Ally Capital Group’s gamble on aging Westshore City Center buildings pays off with one of the largest new office deals in Tampa in the past several years.
Heritage Insurance Holdings Inc. will relocate its corporate headquarters and as many as 400 employees to Tampa’s Westshore City Center from Clearwater next April, after signing one of the largest new office leases in the Tampa Bay area in more than three years.
The move from corporate-owned space to 88,643 square feet in 1401 N. Westshore Blvd. will nearly double Heritage’s space, reflecting the sustained growth the homeowners’ insurance company has experienced since its founding in 2012.
Heritage CEO Bruce Lucas says the decision to move to the five-building Westshore Business District project stemmed in large part from its central location and its ability to accommodate future growth.
“I think we’ll be at 700, or perhaps even 800, employees in the next five years,” says Lucas. “I don’t see anything at this juncture getting in the way of our continued double-digit growth.”
Lucas says the Westshore City Center building, which Heritage will fully lease through at least 2031, together with its surrounding amenities, will also assist the company in recruiting new talent.
For owner Ally Capital Group, which acquired the former Austin Center for $28.96 million, the long-term lease with the publicly traded Heritage validates its decision to buy the roughly 50-year-old complex in February 2019.
“We felt we were in a good position because there aren’t a lot of options for tenants of a large size, unless they gravitate to new development, where there are issues of price,” says Andrew Wright, Ally Capital’s managing partner.
“With Heritage, we couldn’t have dreamed of a tenant like them,” Wright adds.
Heritage’s lease represents one of the largest new office deals in the Tampa Bay area since April 2017, when AAA Auto Group consolidated two locations and some 750 employees into Renaissance VI, also in the Westshore area.
AAA signed an agreement to occupy the entire 150,000-square-foot building within the 71-acre Vision Properties’ park through 2033. The auto club relocated to the four-story building upon completion in August 2018.
Since then, the only other new office transaction of comparable size came in January, when sports merchandiser Fanatics Inc. committed to three floors in Highwoods Properties Inc.’s 5332 Avion building, also in Westshore.
That 92,000-square-foot lease in a six-story building previously occupied by Laser Spine Institute covers just over half of the space there.
“Securing a tenant of this caliber demonstrates the Westshore market’s continued strength and durability, as well as the excitement building around Westshore City Center,” Matt Alexander, a director with commercial real estate brokerage Franklin Street who together with firm Managing Director Chad Rupp negotiated the Heritage lease, says in a statement.
Franklin Street, where Wright is CEO, moved its headquarters to 22,000 square feet in Westshore City Center following the acquisition. The company both leases and manages the 10.4-acre property.
With Heritage, the 299,000-square-foot project is now 85% leased, up from 35% at the time of Ally Financial’s purchase. The space rents for roughly $30 per square foot, Wright says.
The positive momentum has accelerated thanks to a roughly $10 million renovation that has resulted in new walkways, landscaping and painting aimed improving walkability and the outdoor experience at the property, which is adjacent to the International Plaza Mall and in close proximity to the Tampa International Airport.
“The whole idea was to change the curb appeal of the property,” Wright says.
Inside the buildings, Ally Capital and Franklin Street are installing energy efficient windows and upgrading common areas, elevators and restrooms.
By year-end, Wright says Westshore City Center hopes to unveil plans for new restaurants and retail on the North Westshore Boulevard campus.
“The location is superior, and some tenants are taking advantage of the flexibility of renting in this environment,” says Bill Reeves, an executive managing director at commercial real estate brokerage Colliers International Tampa Bay.
“Added to that, there aren’t a lot of blocks of large space in Westshore that don’t involve new construction, which is constrained by cost,” Reeves says. “When you’re doubling in size, a lower rental rate looks very attractive.”
For Heritage, the 20th-largest homeowners’ insurer in the U.S. with more than $1 billion in policies underwritten in 16 states, the move to Westshore City Center will establish its sixth quarters in the past eight years.
Lucas says the company will likely be anchored for some time.
“It’s a central location and will be a great hub for our employees, near shopping and restaurants and the airport,” Lucas says. “It’s a perfect fit for us on so many levels, and when you look at the vision that Andrew has had for the property and what they’ve done, it’s really night and day. They’ve done things that have gone the extra mile, and that really to us separated Westshore City Center from other properties we looked at.”