Space Quest
Commercial real estate finally is rebounding at a steady pace throughout the region, but not equally everywhere and not in all segments. Lakewood Ranch is the area’s most dynamic commercial market with the new University Town Center mall, the blossoming sports industry and ongoing residential expansion.
In fact, so much residential building is occurring in Manatee and Sarasota, particularly in downtown Sarasota and the North Venice/North Port area, that experts say commercial real estate deals―including any large property near I-75―will accelerate to keep up with residential demand for shopping and restaurants.
“Space is getting leased, people are moving in, and you are starting to see some rent increases,” says Brian Kennelly, chief operating officer for the Starling Group, which tracks data for the Economic Development Corporation of Sarasota County. “Concessions of years past, such as free rent, have disappeared.”
We talked with three top commercial real estate agents, representing Manatee, Sarasota and South County, to find out what trends they are seeing in their markets.
DOWNTOWN SARASOTA
John Harshman
Where are the area hot spots?
Downtown Sarasota, particularly for residential and hospitality. There are about nine major projects under construction, including two new hotels, five new condominiums and two new rental apartment projects. The new projects will bring new residents and visitors to downtown Sarasota, attracting new retailers and dramatically changing downtown Sarasota demographics―primarily an increase in the number of permanent and transient residents and the highly anticipated increase in buying power this population increase represents for this relatively small geographic area.
What types of properties are moving most quickly?
Vacant residential development sites downtown are moving the fastest along with sites that have been prepared for developments that failed during the Great Recession. As always, quality locations such as those on the waterfront or with water views are the most desirable, followed by properties with easy access and close to downtown amenities.
What should landlords be thinking about if they want to lease space?
Landlords need to renovate older retail space, providing tall ceilings, open floor plans and updated storefronts to command the highest rental rates and attract top quality retailers.
Are there any impressive newcomers?
The major ones are the hotels―Aloft, Westin, Marriott and Embassy Suites. Wawa, the Pennsylvania-based convenience store chain, started opening stores in Florida last year and is looking at a downtown site near Fruitville Road and East Avenue.
Where are the challenges?
The office market is the most challenged sector, with industrial a close second. Office and industrial vacancies increase and decrease, relative to employment levels. Both sectors have been impacted by changing business practices. In the banking industry, for example, facilities are becoming smaller; drive-through tellers are less of a necessity and large lobbies are features of the past. Also, technology has changed how some companies conduct business and they are no longer restricted to brick-and-mortar locations, so their office needs are not as great.
Where are the good deals?
The market has reached a level that the only profitable option for a developer is to build a condominium or a for-sale project. To make the numbers work, an apartment developer can only pay up to about $22,000-$25,000 per unit for land. A condominium developer can and will pay significantly more than $25,000 per unit for land. The Quay and Main Plaza are two properties to watch. Both sites are large―four acres at the Quay and about nine acres at Main Plaza―well located and will require a sophisticated developer with a vision and understanding of our market to tackle the challenge of delivering truly exceptional development. The cost of development on either parcel will require significant financial capacity and staying power. Both parcels are impacted by obstructed views, and the Quay site is impacted by its proximity to the water.
Top recent sale?
Our company facilitated TerraCap Management’s $37 million acquisition of the Gateway Professional Center at Fruitville Road and Interstate 75. The property has four Class A suburban office buildings totaling approximately 247,000 square feet, making it one of the biggest recent sales in Sarasota County.
Who are the top commercial landlords in your area?
Some of the landlords controlling the greatest amount of square feet are Osprey Management Osprey Real Estate Services, LLC, Benderson Development Company, George Spector and Mark Kauffman.
MANATEE COUNTY
Janet Robinson
COMMERCIAL DIRECTOR, COLDWELL BANK COMMERCIAL
Hot spots in Manatee County?
Anything along the I-75 corridor in the two-county area is booming. A number of companies have contacted us but the opportunities along I-75 are very scarce.
What types of properties are moving most quickly?
Industrial has been very hot and we have low vacancies. The larger buildings have sold and now the smaller flex space is starting to lease and sell. The properties that are staying on the market are the tin-can-on-a-concrete-pad properties, with no insulation and deferred maintenance.
How can landlords best position their properties?
Properties that have the lowest maintenance and management costs are the highest in demand. It doesn’t matter if it’s office, multifamily, retail or industrial.
Any impressive newcomers?
The biggest news is that small businesses are expanding locally and new businesses are coming to our area. This to me shows confidence in our economic recovery.
Where are the challenges?
Downtown Bradenton remains a challenge, but it has come a long way. It had a 35 percent vacancy rate and now it’s at about 29 percent. The problem is that there is not a whole lot of residential property and thus, retailers and restaurants aren’t as attracted to downtown as they are Lakewood Ranch. City and county government offices occupy a lot of downtown real estate, leaving scarce commercial parcels for development.
Where are the good deals?
Any property that has a value-added proposition; in layman’s terms, a fixer-upper that allows you to increase the rent to add additional value to your bottom line. Most of the foreclosure properties have been taken off the market. There were some great opportunities but they are scarce. Many of the banks have done a workout with owners.
Recent top deal?
We sold a 20,000-square-foot warehouse at 1470 Northgate Blvd. in Sarasota for $1.5 million to Orca Composites.
Top commercial landlords in Manatee?
Benderson Development Company, Mark Kauffman, JWM Management [run by attorney and developer John Meshad] and Pointe Group Advisors [recently acquired by Colliers International Group. South Florida offices, including Sarasota, will continue to be managed by Pointe Group’s founder Peter Gardner, a Coconut Grove resident].
VENICE/NORTH PORT
Steve Larkin
Hot spots?
The hottest deal-making spot is U.S. 41 Bypass from Center Road to Shamrock. It’s the south corridor to Venice Island and the site of a successful Bonefish Grill and a Carrabba’s. There’s also a vacant 85,000-square-foot Kmart property, and across the street, a 60,000-square-foot building that used to have an Albertsons. The area has the most available space with the most interest.
What types of properties are moving the quickest?
The most active are the shopping center, retail and quick-service restaurant properties. Venice used to be seen as too old a market, but that has changed. When Bonefish Grill opened on U.S. 41 Bypass, sales went through the roof. News spread and other national and regional companies woke up to the area.
What do landlords need to provide to sell or lease space?
They need to invest in their properties, especially a lot of the family-owned strip centers on U.S. 41. There is a rising tide of interest from regional and national players and they are seeking landlords who will listen.
Any impressive newcomers?
Culver’s [restaurant chain] is coming into the area; Wawa is looking for additional space in South County.
Where are the challenges?
Finding enough product. A lot of investors are looking for small apartment complexes. If I could get them, I’d sell them all. The other struggle is getting enough contiguous property. So much land on U.S. 41 is family owned or independently owned. There are a lot of mom-and-pop strip mall owners with small footprints, especially along the Trail. I’ve got buyers who want big spaces, and it’s extremely difficult to assemble parcels.
Where are the good deals?
The best deals are on S.R. 776 heading toward Englewood. It’s partly the growth in seasonal residents and spillover from the well-known areas such as Venice and Casey Key.
Top sale recently?
Summit Plaza at 1846 S. Tamiami Trail. It’s a 20,000-square-foot strip center. A local family sold it to Bersam Development Company for $2.65 million. It’s a good-looking property and well-positioned for visibility and rising traffic―the type of property regional and national players prize. ■