Used to be investors in commercial income property would wait until it was leased and then buy for investment purposes. "They are a conservative group," says Frank D'Alessandro of D'Alessandro & Woodyard, commercial brokers. "They have been like coupon clippers unwilling to take the risk of an unoccupied building."
That's changing in Southwest Florida, according to D'Alessandro. The inventory of buildings occupied by tenants and available for sale has shrunk so much that income property investors are looking at vacant buildings and taking on the responsibility for tenant improvements and leases. "This is not risk that they have been willing to take in the past, but now they have to if they want to build their portfolios."
In Collier County, Todd Gates says that there's definitely more demand than supply. "The big complaint I hear is that there is nothing for sale," he says. Investors appear to be choosing vacant buildings and assuming the risk of tenant improvements and the cost of finding tenants, for which they can realize 12% to 15% return on their investments instead of the customary 8% to 10% on leased properties.
Flordeco's Tom Cronin has a different perspective. "You must be talking about the real estate investment trusts, " he says. "They have always been more conservative." Cronin says his Fort Myers-based company has been more inclined to purchase vacant buildings and profit from the higher return when the building is improved and leased.
The Collier County Commission is trying to decide whether it should fund a proposed economic development diversification pilot plan and, if approved, where to concentrate the funds. About $2 million in incentives, designed to attract new businesses to the area, are involved in the program as outlined by the Economic Development Council of Collier County.
At a recent budget hearing, the commission reiterated its support in principle for the plan but it might restrict incentives for the Immokalee area.
Incentives include programs for fast track regulatory processing, revolving loans, property tax abatements, and grants for job creation, workforce development and broadband infrastructure improvement. Qualifying companies would have to be new to the area or significantly expanding, create 10 new jobs in non-enterprise zones at wage levels equal to 115% of the average private Collier County wage or five new jobs at 50% of the average in enterprise zones.
Applicants must also be in targeted industries such as aviation, biomedical, information technology, manufacturing, corporate headquarters, wholesale trade and distribution and research & development.
The EDC estimates the direct economic impact of a single company creating 40 jobs will exceed $1.6 million in a non-enterprise zone or more than $1 Million in an enterprise zone. The Greater Naples Chamber of Commerce has indicated its support for the program. Michael Reagan, chamber president, says, "Collier County does not have a differentiated economy." He urges chamber members to support the EDC effort. The commission votes on the program Sept 18 when it approves the fiscal 2004 budget.
Expo at Brantley, a commercial center with 40,000 square feet of flex space that focuses on interior design services and products, is expected to open in Fort Myers at year's end.
Developer Ken Bachman of Bullseye Properties, a Sarasota-based company, says there's an unfilled niche for services and products such as window treatments, kitchen, bath, wall/floor coverings and lighting for homes and offices. Bachman's idea is to create a shopping destination so that builders, remodelers, designers, architects and new home and office owners have one place that meets all their furnishing needs.
Warren Barry of Coldwell Banker Commercial NRT, which handles the center's leasing, says the marketing approach is to seek companies that represent quality and compatibility of product and service. "We are talking to six potential tenants that fit our requirements," Barry says. Some prospective tenants were declined because their companies didn't meet the target profile.
When occupied, Expo at Brantley will have three buildings of about 14,000 square feet each divided by tenant requirements into 17 showrooms, with the possibility some tenants may occupy adjacent spaces to create a larger unit. Barry estimates that approximately eight to 10 tenants in suites of 1,800 to 2,600 square feet will complete the center. Estimate leasing rates are $14 to $17, plus $3.50 CAM per square foot.
Creative thinking (and drinking)
Maybe it was the people who didn't show up that impressed Coffee Talk. Perhaps the most diverse crowd ever to contemplate the region's business climate came together Sept. 5 at the University of Tampa. Creative Tampa Bay, a new group of local Richard Florida disciples, debuted with a task-driven workshop at UT's smartly appointed Vaughn Center. More than 200 academics, artists, consultants, economic developers, journalists, nonprofit heads and, yes, even a few business owners meditated for the rainy afternoon on how the Bay area could raise its dynamism quotient a few notches.
The inspiration for the event was Florida's "The Rise of the Creative Class." The year-old book advises cities to rethink their subsidy-heavy strategies for growing local economies. Instead of milking the taxpayer to finance corporate relocations, Florida urges cities to foster a cultural environment that embraces creativity, diversity and youth. New and profitable businesses will spring up organically.
Deanne Roberts, this year's president of the normally stodgy Greater Tampa Chamber of Commerce, is a true believer. But there were relatively few other pillars of the establishment at UT. Roberts noted the presence of only two politicians - and one of them was a 26-year-old city councilman from Fresno, Calif.
Yet there wasn't much ethnic or racial diversity among the 238 workshop attendees. "I'm tired of hearing talks about diversity around here with three black people in the room," complained Jacqueline Knight, after the formal workshop. The black Republican activist says she only belatedly heard about the workshop.
