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Coffee Talk
All time high
Good news for Tampa landlords: Office rental rates for Class A space increased 3.6% in the first half of this year, and the trend is expected to continue upward, according to a mid-year report by GVA Advantis.
Tampa's Westshore submarket saw the biggest jump with an average Class A rental rate of $25.50 per-square-foot, compared to $22.70 in the first half of last year, says Randy Smith, director of research for the commercial real estate firm.
That's an all time high for the area. The previous high was $23.64 in the second quarter of 2001, Smith says. While rates most likely will continue to rise, they probably won't rise as quickly.
Hillsborough County is expected to grow by 550,000 residents to 1.7 million people through 2030, according to the University of Florida. And in May, job growth in the Tampa-Clearwater-St. Petersburg area was the third highest in Florida: The region added 31,200 new jobs over the previous 12 months.
The rise of rental rates in Tampa's suburban office markets has initiated speculative projects, such as a 98,597-square-foot office building at Highland Oaks in the I-75 corridor submarket. And in the Westshore submarket, Highwoods Properties broke ground on a waterfront development that features twin seven-story towers, with more than 417,000 square feet of space.
Tampa Market Indicators
Mid-year 2005 Mid-year 2006
Overall vacancy rate 16.8% 12.4%
Net absorption (sf) 469,353 534,419
In construction (sf) 270,656 420,850
Source: GVA Advantis and CoStar
+ Holiday Inn may boost Parsons
Oscar Parsons' $10 million investment in creating a viable convention center for the Sarasota-Bradenton area could be getting a jolt: Jiten Patel, who already owns and operates a Holiday Inn Express in Bradenton, is seeking to build a $15 million, 135-room Holiday Inn next to Parsons' Sarasota Bradenton International Convention Center.
Parsons converted the 120,000-square-foot former Sam's Club into a convention center in 2002, and since then he's spent millions sprucing it up, on top of the $3 million he paid for the property. But he's yet to generate any profits or even consistent revenues (See Review cover story, 8/25/06). One of the obstacles has been a lack of a hotel within a short walking distance to the center, located in an industrial area behind the Sarasota-Bradenton International Airport. Without a hotel, the convention center hasn't been able to attract top-shelf groups to the site, Parsons says.
Patel, with Bradenton-based Vinayak Property LLC, says a hotel - and specifically, a unique one with features such as a large lobby and skylight atrium he's planning to build on the site - will be the draw Parsons needs. Patel tells Coffee Talk he's in the final stages of the Manatee County permitting process. He hopes to break ground by the end of this year or early next year and have the hotel ready to open about 18 months later.
+ And the (small business) winners are ...
Fast Lane Clothing Co. (profiled in the Aug. 4 edition of the Review) was one of the recent winners of the Tampa Chamber of Commerce's small business awards.
Juan and Lori Davis, owners of the clothing manufacturer (5-20 employees category), were recognized at a Sept. 29 awards banquet, along with the owners of Alpha-Omega Title (21-50 employees) and Genesis Group (51-250 employees). Attorney Jeanne Tate was recognized as outstanding leader of the year.
Lori Davis, a triathlete, was teaching high school horticulture in the early '80s when she started making and selling colorful spandex shorts to replace the black ones then worn by athletes. Within a few years, she found herself working fulltime at the venture and she was joined by husband, Juan Davis.
The couple - she's the band leader and he's the big cheese - have reinvented the company over the years as more and more manufacturing shifts to countries with cheap labor such as China. But last year, Fast Lane hit $2 million in revenue and met or exceeded its profit goal of 10%.
To improve quality control, the 11-employee company plans to move next year into a new 10,000-square-foot facility in East Tampa and hire another 50 people that are now independent contractors to sew garments in-house.
Coffee Talk congratulates Fast Lane, Alpha-Omega Title and Genesis Group - small companies that making their community a better place by living the American dream and providing jobs for others.
+ Oswald Trippe continues expansion
Despite the challenges of writing insurance policies in Florida, Fort Myers-based Oswald Trippe continues its expansion both within and outside the state.
The company plans to open offices soon in Bonita Springs and Port Charlotte. It also is planning to open a processing center in LaBelle, east of Fort Myers in Hendry County, according to Gary Trippe, the company's chief executive officer. Currently, the insurance brokerage company has 15 offices from Miami to Tallahassee.
