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Business Observer Friday, Nov. 3, 2017 2 years ago

Institutional Magnet

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The pending sales effort for Urban Centre is expected to generate interest from large, institutional real estate players.
by: Kevin McQuaid Commercial Real Estate Editor

In what will likely be one of the largest office transactions along the Gulf Coast in 2018, the owner of the Urban Centre complex in Tampa is preparing to sell the two-building asset.

Teachers Insurance & Annuity Association retained commercial real estate brokerage firm JLL late last month to market the nine-story property, which at 576,000 square feet is the largest office space in the popular Westshore area.

The pair of Class A buildings also are home to the Westshore Grand Hotel, Shula's Steakhouse, the Centre Club and other amenities, and the property is minutes away from Tampa International Airport and the International Plaza shopping mall.

Major tenants in the 4830 W. Kennedy Blvd. project include American Momentum Bank, Concerto Cloud Services, Tribridge, Regus, Charles Schwab and commercial brokerage firm Colliers International, among others.

Urban Centre likely will fetch in excess of $150 million, market analysts say. TIAA-CREF paid $105.5 million for the property in July 2005, according to Hillsborough County property records.

“I can confirm that we're handling the sale, but at this point, there's really not much more we can talk about,” says Jeff Morris, managing director of JLL's capital markets group, who is based in Orlando and will lead the marketing efforts.

TIAA-CREF officials declined to comment on any pending sale.

JLL has leased and managed Urban Centre I and II for at least the past 15 years.

Its capital markets team also is well versed in Westshore office sales, having handled deals involving Harborview Plaza on Rocky Point; Cypress Center I, II and III; Westshore Corporate Center; and Airport Executive Center, among others.

The move by TIAA-CREF, which is among the nation's largest commercial property owners, is expected to draw considerable interest from large, institutional real estate investors who typically limit their holdings to so-called “gateway” cities like New York, Chicago, Los Angeles or Miami or focus exclusively on high-profile, signature assets.'

WITHERSPOON HERE....

By comparison, if Urban Centre were to trade for around $150 million, its sale would likely represent the second-largest office transaction in the Tampa and St. Petersburg market over the past three-plus years.

In late 2015, the 42-story Bank of America Plaza sold to a partnership of Banyan Street Capital and Oaktree Capital Management for $193.5 million -- the only sale larger since the start of 2015.

Over the past three years, fueled by a lack of new construction, shrinking inventory and rising rental rates for landlords, investors have pounced on top-tier, Class A office properties amid rising population and job growth throughout the region.

Highwoods Properties acquired the 35-story SunTrust Financial Centre in downtown Tampa for $124 million; Feldman Equities and Tower Realty Partners bought the 22-story Wells Fargo Center in Tampa for $78 million; Third Lake Capital purchased the 28-story One Progress Plaza in downtown St. Petersburg; and most recently, Farley White Interests spent an estimated $52.5 million to acquire the 19-story Fifth Third Center, also in Tampa.

Several other high-profile office sales have topped $100 million since January 2015, as well, including the Highland Oaks office park; Renaissance Center; 3800 Citibank Center; and a portfolio acquired by Workspace Property Trust — but each involved multiple buildings rather than a single asset.

But while TIAA-CREF appears to want to take advantage of rising office market conditions, the sale of Urban Centre won't mean its exit from the Tampa market.

In early 2014, Taubman Centers Inc. sold a nearly half interest in the tony International Plaza mall, also in Westshore, to a TIAA-CREF fund in concert with a Dutch pension manager for $499 million.

The 1.2 million-square-foot mall, at 2223 N. West Shore Blvd., features upscale retailers like Neiman Marcus, Gucci, Louis Vuitton, Nordstrom, Apple, Tiffany & Co. and Burberry, among others.

Founded in 1918 by Andrew Carnegie, TIAA-CREF today is among the largest institutional investors in the world, with $938 billion in assets under management as of March 31.

The New York-based company also is one of the largest commercial real estate investors in the U.S., according to an annual survey of owners by National Real Estate Investor, a trade publication.

For JLL, being hired by TIAA-CREF marks its second major assignment in the Tampa area this year.

Last month, Strategic Property Partners, the joint venture between Tampa Bay Lightning owner Jeff Vinik and Bill Gates' Cascade Investments LLC, reportedly tapped the firm to lease a planned 700,000-square-foot office tower within its $3 billion Water Street Tampa project in the city's downtown.

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