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Commercial Real Estate
Business Observer Thursday, Jul. 1, 2021 3 months ago

Commercial real estate brokerage pick roils Sarasota firms

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Sarasota County’s selection of Colliers’ Tampa office to market administrative headquarters in downtown Sarasota has caused consternation among competitors.
by: Kevin McQuaid Commercial Real Estate Editor

Sarasota County is catching fire for retaining a Tampa commercial real estate brokerage firm to market its aging administrative headquarters — a move that is expected to result in a multimillion dollar sale and one of the largest new office buildings in the county in a decade.

In the wake of brokerage firm Colliers’ selection, Sarasota commercial real estate brokerages have complained that the county failed to consider or interview other potential representatives.

“Local knowledge is a critical component of understanding the nuances of selling real property assets,” says John Harshman, president of commercial real estate firm Harshman & Co. Inc., which has been based in downtown Sarasota for more than three decades.

COURTESY PHOTO — John Harshman is president of Sarasota-based Harshman & Co. Inc.

“In my opinion, Sarasota County would best be served if their marketing team for the administrative office site included a broker with a profound understanding of the greater Sarasota commercial real estate marketplace.”

Sarasota County officials declined to be interviewed by telephone for this story, and officials prohibited Colliers’ agents Paul Carr and Todd Tolbert, who are working on the assignment, from being interviewed.

In a prepared statement, Planning and Development Services Director Matt Osterhoudt stated that “Sarasota County has worked with Colliers on a number of real-estate activities over the past several years.”

For instance, since 2019 Colliers “developed a comprehensive strategic plan for affordable housing and served as the county’s advisor for affordable housing submittals” for property at 4644 N. Tamiami Trail; evaluated a proposed lease agreement for a new office for the county’s Medical Examiner on Fruitville Road; and analyzed submittals for property at 2501 Dr. Martin Luther King Jr. Way.

Municipalities such as Sarasota County have the ability to bypass typical procurement processes and retain vendors for services if they are already engaged with them on other projects.

Colliers, for its part, works with numerous municipalities on real estate matters statewide and has for many years.

But Jag Grewal, a partner at Sarasota commercial real estate brokerage firm Ian Black Real Estate, says the county should have followed a methodical selection process the way the cities of Venice and Sarasota have in selecting real estate advisors.

“It seems like a flawed process,” says Grewal.

COURTESY PHOTO — Jag Grewal is a partner in the Sarasota-based commercial real estate firm Ian Black Real Estate.

Ian Black, who founded the eponymous brokerage firm, agrees that local knowledge is invaluable and paramount.

“We’ve been practicing our craft in Sarasota County for many years,” Black says. “We’re local people with local knowledge. I respect Colliers, but I don’t know that Colliers can say that.”

Black adds that he’s worked many times in concert with Tampa-area commercial real estate brokerages on Sarasota-related transactions.

“We’re brought in on a listing because of the local market knowledge we have,” he says.

The Realtor Association of Sarasota and Manatee Counties also is expected to make a formal inquiry regarding Colliers’ selection.

Harshman notes that firms such as Colliers — a publicly traded company that operates in 67 countries, generates annual revenue of $3 billion and has more than 18,000 professionals — often are selected for outsized assignments because of their size and ability to reach a multitude of potential buyers.

He contends, though, that modern technology has leveled the proverbial commercial real estate playing field.

“Technology has helped debunk the myth that one must employ a large regional or national real estate firm to dispose of large assets,” he says. “With technology, buyers from all over the world can be accessed by all brokers. However, what’s not easily accessible is the in-depth market knowledge that can only be learned from time spent in a marketplace.”

COURTESY PHOTO — Ian Black is the founder and partner of Sarasota-based commercial real estate brokerage Ian Black Real Estate.

Colliers, in marketing materials for the county administrative property at 1660 Ringling Blvd. and adjacent lots, does not list an asking price.

County officials in their statement say a formal “Invitation to Negotiate” will be sent out to potential buyers next month. Submissions are expected to be reviewed by county commissioners in late August.

An appraisal found that the 5.3-acre administrative property is worth roughly $23 million, but opinions of value have varied widely — from roughly $15 million to as much as $40 million.

The vast differential in amounts stems largely from differing calculations regarding the number of residential units that could be built under City of Sarasota’s building code.

The difference in numbers occurs because the property is governed by three different zoning classifications, which dictate the number of units per acre that could be constructed.

It’s expected that any buyer of the property would seek to raze the office building and develop residences on the three tracts, in part because maintaining the existing building would be cost prohibitive.

County officials have said the 48-year-old 1660 Ringling building would require at least $32 million in upgrades through 2031 to maintain.

The building also does not meet current building codes for its ability to withstand strong hurricanes.

The six-story building, which had previously been a GTE operations center, has served as the county’s primary administrative quarters since 1995.

Last summer, the county hired Sarasota-based Sweet Sparkman Architects and Interiors and designers DLR Group in response to a public request for submissions to evaluate the building and explore issues surrounding a possible relocation.

In the months since, the county has focused on shifting its administrative offices to county-owned land on Cattlemen Road, in northern Sarasota County and in close proximity to other county offices.

During a presentation early last month, county officials indicated that a site at 1301 Cattlemen Road could accommodate a four-story, 120,000-square-foot building and parking for more than 300 vehicles — with land for future expansion.

The initial phases would cost an estimated $72 million, an amount that would likely require a referendum because it exceeds the spending cap contained in the county’s charter.

If a vote does approve the spending and a sale of the Ringling Boulevard property does occur, a new county administrative building could be ready for occupancy in summer 2025, officials say.

At 120,000 square feet, the new building would be one of the largest new office structures developed in Sarasota County in the past decade.

Sarasota County also hopes to lease back its current offices from the buyer for a period of up to four years, the Colliers’ marketing material states.

Like the offering price for the property, however, the county’s rental rate during that period isn’t listed. The offering says that the county would pay a “market” rate that would be “negotiable.”

Under current net-lease office rates in Sarasota, such a commitment would generate between $2 million and $3 million annually for the buyer.

County officials seemed to telegraph the ultimate fate of the Ringling Boulevard and Morrill Street properties last year, in its request for architectural services.

“The site of the existing administration building may have greater value if put to another use,” the county stated.

 

 

 

 

 

 

 

 

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