Meanwhile, Oswald Trippe continues to expand in other states such as North Carolina. It has acquired a second insurance broker in the Lake Norman region north of Charlotte. Trippe says other southeastern states such as South Carolina, Georgia and Alabama also look promising.
"What we're trying to do is think ahead," says Trippe.
+ Analyst forecasts earnings fall at WCI Communities
Housing-stock analysts continue to downgrade the stock of WCI Communities, the Bonita Springs-based developer once headed by Al Hoffman, now U.S. ambassador to Portugal.
The latest to do so is Banc of America Securities analyst Daniel Oppenheim, who recently downgraded WCI's stock from a "buy" to a "neutral" citing lower future earnings and deteriorating market conditions for new homes in its key Florida markets. He estimates earnings per share will fall from $2.62 in 2006 to 70 cents in 2007 and to a loss of 15 cents in 2008. "The reductions in our estimates are driven by the severity of the decline in demand in Florida," Oppenheim says in a note to clients.
The company recently guided analysts' expectations downward Oct. 3 when it announced that earnings for the third quarter would be significantly below its prior guidance of about 52 cents per share. It cited greater defaults as one of the reasons. For example, 80 homes it sold for about $48 million failed to close in the third quarter. In addition, the company expects orders for new homes in the third quarter will fall 80% compared to the same quarter in 2005.
Despite the gloomy forecast, Oppenheim says WCI's stock trades at a 24% discount to tangible book value. That's because WCI has one of the most extensive supply of land in the homebuilding industry.
Oppenheim's price target for WCI is $19 a share. The stock (symbol WCI) recently traded at $17.24.
+ Sweetbay building on own, for now
Sweetbay Supermarket CEO Shelley Broader's announcement that the Tampa-based grocery store chain plans to self-develop its stores seems to have caused a stir in the development community.
But Broader told those at the Oct. 3 luncheon meeting of the CREW Tampa Bay that the change probably won't be permanent. She just needs to get a tighter grasp on the development process in Florida and the costs involved. Right now, there are "too many people" between her and the stores.
Plus, she says that as an executive at other grocery chains that's how she has built stores in the past.
"I've heard from a lot of people in the development world I can't believe you're going to self development and cutting us out," Broader says. "Well, we're not saying we're going to self develop all stores from this point forward. We're saying we're going to self develop a few stores next year to get very tactile and to get our hands on the business. In the future we'll be doing a blend of developer-driven and self-developed sites."
+ Sarasota Country Inn smoke-out
The smoke-free bug has bitten Sarasota hotels. The Country Inn & Suites, a few miles from the Interstate 75 Clark Road interchange, has implemented a no-smoking policy for all its hotel rooms. It's one of first hotels in the area to go totally smoke free, a spokeswoman says, adding that the change was prompted mostly by customers requesting it.
+ CEO makes surprise visit to Fort Myers
Groundbreaking ceremonies for industrial buildings are generally routine affairs.
But one event in Fort Myers drew some attention because EastGroup Properties President and CEO David Hoster II made a surprise visit during a ceremony to start construction of 372,000 square feet of distribution space at SunCoast Commerce Park.
EastGroup is one of the largest real estate investment trusts specializing in distribution facilities, with a portfolio of 21.9 million square feet and another 910,000 square in development in Florida, Texas, Arizona and California. The publicly traded company (symbol EGP, recent stock price $49) has a total market capitalization of $1.5 billion.
Hoster says the company picked Fort Myers as its fifth Florida market in part because there is little competition from other REITs. Until the recent population boom, local developers have done most of the industrial-building development. Although the EastGroup buildings are speculative, Hoster says there has been strong demand from prospective tenants.
Frank D'Alessandro, whose firm Gates D'Alessandro & Woodyard is helping to lease the buildings, says REIT interest in the area is growing. "We are officially on the map," he says.
Hoster predicts that growth along Interstate 75 will mirror what has happened along the east coast of Florida along Interstate 95. "Now's a good time to get in," he says.
EastGroup is about to close on another 20 acres across the street from its new project and plans to build another 250,000 square feet among four speculative buildings.
