Downtown – The Big News
As most presumably knows by now, the Lightning owner has partnered with Cascade, an investment company for Bill Gates, on his project for the very large land holdings at the south end of downtown Tampa. The news came in a number of reports, so we tried to put it all together.
An investment fund controlled by Microsoft’s billionaire founder will help finance the Tampa Bay Lightning owner’s ambitious plan to build a massive entertainment, office, residential and retail district around the Amalie Arena.
Here is a map of the holdings from the Times print edition of September 26, 2014 (the issues with the notations on the map are from the original):
And don’t forget the Marriott Waterside that he just bought.
The Lightning owner’s development team would not say how much Cascade is putting up for the project, but the Mayor did say this:
Whatever the amount is, good. Cascade joining is certainly an interesting development and nice to see. We knew the Lightning owner could finance his project without too much trouble, but it is good to have even heavier weight partners. Of course, it is worth keeping in mind that, as beneficial as the project could be (we don’t actually know what it is yet, so we can’t be completely sure), it is business:
If the development comes to fruition and is a success, it will spur other developers to look at Tampa. Leiweke said the project — which is far too large in an unproven market for a traditional developer — is not a philanthropic endeavor for Vinik. The intention is to demonstrate the commercial viability and financial success that draws other developers to an area.
And there is nothing wrong with that. And given some market dynamics, the involvement of Cascade will help move this project and also have a knock on effect:
As a secondary city, Tampa’s commercial real estate market struggles to attract big institutional investors, many of whom fled to gateway cities like New York and San Francisco after the last downturn. And while Gates’ endorsement won’t result in an immediate flurry of transactions, it’s a good story — and that’s what investors like to hear, said Mike Davis, executive director of the capital markets group with Cushman & Wakefield of Florida Inc.
And that last part is important because there are often grand plans announced that never come to full fruition because of economic cycles and over-extension of the developer. So far, we have to say, the Tampa Bay area got lucky when the Lightning owner bought the team and decided that he wanted to invest further in this area.
— What is it?
So when will we learn what the plan really is?
Vinik’s development team plans to unveil at least the first phase of the master plan before the end of the year. It needs to be a balanced plan, Leiweke said, with scenic places to walk, good ways to get around, places to eat and a sense of “a place that has a soul and a spirit.”
Vague, but promising. In fact, it is one of the few times we have heard a developer in the area speak of creating a sense of place, which is encouraging.
Leiweke said the district will have a “terrific blend” of hospitality, residential and commercial uses. All of those types of users — as well as the existing residential base in Channelside — want the same types of amenities, such as basic service retail, restaurants and a visually interesting, walkable environment.
We hope it does. The hotel/condo plan released already, the zoning changes for which were approved on Thursday, seems a good start.
Hopefully, the rest of the project will continue the basic ideas in that preliminary information – and it will all fine tune them.
And when might it get all going?
Coincidentally, that is when the transportation referendum might happen.
Speaking of transportation:
Transportation — a key factor in urban renewal and attracting Millennials — will be a big part of the plans, Leiweke said, and that includes the waterfront. He said the team envisions people walking, biking, using the street car and the water as means to get around the district.
We agree. Luckily, the project area already has decent internal transportation, assuming the streetcar increases service (and maybe pushes farther north into downtown and to Tampa Heights or even across the river possibly with more modern, faster moving cars).
However, there is another part of transportation. If fully built, this is going to be a very big project drawing many people from outside the immediate area. How are they going to get to and from the project and special events? Even if the “grid” is made more consistent, that will not fully meet the need. Good transit is important to attracting tenants, buyers, patrons to this project, and it should become part of the push. All the issues – proper development, proper transit, and attracting tenants/professionals/young professionals – are interconnected.
— The New Stuff Road Show
So, this all sounds great, and we hope it comes to fruition. On the other hand, it should be kept in mind that this is business and we would not expect any of the people involved in the development to just power through the project without the prospect of it being really successful. In other words, there need to be tenants/buyers/patrons for whatever is built.
Being good business people, that is clearly understood and part of the plan.
Leiweke said Thursday that while there’s a rough draft of a master plan of Lightning Owner Jeff Vinik’s downtown real estate holdings, the team is also gearing up to help efforts to drive corporate headquarter relocations to Tampa Bay.
