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Tampa Bay Business Journal: Pat Kelly sees Westshore as uniquely positioned for a post-Covid world

For Pat Kelly, taking the helm at the Westshore Alliance feels like a full-circle moment.

Kelly, regional managing partner of Franklin Street, was named president of the board of directors at the alliance’s annual meeting in late February. 

Kelly has been involved with the district since the early 1980s, when Florida was requiring any large-scale development to seek a status known as development of regional impact or DRI. At that time, the DRI review process was meant to ensure local and state governments worked together to manage growth, and every new building proposed in Westshore would have been designated a DRI. Instead, Kelly and other real estate leaders joined forces to form the alliance and have the entire district certified as one DRI.

“Our primary reason for coming together was to create some efficiency,” Kelly told the Tampa Bay Business Journal. 

Now, Kelly is working with the alliance on several initiatives to improve pedestrian access and connectivity throughout the business district, which has seen an influx of residential development in recent years. He spoke with the Business Journal about Westshore’s post-pandemic future. This interview has been edited for brevity and clarity.

Congratulations on the new post. In terms of taking on the leadership of the alliance — why now? We are coming out of a cycle that was as interesting as we’ve ever seen in our industry, meaning the pandemic. When I look at all of the walkability factors we need to implement, it’s all about creating a place where people want to be and walkability. I just think it’s appropriate. Our day is now. As you’re well aware, most of the emphasis last cycle was on downtown, and now I think Westshore is going to be perfectly positioned for the next cycle.

Read Pat’s full interview from the Tampa Bay Business Journal.

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2021 Forecast: Retail Investment Market Prime for Private Capital

As COVID-19 and rising competition from e-commerce challenged the retail market in 2020, it’s no surprise that investment in retail real estate took a hit. However, while the retail market will continue to face hurdles in 2021, certain groups of buyers and sellers are well-positioned to benefit from the current environment.

Franklin Street’s retail investment sales team had a strong year in 2020 and expects the market to perform significantly better in 2021, as the retail sector rebounds. Below, two of our firm’s leading investments sales experts offer their insight and predictions for the year ahead:

Greg Matus, Senior Vice President, Investment Sales

“For owners of quality retail properties who want to access their equity, now is a great time to sell. Although buyers are continuing to proceed with caution, well-performing retail assets are in high demand due to very limited inventory in the marketplace.

We can expect retail investment sales activity to pick up significantly in the second half of 2021, as there’s a lot of capital out there causing pent-up demand.

Properties with strong streams of income are achieving cap rates just as high, if not higher, than they were pre-pandemic. This is especially true for single-tenant properties and smaller strip centers in the $1 to $5 million range.

While financing may be tricky until underwriters can see a clear end to the pandemic, private equity investors are eager to buy, creating an ideal situation for owners of these types of retail properties.”

John Tennant, Senior Director, Retail Investment Sales

“The retail sector will see continued store closures in 2021 as retailers pivot to more online sales, potentially causing vulnerable, undercapitalized tenants to close their businesses as traffic continues to decline. During the latter half of 2021, some of this vacancy will be absorbed by non-retail tenants, especially in the B and C tier centers. 

For buyers, the bottom line is that despite the current challenges facing the retail market, there are still many opportunities to acquire stable, income-producing assets – especially if you have cash in hand.

As institutional investors continue pull away from non-core assets and urban markets, where a recovery could take significantly longer, private capital investment will be the main driver in 2021. We are already seeing private equity and venture capital funds seeking to finance new retail ventures as long as the returns are commensurate with the risk.

This increased private capital activity, combined with loosening COVID restrictions, should ultimately lead to a bounce back in transaction volume over the course the year.”

Read part 1 of this blog series on the retail leasing market here.

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Business Observer: Construction commodity prices rising

Construction largely survived and even thrived during the pandemic along the Gulf Coast last year, but rising construction commodity prices threaten to put a crimp on profit margins, hike rents and even postpone some projects in 2021.

The most notable commodity price increase has been for lumber, which surged more than 35% in the final weeks of 2020. That price hike, to more than $650 per thousand board, is especially worrisome to apartment developers because they rely increasingly on wood for so-called “stick-built” multifamily rental properties.