Hoster says his company doesn't plan to stop there and is scouting sites in other areas of Lee County. "Our goal is not to stop," he says.
+ Lawyer of year appointed judge
Pamela A.M. Campbell, named 2003 lawyer of the year by the St. Petersburg Bar Association and the Review, will soon don a black robe for work.
Gov. Jeb Bush recently appointed Campbell, one of the first lawyers to represent Bob and Mary Schindler in their fight to save the life of their comatose daughter Terri Schiavo, to the 6th Judicial Circuit.
Campbell started her legal career at 18 as a gopher at the St. Petersburg court clerk's office. She worked her way through community college as a clerk-typist, delivering mail to the judges, typing documents and waiting on people at the counter. On her way to obtaining a law degree, she worked in Washington, D.C., as an aide to Rep. Curt Kiser.
After Campbell wraps up her 17-year legal practice, she'll return to the Pinellas courthouse as a judge.
Florida municipal-bond funds may shrink after tax repeal
Now that Florida's intangible-property tax has been repealed, is there any need to own a bond fund that invests exclusively tax-exempt Florida municipal bonds?
That's what some wealthy investors are asking themselves. Every December, bond funds that invested in Florida municipal issues saw a surge in new money as investors sought to shelter their assets from the intangibles tax, a wealth tax that targeted large holdings of taxable stocks and bonds.
But now that the intangible-property tax has been repealed, it may make more sense to diversify a bond portfolio by investing in a municipal-bond fund that buys issues from municipalities around the country.
Officials with Vanguard Group, who run the second-largest Florida municipal-bond fund, say they're reviewing the fund's objectives in light of the tax repeal. One possibility might be to merge the fund with another, especially if assets under management decline substantially. Currently, Vanguard manages $1.2 billion in its Florida Long-Term Tax-Exempt fund.
Here are the top 10 Florida municipal-bond funds ranked by asset size, according to fund tracker Morningstar:
Name Total assets (in 1,000s) 12-month yield
Franklin FL Tax-Free Income A 1,721,655 4.52%
Vanguard FL Long-Term Tax Exempt 1,203,720 4.02
Evergreen FL High-Income Muni Bond A 483,781 4.62%
Fidelity Florida Municipal Income 469,958 3.6%
Evergreen FL Municipal Bond A 363,301 3.8%
Nuveen FL Municipal Bond A 298,690 4.11%
USAA FL Tax-Free Income 275,999 3.85%
Eaton Vance FL Municipals B 258,228 3.42%
Alliance Bernstein Muni Inc II FL A 215,841 4.46%
Legg Mason Partners FL Municipals A 206,916 4.31%
+ Buchanan means business at USF
The business school wing in the new USF Sarasota-Manatee campus will have a familiar name to it for those in the area business community: Vern Buchanan. The school is naming the complex after the entrepreneur and U.S congressional candidate. Buchanan gave $100,000 to the school in the development phase of the new construction project, one of the first major gifts received by the college for its new campus.
The 100,000 square-foot campus, on Tamiami Trail near the Sarasota-Bradenton International Airport, features 24 classrooms, a 190-seat lecture hall and training facilities for the School of Hotel and Restaurant Management.
+ Quote of the week
"The only reason I became a housing economist is because I didn't have enough personality to be an accountant."
- Brad Hunter, director of the South Florida market for housing tracker Metrostudy, speaking to a group of homebuilders in Fort Myers recently.
+ Correction
Ken Cherven is CEO of First Community Bank, Pinellas Park, which had assets of $356 million as of June 30. A Sept. 22 article in the Review was incorrect.
What's Ahead...
Oct. 27 - The Apex Award will be presented to a woman who has been nominated by her peers for outstanding achievement in career, community and leadership. The black-tie gala will be held at Harborside Events Center in Fort Myers and it begins at 6 p.m. To register, visit the Web site of the Greater Fort Myers Chamber of Commerce at www.fortmyers.org.
Nov. 2 - The 2006 Southwest Florida Community Blue Chip Business Awards will be held in Naples at 7:30 a.m. and Fort Myers at 11:30 a.m. The awards program recognizes successful small-business owners who have overcome adversity to achieve success and share their stories as models for other entrepreneurs. For more information, visit www.otc1.com or call 239-985-7614.
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