The development of Vinik’s downtown real estate will be backed by Cascade Investments LLC, the Seattle-based investment firm controlled by Microsoft Founder Bill Gates. It could be a “potentially billion dollar” undertaking, Leiweke said. For those plans to be sustainable, Leiweke said, Tampa needs to broaden its corporate base — and what Vinik and Cascade plan to do in Channelside will make the city even more appealing to corporate relocations.
That last part is key. (Sure, a residential focused project could probably work, but not nearly as well as one with a strong office component and it would run the risk of cannibalizing other projects.) While talk of the plan is great and getting Cascade involved is a coup, for the plan to really work, companies need to be attracted to the area. (One interesting take away from this Wall Street Journal article on Cascade is that it seems to like to do everything very quietly, so it is notable that this announcement is public – maybe to draw interest to the project.)
Of course, that has always been the case, but it is nice for a major developer to point out that for real estate to thrive, you need to grow the overall economy. (Hopefully, that banishes once and for all the idea that we can grow through a real estate based economy.) A really good plan for the area (we look forward to seeing the plan) and big investors with big connections can do nothing but help.
Leiweke did not disclose how much Cascade will invest in the project, but he said the overall goal is to make the whole district a profitable project that includes residential buildings, new offices, likely a new grocery store and an overall walking neighborhood. Vinik’s team will soon take to the road on a nation-wide tour to visit CEOs and persuade them to expand into the new neighborhood — which will likely have a new name as well.
A new name? Ok.
The next phase, Leiweke said, involves a nation-wide road show to visit CEOs of major companies to show off the Master Plan for the Channel District, and persuade them to expand into soon-to-be-build office buildings, if not move their headquarters here.
“We can bring those prospective CEOs here,” to the Amalie Arena, Leiweke said, “and have Steve Stamkos skate up to them after a game … and take them to a Tom Petty concert, and show them what a cool, work/play place this can be.”
Indeed. Hopefully, those CEO’s will buy in, but that remains to be seen. We assume deep pocket support, a good project, and the Road Show will give a big push to recruitment efforts that have been much too slow to date. (And, yes, it is lucky to get deep pockets on our side, but so what?)
So what are the targets? The site selectors tell us:
Huge companies need headquarters in places that allow easy travel to extensive international locations. Tampa International Airport has some international flights and is adding more, but could not handle the biggest corporate headquarters’ needs.
While we get the reasoning, and it seems sound, you can’t score if you don’t shoot. Our view is that Tampa should go after whatever is there (though keeping in mind the probability – or lack thereof – of success with each effort). Maybe we’ll get lucky.
And, of course, there is the USF med school:
Once again, we see nothing wrong with wanting the USF med school on his property. That is good business. Whether it is the best for the med school is a matter to be determined. Just like a corporation will move its HQ if it makes sense for its business, not just as part of development, USF should move if it makes sense for its mission, which is an open question. (Though, on past experience, we have been functioning since the roll out of the idea to the media on the assumption that the med school move is – or is very close to – a done deal at this point. We could be wrong but. . .)
— One Cautionary-ish Note
Among all the excitement, it is worth noting that a project this big will take some time to build out and things can change over that time. In fact, we have an example right in downtown Tampa. When plans for Harbour Island were first announced, it was a “$1 billion” project with deep pockets that was to bring “an urban community.” This was a photo of a model (probably massing) of the plans:
Looking at Harbour Island today, it is almost fully built, though, aside from the north end of the island, most of it is not built based on the original plans. That is not to say it is not nice, but almost 25 years later, it is not done (though in a few years it might be), and it is not built as proposed – an urban neighborhood. Just keep that in mind.
Of course, past performance is not a guarantee of future returns, so this project may be different. The backers are different. The area is different (though the political culture still has not really changed that much). Times are different. The market is different. So there is a good possibility the results will be different. Nevertheless, that history is something to keep in mind in terms of expectations and timing.
— Bottom Line
So, this all sounds good. It appears that the outline of the plan is sound (hopefully the details will be truly urban) and based in sober reality, like this:
“The ultimate thing we can do for this community is to make it commercially viable,” Leiweke said. “When this becomes a commercial-grade investment, we will have done a phenomenal thing for this city. We will have created thousands of jobs. We will have created ad valorem tax (value.)
It is ok to be excited, but that excitement should be tempered with the reality that most of the hard work still has to be done and the true success is contingent on attracting more business to the area.
