Niche: Residential to Retail
Niche: Residential to Retail
Morin Development's projects include the replacement of the strange-looking former Walter Industries headquarters, near Interstate 275, with a multistory mall.
No one can accuse Ken Morin of operating an assembly line. Of his three pending retail projects, the president of South Tampa-based Morin Development Group LLC opted for a different retail development style at each site. Rather than use a cookie-cutter approach, he lets the local market dictate construction style.
In Pasco County, for instance, Morin's Suncoast Crossings, a 700-acre mixed-used development of regional impact, features a traditional neighborhood retail center at the southwest corner of State Road 54 and the Suncoast Parkway.
In southwest Hillsborough County, Morin plans to build the South Bend Town Center, a million-square-foot lifestyle retail center on Big Bend Road east of Apollo Beach. Lifestyle retail centers - unenclosed pedestrian malls - typically offer local and regional consumers a one-stop venue and a variety of national retailers, restaurants and other services.
Then there is Morin's plan in Tampa for what used to be the headquarters of Walter Industries Inc. - the two office towers linked by a suspended covered walkway at Dale Mabry Highway and Interstate 275. To make the best use of the 13 acres, Morin plans to demolish the towers and build what will become the Gulf Coast region's first multistory enclosed retail center - upward to 365,000 square feet of space in three to four stories.
"It is the first multistory retail property in the area," says Patrick Berman, a retail specialist in the Tampa office of Cushman & Wakefield of Florida Inc. "Atlanta is the only area (nearby) where they have those."
The planned Walter's Crossing development - named in honor of Walter Industries' late founder, Jim Walter - is a pricey proposition, too. Morin contracted to pay $16 million for the land. First-phase development costs on the first three stories is estimated at $47 million. Closing on the sale is expected within the next six weeks or so, though Morin put the property under contract in early 2001. The soft national retail market delayed the closing and construction start.
"We just got caught in the wrong period of time," Morin says. "There was the collapse of the stock market, all the huge corporate accounting scandals and the largest retail bankruptcy in history (Kmart). Retail sales fell flat, so most retailer revenue was off, which affects their expansion plans. Put a couple of planes into a few buildings and everything changes."
"Then land and development costs associated with the development command a higher rent that is justifiable and doable," he says. "So it takes a different mindset to convince corporate retail executives to pay higher rents than they've had to pay in the Bay area. However, we overcame it all. But we couldn't have overcome it without the faith, patience and trust of the seller in our abilities to get it done."
Offering only estimates, Morin says the prospective Walter's Crossing tenants would pay from $16 to $19 a square foot for rent. That compares with the more traditional Tampa Bay area retail centers that charge from $10 to $15 a square foot. He's selling retailers on the tremendous daily traffic flow past the site.
"We're pushing the envelope on rents here," Morin acknowledges. "Rents are a tad bit higher, a couple of bucks higher. This project will justify it, and the retailers we have in this project will be their top performing stores in the Tampa Bay area."
Berman thinks Morin just may have picked the best spot for a multistory retail project. Most successful multistory retail projects operate in urban settings and provide consumers with the same ease of parking as a ground-level retail center. That's what Morin has in mind for Walter's Crossing.
"If it's done properly it can work," Berman says. "It's in a high volume area. It's a great location, actually a fantastic location. That's what makes it work. A good developer like Morin will do a market survey to determine what is the best possible use of the site. For the Walter site, he had to go vertical because it has the density."
Most prospective tenants are household names, Morin says, such as Bed & Bath, Linens & Things and other retailers, which traditionally operate stand-alone retail stores. He targeted retailers that are unlikely to seek a presence at nearby regional competitors such as the Westshore Mall and the newer International Mall.
"They're all specialty retail at the higher end," Morin says about his nearest competitors. "We're nothing like that."
Work could begin as soon as Morin closes on the Walter Industries site. Building permits are approved, he says. The neighboring Rooms to Go store agreed to reciprocal access easements. He even has an agreement with the Florida Department of Transportation to spend $1 million out of pocket to fix roadway problems on Dale Mabry Highway.
Besides the Dale Mabry roadwork, Morin also took into consideration the project's potential impacts on the Carver City and Lincoln Gardens neighborhoods. That includes a redesign of the West Laurel Street access to Dale Mabry. It also included an agreement with all of the Walter's Crossing contractors to invest time and dollars to rebuild an aging community center.
"All of my contractors have agreed to bring all of their disciplines to bring the project up to code," Morin says. "It's all a part of their fee. Everybody has to contribute."
He and his wife, MaryJo, a former schoolteacher, created a literacy program that will eventually operate out of the remodeled community center. "She's been there with the kids for two years," he says. "It's a labor of love."
Morin's civic consciousness has deep roots. As his role models, he cites Mel and Betty Sembler, founding members of what has become the Drug Free America Foundation Inc. Morin worked 11 1/2 years as a senior vice president for Mel Sembler, the U.S. ambassador to Italy, at St. Petersburg-based The Sembler Co., a prominent retail developer. Morin attributes much of his success to the knowledge he gained through that relationship. "You couldn't go to school and learn all this stuff," he says. "I was sitting at the table with some very gifted people."
