Excerpted from Southeast Real Estate Business August 2017 issue.
NEW MIXED-USE DEVELOPMENT TRANSFORMS TAMPA
Miami isn’t the only Florida city with a billion-dollar development in its pipeline. Strategic Property Partners (SPP) is underway on a $3 billion mixed-use project that is redefining Tampa’s retail market.
Water Street Tampa, the product of a real estate investment joint venture between Cascade Investment LLC and Tampa Bay Lightning owner Jeff Vinik, will span 50 acres and add over 9 million square feet to the Tampa Bay skyline. Located on the Garrison Channel and Hillsborough Bay in downtown, the development will feature office, retail, cultural, residential, entertainment and hospitality space, making it a true live-work-play environment, according to John Stoner, director of leasing at Clearwater-based Bruce Strumpf.
“The living units will be the driver,” says Stoner. “They will bring the restaurants, bars, entertainment, grocery, furniture, drug stores, title companies, insurance providers and the retailers that support the more affluent homeowner. It will have an environment where people will be living, working and shopping all within walking distance.”
The first phase of development on the property will break ground this year, with subsequent phases slated for completion by 2027.
“There is so much buzz around Mr. Vinik, and his vision for shaping Tampa into a ‘real metropolis,’” says Joe Morrow, investment associate at Tampa-based Franklin Street. “I’ve always thought of Tampa as a small town with the amenities of a big city — we have steady population growth, a low cost of living and a higher quality of life.”
Anticipation of Water Street Tampa has also prompted redevelopments in other neighborhoods in the region. In the SoHo district, one project will transform a former gym into a mixed-use development: The Morrison. Leasing of the development is being spearheaded by Franklin Street.
“When it comes to choosing a retail site, location, visibility and access are most important,” says Morrow. Located at 936 S. Howard Ave., The Morrison is situated within the walkable Hyde Park neighborhood, home to the upscale shopping and dining destination, Hyde Park Village.
The Morrison will feature 13,890 square feet of retail space, 6,950 square feet of office space and 46 residential units. Spanish-inspired tapas restaurant Bulla Gastrobar and Mediterranean chain Zoe’s Kitchen will open their first locations in the Tampa market at the development, and Club Pilates and Blind Tiger Café will open their second and third locations, respectively.
The Channel Club, a mixed-use development that will include 323 rental units and a 36,000-square-foot Publix, is currently under construction in Tampa’s Channel District. The project is scheduled for completion in December 2018. Blackwater Resources is underway on plans for Mitchell 54 West, a mixeduse development that will include shops, restaurants, a movie theater, Class A office space and roughly 800 homes. The 330- acre project is expected to break ground later this year.
Boutique grocers are also expanding their presence in the metro. Sprouts Farmers Market opened its first Tampa location at Carrollwood Commons shopping center in February, and has subsequently opened locations in south Tampa and Palm Harbor. According to CoStar Group, 18 buildings totaling 126,935 square feet were completed in the Tampa/St. Petersburg retail market during the first quarter of 2017. CoStar reports that the metro’s rental rates ended the first quarter at $14.83 per square foot, representing a 2.6 percent increase from the fourth quarter of 2016 and a 5.9 percent increase from three quarters ago.
“We will continue to see a positive trend in Tampa’s retail rental rates,” says Stoner. “Occupancy is going to remain fairly steady and put an upward pressure on those rental rates.”
Retail vacancy decreased in the first quarter of 2017, ending the quarter with a positive net absorption of 467,579 square feet , according to CoStar. Over the past four quarters, the market has seen an overall decrease in the vacancy rate, going from 5.1 percent in the second quarter of 2016 to 4.7 percent in the first quarter of 2017. As the availability of retail space in the marketplace shrinks and both new and existing retailers and restaurants look to expand in Tampa, the search for the ideal location has become more competitive.
“In today’s market, you must be willing to pay, but you may not have as much time to analyze the decision as you once had,” says Morrow. “The space you may want will not be available for as long.”