The involvement of the Lightning owner and his partners and team in economic development (and their sober approach) is in many ways the most exciting part of this project. Having such networked business people with a lot of skin in the game and committed to leading the charge is nothing but helpful.
Hopefully (and, yes, we are saying that a lot in the item), the full plan will be as good as advertised and the whole thing will come off, because that would be transformative for downtown.
— Aside: So What Does a Billion Dollars Get You These Days?
A billion dollars is a lot of money. Sometimes it is hard to know just what you actually get for a billion, so we thought we would provide some examples.
The closest city with major projects is Miami. (You can find a list of major projects here.) Among them are the $1.05 billion Brickell Citi Centre, the $ 1.5 billion Miami World Center, and the $ 3 billion Resorts World Miami. The 1100 Millecento by Related, a single condo building, is estimated at $105 million.
Closer to home, the Residences at Riverwalk project is estimated to cost $ 85 million. And Encore is $450 million in the basic model and about $1 billion if you add in the proposed private development in a few of the lots.
Economic Development – Fortune 1000
Continuing on the theme of corporate relocations, we found this interesting site that lists Fortune 1000 companies by metropolitan area. You can check the cities in which you are interested. It lists seven for the Tampa Bay area.
TIA – More Signs of Success
Edelweiss is expanding its service to Tampa once again.
Edelweiss Air’s route connecting Tampa to Zurich continues to be one of Tampa International Airport’s big international success stories. It also has been a big success for the airline: That’s why Edelweiss announced Monday that it will increase its overseas flights to Tampa from twice a week to three times a week starting in June.
That is great news. Apparently, there is a market for more European flights, after all. Also notable was this:
TIA used $464,000 in cash, as well as marketing help and waived airport fees, to attract Edelweiss in 2012. The airport also helped put together a coalition of community partners to market the route to Tampa Bay and Europeans alike, including Hillsborough County’s tourism agency Visit Tampa Bay and Pinellas County’s tourism arm Visit St. Pete/Clearwater.
In other words, the incentives worked. They helped open a market that is continuing to grow, which is great.
Then there was this:
Which would be nice, though we know it is an ongoing process, as is finishing our connections to major US cities with a San Francisco flight.
Nonetheless, well done.
Westshore – Possibilities Over Time
There was this interesting nugget from the Business Journal:
Redstone Investments, which has offices in Tampa and Youngstown, Ohio, plans to buy the five buildings that make up the Austin Center, according to real estate sources, who asked not to be named because of the sensitivity of the deal.
This is the complex. Why is this interesting?
The Austin Center’s location in Westshore — home to 12 million square feet of office space and more than 93,000 office workers, as well as a population base of nearly 14,000 and growing with several apartment developments in the works — makes it an ideal redevelopment play for a mixed-use project. Add in the potential of a multimodal hub, and the location is even more desirable.
Redstone is a retail developer, and a source said the company would likely bring in a multifamily developer for that portion of the project. Publix Supermarkets Inc., long rumored to be looking for a site in Westshore, could be a candidate for the project, and Redstone has done deals with Publix previously. Westshore, despite its office and household base, does not have a grocery store; the closest stores are a Publix on South Dale Mabry Highway and Trader Joe’s at South Dale Mabry and Swann Avenue.
That sums it up. Of course, the utility of the multimodal hub, what will really go there, and when it will get built is not clear – and won’t really be worked out until 2016 at the earliest, as it is contingent on a referendum. And throw in the tendency for not very walkable development in Westshore, and it makes us wonder if, even if this report is true, if anything of interest will happen for years on that property (or if something does happen, will it be done to take advantage of what might come later?). In other words, interesting but very speculative at this point.
Economic Development – More IT . . . But Just How Much?
There was good news on the job front:
CEO Matt Nachtrab said he was excited that LabTech Software could contribute to a growing IT presence in Tampa Bay. “Tampa has become our home, and we’re thrilled that our commitment to the growth of the LabTech product and our commitment to the local economy can go hand-in-hand,” he said in a statement.
And that is great. We love expanding IT businesses in the Tampa Bay area. But we have to admit, the reporting is a little confusing. First, let’s look at this week’s announcement:
The company, which is pledging to make a capital investment of $644,000, has been promised a combined local and state incentives package worth $500,000. In March, Hillsborough County and the Tampa City Council approved an incentive package of $100,000, added to $400,000 coming from the state of Florida’s Qualified Target Industry (QTI) program.