Morin says he developed a lasting friendship with Greg Sembler, the firm's vice chairman and the Semblers' son. In fact, he joined Greg Sembler in a venture to develop a 300,000-square-foot outlet center in St. Augustine.
Following his departure in 1997 from The Sembler Co., Morin put his experience to the test first with the development of the former Tampa jai alai site on 40 acres at Dale Mabry Highway and Gandy Boulevard in South Tampa. That neighborhood retail center attracted tenants such as Home Depot and Sam's Club. Next he developed Hillsborough Square, another neighborhood retail center, on 19.58 acres at Hillsborough Avenue and Memorial Highway in west Hillsborough County. Home Depot anchored the estimated 207,750 square feet of leaseable space at the Hillsborough Square site. Then he developed the AMC Veterans 24 site on 45 acres at the Veterans Expressway and Walters Avenue in West Hillsborough.
Over the company's first five years in business, Morin valued his projects at between $260 million to $270 million. In 2003, he forecast that figure to reach $48 million - mostly from the Walter's Crossing project. Of the total, he says gross revenue ranges from 10% to 13%. In 2003, for instance, he says revenue should range between $3.5 million to $4 million, with much of that figure paying down debt. Next year he forecasts revenue from all projects to reach about $10 million.
The biggest challenge for Morin comes from economies of scale. As a small shop - he has one assistant, Stacey Reisinger - Morin competes against competitors with vastly larger amounts of resources.
"The biggest challenge or obstacle is being a small-shop developer, because you're competing with all the institutional type of developers," he says. "It keeps me on edge."
That challenge also figures prominently in his strategic plan. "I pursue individual developments based on the overall market conditions of a geographic area," he says. "That's why my projects are so different. I'm not a Wal-Mart or Walgreen merchant builder. It's all tied into market conditions and local needs."
Last year, Morin began work on his biggest venture to date - the 700-acre Suncoast Crossings in Pasco County. One day, while flying into Tampa International Airport, Morin noticed the construction on the now-completed Suncoast Parkway and became keenly interested in development possibilities along the toll-road's interchanges. A broker introduced him to Tampa accountant John Nord, prior owner of the Suncoast Crossings site.
"That was my favorite deal," Morin says of the $200 million project. "From the first meeting to the day we put it under contract was only four days. That happens once in a lifetime."
It took eight months to prepare the Suncoast Crossings site. For instance, he had to bring water and sewer in from a hookup three miles away. Then he sold the residential component - approved for 550 single-family homes - to Todd Taylor of Taylor Development, who sold parcels to area homebuilders.
"We have 300 homes under construction," Morin says. "It's so busy back there, the fire marshal threatened to close them down because there was so many subcontractors."
Besides single-family construction, Morin sold the land for a 350-unit multifamily project to Raleigh, N.C.-based Phillips Development & Realty. Suncoast Crossings' site plans also call for 60,000 to 70,000 square feet of office space, in addition to the planned 500,000 square feet of retail space.
On the other side of the Suncoast Parkway, Morin owns another 275 acres, which includes entitlements for about 1.2 million square feet of commercial office space. He has signed a long-term agreement to sell that property to Tampa-based The Hogan Group.
Morin plans to hold on to only the 500,000 square feet of retail at Suncoast Crossings. "We will keep this property," he says. "From its inception I built it to be my annuity. This one will support me for the rest of my life."
If that's not enough, Morin plans to develop a million square feet of space at the planned South Bend Town Center. "We're under a long-term option contract to buy the property," he says. Although he wouldn't disclose details, Morin says he negotiated agreements with two land trusts that reacquired the South Bend property from General Homes Corp., which first filed for Chapter 11 protection under the U.S. Bankruptcy Code in July 1990.
Morin says he talked to at least five national retailers that may be interested in occupying the lifestyle retail center. He proposes development of a self-contained, open-air mall with 20- to 25-foot walkways. It will include big box retailers, a movie theater, health club, restaurants, some hotel space and about 60,000 square feet of commercial office space for professionals such as physicians, dentists and other medical personnel.
If all goes well, Morin expects to close on the land next summer, immediately begin construction and open the first phase between the fall of 2005 and spring of 2006.
For now, those projects dominate Morin's time. Although open for possible ventures, he plans to focus the majority of his efforts on Suncoast Crossings, South Bend and Walter's Crossing. "Then I'll come up for air and look for the next project," he says.
Kenneth I. Morin
Hometown: Wethersfield, Conn.
Personal: Married to MaryJo on Oct. 20, 2002.
Education: Attended community college. Enlisted in the U.S. Navy, where he served eight months of his tour in the Gulf of Tonkin during the Vietnam War.
Career: Worked for the U.S. Postal Service. At age 22, acquired first development property. Worked at The Conover Co. and the Pyramid Cos. in Syracuse, N.Y., before moving to Florida in 1984. He worked at St. Petersburg's The Sembler Co. for 11 1/2 years.
Favorite authors: Washington Post writer Bob Woodward, "Bush at War," and the nonfiction work of TV pundits such as Dick Morris, Catherine Crier and Bill O'Reilly.
Mantra: "You have to tell the truth even if it's bad news."