PropLogix discovered that for growing firms in need of office space in Sarasota, options are few.
When real estate tech firm PropLogix began scouting for new office space last year, it quickly found its options were limited to two: Either build a new building to house its growing business and 175 employees, or move out of downtown Sarasota.
Construction wasn’t an option. Spurred on by the early November sale of PropLogix’s quarters in the Main Plaza office and retail complex to a Connecticut firm with redevelopment plans, the company needed to move quickly to find new digs.
But downtown Sarasota’s office market — despite an availability rate north of 12% — offers few big blocks of space. PropLogix’s 35,000-square-foot space requirement couldn’t be met.
So while PropLogix founder and owner Jesse Biter — who also had owned a slice of Main Plaza prior to its $20 million sale — has always been a huge proponent of downtown Sarasota, there was little choice in looking outside the city.
As a result, it came as little surprise earlier this month when PropLogix acquired a two-story, 44,000-square-foot building in the IntegraClick Professional Park, at 5901 N. Honore Ave., near University Parkway and Interstate 75 — a solid 20-minute drive from downtown Sarasota — for $10.5 million.
“If you’re an office user in Sarasota and you need 30,000 square feet and 100 parking spaces, there’s no place in downtown that can accommodate you that’s modern or good for recruiting talent — especially the kind of young tech talent that PropLogix needs,” says Jag Grewal, a partner at Sarasota commercial real estate brokerage Ian Black Real Estate who together with the firm’s Amy MacDougall represented building owner JDL Development LLC, an entity controlled by business owner John Lemp.
“PropLogix is in such a growth mode, so they need to recruit, and to do that, they need space and a location that helps them do that, and proximity to I-75 does that,” adds Grewal.
Such is the conundrum for several office markets along the Gulf Coast. While vacancies are down and rental rates up, neither figure outright justifies new construction — except in pockets of downtown and suburban Tampa, where job and population surge has propelled development of several new buildings.
And while Sarasota office availability rate remains relatively high, blocks of contiguous space in Class A buildings are tight. Larger users, or companies that have grown like PropLogix — the company’s revenue has increased more than 1,600% percent since 2014 — find themselves spaced out of the market.
In PropLogix’s case, the firm, which uses proprietary software to help clients find fees, liens or assessments on properties to aid real estate closings, had been squeezing in to 18,000 square feet in Main Plaza. It had been in several other spaces since Biter, an entrepreneur and property owner, bought the business in 2014. Back then it did $1.13 million a year in sales. In 2018 it posted $19.79 million in revenue.
Although Ian Black partners Steve Horn and Nick DeVito, who had been searching on PropLogix’s behalf, could have found disconnected floors in downtown’s Five Points Plaza or a few other spots for the company, none would have sufficed.
“It’s very difficult to find contiguous spaces of 20,000 to 30,000 square feet in downtown Sarasota,” says John Harshman, president of Harshman & Co. Inc., another Sarasota-based commercial real estate brokerage.
“Sarasota just doesn’t have the floor plates, because the city’s office market caters more to smaller users,” he adds. “It’s why the city doesn’t have any new office developments.”
The biggest surprise associated with the PropLogix deal came in its form. When JDL Development brought the building to market last summer, it was offering the space for lease at $19 per square foot on a triple net basis, not for sale.
JDL Development acquired the building and a companion structure on 12 acres in 2009 for $5.75 million and proceeded to add amenities such as on-site fitness center, full kitchen, outdoor seating and a spiral slide from the second floor to the first.
But the space quandary isn’t limited only to firms the size of PropLogix, which will move fully into the IntegraClick park in February.
RevContent, a Lemp-founded business displaced as a result of the PropLogix deal, has leased 8,000 square feet in Biter’s Bold Lofts’ office space in downtown.
“It was just one of those serendipitous things,” says Richard Marques, RevContent’s CEO.
The move could be a relatively temporary one, however.
Grewal and Marques say the company could begin looking for a more permanent home in the near future.