Founded in 2004, LabTech has a total of 350 employees, most located at its primary facility on George Road in Tampa. Its software, which is used by more than 4,200 IT service providers globally, helps clients monitor and manage their IT environments remotely and automate any IT task through a single console.
And that’s fine. But in late February, there was this report about ConnectWise:
That news brought the bipartisan trinity of high-tech job evangelists — Gov. Rick Scott, Mayor Bob Buckhorn and Hillsborough County Commission Chairman Mark Sharpe — out to the company’s headquarters Wednesday to celebrate the news with ConnectWise’s founding brothers: chief executive officer Arnie Bellini and chief operating officer David Bellini.
Public incentives will aid ConnectWise’s plans to expand its workforce, which will also require the company to add 10,000 square feet of workspace to its headquarters in the West Shore business district.
Officials said the company will receive up to $560,000 in incentives. That will take the form of $448,000 in tax refunds from the state, plus an incentive package of $112,000 jointly offered by Tampa and Hillsborough County. In all, that’s $5,000 per job.
The brothers founded ConnectWise in 1982 in Tampa in their parents’ spare bedroom. The CEO said his company employs about 600 people, most of them in Tampa, but about 30 work in a Seattle office. ConnectWise bills itself as the world’s No. 1 “business management platform” for IT firms and says its software is used by more than 6,000 businesses and 80,000 people.
Which is also fine. No problem with that. But if you Google LabTech, you get this page, which is ConnectWise. Google maps also placed both companies in the same building. Moreover, the Sunbiz entry for LabTech Software makes it clear that ConnectWise’s founders control the company.
We are very pleased that the jobs are coming to Tampa. We think it is great and are happy that the investment in the area is being made. But the reporting is confusing. Are they the same jobs (the “March” reference in this week’s article makes it seem so) or are we getting double (which would be better)? We’re not going to complain in either case, but the news should be clear.
Harbour Island – Toward Building
Last week, we noted that the developer’s website said ground is to be broken on HIKU (though maybe the name will change), an apartment building planned for Harbour Island, in October. This week it seems they got a loan.
The developers pursuing the deal, under corporate entity Harbour Island Residential LLC, received a $41.5 million loan for the project from Birmingham, Ala.-based Compass Bank, according to a Hillsborough County mortgage filed Wednesday.
Good deal. With SkyHouse close to topping out, it would be nice to have another building going up.
Transportation – Recycled Is the New Original
This week, the Tribune’s “conservative” columnist recycled arguments he brought up at the beginning of the year regarding transit, namely buses, to discuss Greenlight Pinellas. In the interest of conservation, we will not use more space to analyze his argument, because we already did it – here. Nothing has changed.
Rays – And Then?
This week the MLB regular season came to an end. Unfortunately, the Rays did not make the playoffs. On the other hand, a large number of former Rays did – like James Shields, David Price, Wade Davis, Johnny Gomes, Sam Fuld, Stephen Vogt, and Scott Kazmir. We are not second guessing any trades or other deals (and we like Wil Myers) because we know the Rays have a reason they cannot keep much of their best, developed talent so they have to make deals.
With their home games completed, the Rays will conclude the season this weekend in a series against the team with the second smallest crowds in baseball, the Cleveland Indians, who have drawn only a couple of hundred more fans per game than Tampa Bay and fewer people in total this year.
At some point, one has to conclude that the location is an issue. Of course, basically nothing happened over the last season to move the stadium issue forward. Now, there is news that things might move a little.
Kriseman and Rays president Matt Silverman met for about an hour Friday afternoon at Tropicana Field, the latest in a series of “good” meetings that haven’t yielded any concrete steps toward resolving the long-running saga of finding a new stadium site for the Major League Baseball team that finished a losing campaign Sunday with (depending on how you tally the numbers) MLB’s lowest attendance.
Well, that would be good, but we have heard such things before. Over in Hillsborough, there are moves to get ready for the time the Rays can look there. Which is fine to do (advisable even) but not yet relevant.
And it seems hard to believe that St. Pete will just let the Rays look in Hillsborough.
Kriseman conceded as much in a Friday night interview, saying the subject has come up in recent discussions he’s had with Rays management. Still, Kriseman called Hagan’s proposal “premature” and potentially “problematic” because of the Rays’ contract binding the team to Tropicana Field.