Current price increases could add thousands of dollars to the cost of a four-story, “garden-style” apartment complex — the type favored by most suburban multifamily rental developers, according to National Association of Home Builders data and projections.

But while lumber has seen the largest gains coming into 2021, construction experts say other materials are also rising amid continued growth throughout the state and the U.S.

Metals like copper and steel for re-enforced concrete and steel cable have risen dramatically or are poised to do so with early 2021 orders, builders say.

“The cost of steel is up by 35% over the last 45 days,” Nick Sanfilippo, senior vice president of project management for Tampa-based Franklin Street, a commercial real estate and financial services firm, says during a mid-December webinar.

“It’s been a massive increase.”

Read more from the Business Observer.

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2021 Forecast: Retail Market Expected to “Come Back Roaring”

From lockdowns and stay-at-home orders to increasing competition from ecommerce companies and food delivery services, retailers faced no shortage of challenges in 2020. Fortunately, many U.S. retail markets have already shown strong signs of recovery.

At Franklin Street, our experts are bullish on the year ahead as retailers pivot to thrive in a post-pandemic world, and the rollout of the COVID-19 vaccine eases consumer concerns about in-person shopping and dining. Below, some of our leading retail leasing brokers reflect on last year’s events and offer their insight and predictions for 2021 retail:

Carrie Smith, Managing Director, Jacksonville

“We went into 2020 seeing some of the highest rents, number of construction starts and sales volumes from retailers, anticipating 2020 being a banner year for the industry. Things were looking that way until March, when there was a literal stop on deals for a couple of months. However, things began to pick back up in the summer and have been steady ever since. Going into this year, we’re predicting a robust 2021 with pipelines showing signs of deal flow very close to pre-pandemic levels.

Retailers and restaurants had to pivot quickly on how to cater to consumers in lockdown. For those that figured it out and excelled at it, I believe the changes they made will last post-pandemic. This includes things like curbside pick-up, more efficient ordering systems and more integrated online platforms that work synergistically with the brick and mortar store.

We may also see more ecommerce and direct-to-consumer brands adopting a brick-and-mortar presence, potentially back-filling space that has become available due to closures and bankruptcies. These brands saw the value in having a fully integrated consumer experience with both online and physical footprints prior to the pandemic and last year’s events reaffirmed that.”

Terrence Hart, Senior Director, Orlando

“The rise of ecommerce was a challenge for traditional retail long before COVID-19, but the pandemic accelerated its impacts. Retailers who were already in the process of adapting their business model to accommodate online interaction are the ones thriving in the pandemic.

Eventually the virus will not be as much a factor, but there are components of the current retail experience that will likely stick. Consumers will continue to expect options for online ordering, so in-person shopping and dining will need to be more experiential than ever. Going forward, I anticipate we’ll see the most activity from retailers and restaurants on either side of the spectrum: those that offer speed and convenience or those that offer a truly unique and worthwhile experience that cannot be replicated at home.

Ultimately, retail may become smaller and more efficient from a square footage standpoint, but at the end of the day the need for retail will always be there.”

Monetha Cobb, Senior Vice President, Atlanta

Monetha Cobb

“In the past nine months, certain types of retail have performed especially well, including healthcare retail like urgent care centers and dentist offices, quick service restaurants like Chipotle and Wingstop and discount stores like Dollar Tree and Family Dollar. We’ve also seen a lot of junior box retailers such as TJMaxx and Bealls / Burkes Outlet taking advantage of the influx of larger box availabilities that have come online due to bankruptcies. 

One of the more interesting trends we are seeing now is landlords’ willingness to partner with restaurant groups in order to get them open/operating in their centers. We’re also seeing this at a more macro-level with the investment into JCP by Brookfield and Simon.

The retail market has already started rebounding in many ways as retailers have created safer environments, and I expect it to come back roaring in 2021 as the COVID-19 vaccine helps ease consumers’ minds. People are still going to want to be together eating, dining and experiencing new things outside the home — they just want to feel safe doing it.”

