projects, all of which have proximity to downtown.”
Moreover, Weaver says the acreage involved allows all four maximum flexibility with their development plans.
Financing, for instance, will be a hurdle for some. Despite Related’s solid, billion-dollar balance sheet, the West River project will likely depend on government funding.
The Port Authority, too, could end up relying on public money.
Investors and tenants there also will have to deal with 60-year land leases, Erhardt notes. Though such leases are common in New York and other cities — much of Manhattan’s commercial buildings are subject to long-term land leases, for instance — they haven’t been widely adopted in Florida.
“They might get some resistance to that, and if so, that could be a reason they don’t get quite traction right away,” Erhardt says.
The cost to develop high-rise rentals in the urban core — and the subsequent rental rates that would need to be achieved — could also pose problems for some.
“Residential development within the four projects is a no-brainer, but how deep is the $2 per square foot market, the amount developers may need on the back end?” Erhardt says.
“That’s the big question.”
Even so, Weaver is optimistic.
“It could take 10 years for all of them to happen, it could take 15 years,” Weaver says. “But if you look at the population growth, it’s likely they will all happen.”
Erhardt thinks so, too.
“The next 10 years will tell the tale.”
August 12, 2016
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