One of the organizers, Tampa Bay Technology Forum Executive Director Michelle Bauer, couldn't agree more with Knight. Bauer says Creative Tampa Bay will do a better job of outreach for its next workshop, scheduled for St. Petersburg.
The meat of the meeting was a series of speed dating-style brainstorming sessions. The result was a list of community-empowerment projects, such as founding a Latin American cultural center in West Tampa. Workshop participants could sign up to work on one or more projects during a cocktail reception that concluded the day's activities.
Legislative efforts this year to fix the Florida's workers' compensation system missed the mark with the state's construction industry.
"I think everyone agrees it's a Band-Aid," says Kim Hall, the Tampa Bay Builder Association's director of governmental affairs and community relations. "There still needs to be a major overhaul."
The concern comes as the state Workers' Compensation Division is about to begin the rule-making process on the provisions enacted in Senate Bill 50A during the 2003 legislative session.
At the heart of the builders' concern, Hall says: Construction companies, particularly smaller ones, still face the daunting problem of just finding a workers' compensation insurance carrier.
"There are no commercial carriers writing workers' compensation insurance in Florida," she says. "They have one option, as a result of the (new) legislation."
The Legislature created a new classification through the Florida Joint Underwriters Association for qualified small construction employers with 15 employees or less. But the premium through the JUA apparently costs as much as 125% of the market rate.
"We're still in a crisis mode," Hall says. "We're getting calls from companies that are closing their doors because they can't afford the $25,000 increase that comes from going to the JUA."
To that end, she says the builders association intends to make workers' comp reform as one of its top priorities in the 2004 legislative session.
Meanwhile, a serious deadline looms. On Jan. 1, owners and investors in construction companies must prove they own at least a 10% interest to qualify for an exemption from workers' comp coverage. The new law targets those small-business construction owners who purportedly listed non-owner employees as corporate officers. As of Jan. 1, such an act constitutes fraud.
"It's a big issue," Halls says. "Within the industry, there are quite a few members of both sides of the fence. There are members who support exemptions and don't want them removed. There are also members who think the system would work better with them removed."
Lobeck denies anti-golf course comment
Last week, Coffee Talk quoted a golf course industry source regarding a conversation she had with Sarasota attorney Dan Lobeck. The item drew a quick response from Lobeck, who sent the following statement:
"Last week's Coffee Talk quoted an unnamed 'golf course representative' as saying that I stated that County Commissioner Jon Thaxton and I 'have worked very hard to make sure no golf courses are built in this community.' That is an outrageous lie. I have never characterized Jon Thaxton's position on golf courses to anyone and I know from his public statements that he does not seek to prevent them. I also do not oppose golf courses. My only advocacy on the subject has been to oppose allowing golf courses to be counted toward the 50% open space required of Villages in the Sarasota 2050 amendment. I also happen to favor reasonable, nationally accepted environmental standards for golf courses, although I expressed that view to no one until I spoke to your reporter after the Coffee Talk article appeared. Also, I am not an 'anti-growth attorney.' I do not oppose growth (which is impossible) but instead favor controls on growth to minimize adverse public impacts."
When confronted, Coffee Talk's source stands by her statement. Thaxton did not request a correction, and he says he has no knowledge of whether Lobeck made the statement. Thaxton does say that the substance of the statement - that he has worked to prevent golf courses - is untrue. particularly close relationship with Lobeck.
Banker of the Year Nominees
Next week, the Review will publish its special Banker of the Year issue. In that issue, the Review will identify one Banker of the Year and two runners-up in the entire Review coverage area, from Tampa to Naples. The Review received nominations from various sources. The top three bankers will be chosen from the following list of nominees:
Roger Baldinger, President and CEO, Community National Bank of Sarasota County, Venice
Chip Black, President and CEO, First Community Bank of Southwest Florida, Fort Myers
Charlie Brown, President and CEO, Charlotte State Bank, Port Charlotte
Ken Cherven, CEO, First Community Bank Corp. of America, Pinellas Park
Corey Coughlin, President and CEO, First State Bank, Sarasota
David Dunbar, Chairman of the Board and CEO, People's Bank, Palm Harbor
Robert Guididas, President and CEO, Community Bank of Naples, Naples
Jody Hudgins, Sarasota County President and CEO, First National Bank of Florida, Sarasota
William Klich, Chairman and CEO, Republic Bank, Tampa
Christine Jennings, President and CEO, Sarasota Bank, Sarasota
Mike McCoy, President, Community Bank of Manatee, Bradenton
Jerry Neff, President and CEO, Gold Bank-Florida, Bradenton
John O'Neill, President, Century Bank, Sarasota
Stephen Price, Chairman, President and CEO, Florida Community Bank, Immokalee
Tom Quale, President and CEO, LandMark Bank, Sarasota
Jerry Williams, Chairman, President and CEO, Orion Bank, Naples