“I’m more open to having those discussions and I will see where they lead,” Kriseman said, “but my focus first and foremost is to do what I can and work with the Rays on keeping them in St. Petersburg.”
Sounds a lot like the last St. Pete mayor.
Even setting that aside, the other question is where would a stadium in Hillsborough go? Does the Lightning owner want it near his project (it could help bring people around, but it would also compete for entertainment dollars.)? Given the scope of his project and its likely request for infrastructure money (though, if done right, infrastructure improvement could also be used for a stadium), he likely has a lot of influence. And if not there, where?
In other words, we still have not gotten anywhere on the Rays.
State Fair Grounds – Stick With the Duck
The State Fair Board rejected a proposal to develop part of the land:
Deflated directors of the Florida State Fair Authority shot down a developer’s proposal Monday to build a hotel, an RV park and a field house at the fairgrounds, saying they expect more money and more “wow.”
So what was the proposal?
The development plan presented to the Florida State Fair Authority Board Monday lacks a “wow factor” and brings in a less-than-favorable amount of revenue — less than $500,000 a year, once the developments got off the ground. The phased plan called for a sports-themed hotel and field house, an RV park and handful of restaurants on 35 acres. The board gave the plan a unanimous thumbs down.
When Virginia-based Republic Land Development first came to the board with its plan a couple of years ago for an amateur sports village, a sports-themed hotel, water park, an indoor virtual golf facility and a “restaurant park,” board members envisioned a smart-looking plan that would relieve them of some of the constant scrambling for money to keep the Florida State Fair running efficiently, some members said.
Not very inspiring, but rejecting such a proposal is unusual for the area. Why did it happen?
The Florida State Fair could make more money in five years on a floating sign shaped like a giant rubber ducky than it could make on a lackluster development plan that would tie up a chunk of its property for years, Agricultural Commissioner Adam Putnam said.
“I have always said… our No. 1 priority is to this fair,” said Putnam, who sits on the board. “This is a decision about tying up the future of this fair for 40 years and really not getting a lot in return.
“We will get more money selling a (sign on a) giant rubber duck than we will for five years in this deal,” Putnam said “I don’t believe it is offering a return to this board to support our core programs commensurate with what we are giving up in terms of time and land.”
Putnam’s rubber duck comment was referring to a five-year sponsorship agreement the board made with Spa Manufacturing Inc. earlier in the meeting that will include placing its name on a giant rubber duck that will float in a lake on fair property.
Well, that about says it all.
List of the Week
This week’s list is Wallethub.com’s Fastest Growing Cities. You can find the methodology here. Helpfully, they have overall rankings and also break down rankings by large, medium, and small cities. We will focus on the large cities. Because Tampa is number 41, we will list the top 41.
Coming in first is Austin, TX, followed by Fort Worth, TX; New Orleans, LA; Denver, CO; San Antonio, TX; Corpus Christi, TX; Washington, DC; Bakersfield, CA; Oklahoma City, OK; Columbus, OH; Omaha, NE; Nashville, TN; El Paso, TX; Portland, OR; Minneapolis, MN; Pittsburgh, PA; Houston, TX; Raleigh, NC; Anchorage, AK; Seattle, WA; Aurora, CO; Philadelphia, PA; Oakland, CA; Louisville, KY; San Jose, CA; Dallas, TX; Miami, FL (#27); Fresno, CA; Boston, MA; San Francisco, CA; Charlotte, NC; Kansas City, MO; Cleveland, OH; Baltimore, MD; Colorado Springs, CO; San Diego, CA; Lexington, KY; Albuquerque, NM; Santa Ana, CA; Arlington, TX; and Tampa, FL.
Looking at Florida specifically: Miami is 123 overall. Tampa is 226 overall. Jacksonville is #46 (308 overall). In “medium cities,” Orlando is #56 (116 overall), Clearwater is #74 (145 overall), Fort Lauderdale is #84 (180 overall), West Palm Beach is #94 (191 overall), St. Pete is #147 (304 overall), and Lakeland is #189. In “small cities,” Largo is #81 (236 overall) in small cities. Brandon is #30 (62 overall) in medium and Town’n’Country is #65 (199 overall) in small cities even though neither is actually a city.