Read part 2 of this blog series on the retail investment sales market here.

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TBBJ: 2021 Economic Outlook: Presentation from Andrew Wright, Franklin Street

For the third consecutive year, Franklin Street CEO Andrew Wright delivered an insightful presentation on what’s in store for the year ahead at Tampa Bay Business Journals’ Economic Outlook Event. Below is an excerpt from Andrew’s virtual presentation:

I talked a lot last year about a secular bull market. Over a 20- or 30-year time frame, things will go up and they go down; they go up and they go down, and no one has any crystal ball. 

But if you look at long-term trends, I said it last year and I say it again today. There’s no better place in the world that I’d rather be than the Interstate 4 corridor. It really is all about population growth.

When you think about the number of people who have been coming and all the things that have happened in 2020 and all the anecdotal stats of people moving here, whether it be businesses or friends of mine that are talking about coming here, welcome to the Sunshine State.

A little more than 1,060 people move to the state a day. That’s a staggering number. 387,000 people moved here between April and April, ending in 2020. I don’t have great statistics on that beyond that. But it’s a pretty strong number. 

When you look at how we compare to the national average, in Florida we’re almost triple the national average in population growth and almost 20 percent higher than population growth in Florida here in the Tampa Bay MSA. So that’s strong by any measure. 

But it’s not just about the growth rate. When you look at our comparison, you look at the other states, you see growth since 2010. You see growth since 2018; so a two-year population trend. 

And of the top 10, you see Florida chimes in there at five. But of particular note is the size of the population compared to those people in front of us. 

It’s one thing for Idaho to grow by 4 percent on 1.8 million, but it’s an entirely different thing for Florida to be growing at over 3.2 percent on a population of almost 22 million.

If you look at it now based on population, to understand people who are of our comparable size, aside from Texas, there’s really nobody close. 

Read more from the Tampa Bay Business Journal or click here to watch a playback of the presentation.

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Business Observer: Pent-Up Optimism

This article from Business Observer offers insight from commercial real estate leaders on how the market is expected to perform in 2021. See below for a sample of quotes from Franklin Street’s experts.

On Industrial:

“Industrial properties have outperformed every asset class save for residential in the greater Tampa Bay area, because of the rise of e-commerce, and I don’t expect that to end anytime soon,” says Pat Kelly, regional managing partner at Franklin Street, a Tampa-based commercial real estate services firm.

On Multifamily:

In the Tampa Bay area, multifamily starts and transactions are expected to continue unabated in 2021, thanks to abundant available equity and financing opportunities available from the government sponsored Fannie Mae and Freddie Mac.

As a result, investor interest is almost certain to keep capitalization rates compressed throughout the new year, says Darron Kattan, Franklin Street’s managing director of multifamily sales.

As a result, investor interest is almost certain to keep capitalization rates compressed throughout the new year, says Darron Kattan, Franklin Street’s managing director of multifamily sales.

On Retail Sales:

John Tennant, senior director of retail investment sales and Franklin Street, says the second half of the year should be especially robust for single-tenant properties and grocery-anchored centers.

“I think there will be a huge gain in transactional volume for retail properties, in part because there’s a lot of capital out there,” Tennant says.

On Retail Leasing:

“I think retail is going to come back roaring,” says Monetha Cobb, Franklin Street’s senior vice president of retail leasing. “People want to be together, they just want to feel safe doing it.”

Read the full article from Business Observer.

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Florida Trend: Southwest Florida’s economic forecast for 2021

Florida Trend asked Florida’s top business leaders for their insight on the state’s economy heading into 2021. Here’s what Franklin Street CEO Andrew Wright had to say:

“Despite 2020’s challenges, I am very bullish on the outlook for 2021. Florida remains one of the fastest-growing states, as residents from the Northeast and other high-density regions move here in search of better economic opportunity and quality of life. Although there is some uncertainty in the short-term, we can expect the state’s strong population growth to create significant opportunity in the commercial real estate space going forward. Occupiers and investors may proceed with caution in the first quarter of 2021, especially those in retail and hospitality.

