In dense Tampa Bay cities, scarcity fuels demand for commercial property
The land came quietly to market last summer: a 39-acre lot on busy Gandy Boulevard in Tampa that housed a Macy’s warehouse and furniture gallery. Even with minimal marketing, it didn’t take long to get attention.
“Demand has been very robust,” said Rick Brugge of Cushman and Wakefield commercial real estate companies, which listed the property. “It is one of the largest contiguous pieces of land in South Tampa. It’s the size of a package that is hard to come by because South Tampa has such high barriers to entry and the demographics are very good. The retail front on Gandy Boulevard made it a very attractive location. “
Last month, Macy’s sold the property to a California real estate company for $ 32 million as part of one of Tampa Bay’s liveliest commercial real estate deals. The new owners, Bruges said, plan to sit in the country for a bit and rent some of it back to Macy’s, but could one day develop apartments, warehouses or more retail.
“We don’t see websites like Macy’s very often,” said Bruges. “It’s very rare.”
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A year into the coronavirus pandemic, restaurants and retail stores are still struggling and the future of office space is uncertain. However, the demand for large urban debris has not subsided as investors and developers still crave the rare opportunity to land in dense cities like Tampa and St. Petersburg.
“The only way to add new offerings – and that’s office, retail, everything – is to take something down and put something else in there,” said Mack Feldman, vice president of commercial real estate development company Feldman Equities.
In the past five years, only 14 commercial and industrial parcels between 25 and 100 acres have been sold in the city of Tampa, according to CoStar, commercial real estate analysts. There were no such large transactions in St. Petersburg during this period, and only three in Pinellas County.
More large areas could hit the market in the near future as companies hard hit by the pandemic realize that now may be the time to sell long-standing developed land, said Nancy Surak of real estate broker and advisory firm Land Advisors Organization.
That was the case for Big Top Flea Market, a 32-acre property in Thonotosassa that was sold last month for nearly $ 6.6 million to a company planning to build a 292-unit housing estate. Surak, who facilitated the sale, said a wider cultural shift to e-commerce was an important factor in the owners’ sales decision.
“I’ve seen a significant surge in this business in the past few months due to COVID,” said Surak. “(For) owners sitting on something that may not be generating the income level they want, monetizing that property, or getting that property off and selling it to someone else, might be the thing.”
One such area soon to be launched: the Tampa Bay Times printing facility at 1301 34th St. N, which covers about 27 acres in crowded St. Petersburg. Bruges recently signed up as a listing agent.
The Tampa Bay Times manufacturing facility at 1301 34th Street N in St. Petersburg is being sold after 61 years of operation as the company signed a three-year contract with Gannett to print the newspaper in Lakeland.
The Times earlier this month announced plans to close the 61-year-old facility and move printing operations to a Gannett newspaper chain’s Lakeland facility. This will cut 160 jobs as last year saw high sales losses.
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The property is the largest remaining area in the Times real estate portfolio. In 2015, the company sold a portion of the property on 34th Street for $ 3.8 million. This land was developed into an Aldi, a Culver’s, a Thorntons, and others.
“All we’ve heard over and over again is that it’s a blazing time for the industrial real estate and apartment building market,” said Conan Gallaty, president of the Times Publishing Company. “There are some development areas that need large lots and the location of our property also seems to be in great demand as it is in a very dense part of Pinellas County with lots of residential areas. This is usually what developers are looking for. “
Land like the Times tract is “definitely rare,” Feldman said, but it’s far from certain what will happen to it. The facility is surrounded by retail stores and neighborhoods and is not in a floodplain. It’s reserved for industrial use and with access to the railroad that used to transport newsprint – another unusual feature of real estate – it could stay that way. It could be an attractive last mile delivery location for a company like Amazon, which is already developing a 1 million square foot warehouse in Auburndale and another 700,000 square foot distribution center in Lakeland.
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On the other hand, Surak said, “Personally, I don’t think an industrial user can pay for what this property is ultimately worth.” Residential and condominiums often bring a higher return on investment. And while St. Petersburg needs affordable housing, there is no guarantee that the city would mark a rededication from industrial to mixed-use or apartment buildings.
“Often the municipalities will see trade in industrial or office space – in other words, job-producing locations – for residential or residential property as not a good compromise, as they have to protect this land for future jobs,” said Bruges. “If a city does not want to re-zone a property, it can be bound for years.”
In the current climate where large swaths of urban land are selling in eight figures, this may not matter. The Times property has already attracted a lot of interest, Gallaty said. Surak, who is not involved in the sale, said she too had heard from potential buyers.
“Where do you get 28 acres, contiguous, in Pinellas County?” Bruges said. “It’s hard to find, especially in the most densely populated county in the state.”