However, as unemployment levels out and businesses determine what their new normal looks like, I expect the state’s economy to be back on track by the second quarter. At Franklin Street, we’ve benefited from having a diverse range of services. Our insurance business has remained especially robust, and we have continued to close leases and sales across all asset types. Notably, we expect the state’s Amazon-driven industrial sector to remain white hot, while population influx from out of state continues to propel demand for affordable multifamily housing.”

Read more from Florida Trend.

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GrowthSpotter: Rapid shifts in the retail industry will change how malls are reconstructed

Farewell old malls and hello reinvention.

The age-old department store model that places one or more big-box retailers inside large regional malls with even larger parking lots and finicky infrastructure is going under, if not down already.

That’s according to a panel at this year’s National Association of Real Estate Editors 2020 Conference, which included experts in the industry and architects currently working on grand mall reconstruction projects throughout the nation.

Terrence Hart, a senior director at Franklin Street who’s active in Florida, said he’s optimistic about the future of retail.

“Retail doesn’t go away, it gets smaller from a square footage stand point, so these bigger box concepts are not as relevant as they used to be,” Hart said. Retail will evolve, and the tenants will change. “But at the end of the day the retail need is always there.”

ABC Fine Wine & Spirits, has seen sales increase nearly 50% since the pandemic, he said. The privately held alcohol retailer is now expanding, and retrofitting some of its older locations across Florida.

They spent about $2 million renovating its former store in Orlando’s Hourglass District, he said.

Its ABC liquor store at 3097 Curry Ford Road, at the corner of South Crystal Lake Drive, was divided into smaller retail bays. Just recently, Black Rooster Taqueria and Floyd’s Barbershop announced they would be opening a location at the former liquor store.

“The innovation there is a matter of keeping up with the tenants that are successful and recreating their profits to keep up with times,” Hart said.

Read the full article on

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GrowthSpotter: Innovation and communication will shape the post-COVID office building

With demand for new office space at historic lows, developers and landlords are turning to technology and innovative design to lure employers back to the workplace.

Upgraded air filtration systems, touchless doors and bathroom fixtures and UV antiviral lighting are just a few of the features Patrinely Group is building into the new Hewlett Packard Enterprises headquarters in Houston as a response to the coronavirus pandemic. CEO Robert Fields told a panel at the National Association of Real Estate Editors 2020 Conference this is the cost of doing business after COVID.

Yvonne Baker, managing partner for Franklin Street in Orlando, told GrowthSpotter that while some markets are rebounding, she doesn’t expect to see any new spec office construction in Central Florida in the near future.

“In real estate there’s always winners and losers,” Baker said. “Texas is a big winner in this thing. A lot of companies are moving from California and New York to these other markets like Houston and Austin.”

Some Orlando users are returning to the office. Baker said Franklin Street is now back in its office at 20 N. Orange Ave., and she just signed a lease for 3,400 square feet in the same building.

But several large office users are canceling their leases. “Liberty Mutual is giving back 100,000 square feet. And Disney had one building in Celebration is was leasing. It was 100,000 square feet, and they’re giving it back,” she said. “When you have huge pockets like that, you can’t justify building a new building.”

Read the full story on

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Fox 35: Golden Corral owner talks about closing, selling restaurants

ORLANDO, Fla. – The lights were on, but nobody was at the Golden Corral on South Semoran Blvd. in Orlando on Thursday. Even though the sign was covered and gone from the building, you could tell it used to be a Golden Corral.

It was one of two that were going up for sale in central Florida. The owner, Eric Holm, was selling them and closing three others. “I don’t think it feels good,” Holm said, “but God has never given us anything we couldn’t handle.”

Real estate analyst Terrence Hart, from Franklin Street Real Estate, said the locations getting closed or sold were in prime spots, especially in the tourist district. He said it presented a rare opportunity for future business.

“Those will get picked up pretty quick,” Hart said, “I don’t think they’ll utilize the space as it is today, I think it’ll be an interior renovation at the minimum, they might even scrape and build something new, but those are markets that are extremely tight and rarely can you find anything for sale.”

See the TV clip and full story from Fox 35 here.