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Commercial Real Estate
Business Observer Friday, Aug. 9, 2019 2 months ago

New developers breathing new life into Pineapple Square project in Sarasota

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Plans for ambitious, $200 million downtown redevelopment live on in new condos and retail investments.
by: Kevin McQuaid Commercial Real Estate Editor

Fifteen years ago, as Sarasota seized on the recommendations a 2001 master plan aimed at bringing additional residents and more sophisticated commercial space to the city’s downtown, a group of brothers from Bryan, Ohio, quietly began buying up retail properties.

At the time, Sarasota’s Main Street was populated almost exclusively by mom-and-pop shops that closed at 5 p.m. weekdays and stayed dark on weekends, only a few restaurants worth visiting twice and several used bookstores.

At Main Street and Lemon Avenue — arguably “Main and Main” in Sarasota — there stood a Burger King. Across Lemon Avenue, The Gator Club provided the only real nightlife of note.

But Isaac Property Co. saw potential.

It wanted to transform downtown Sarasota through a mix of national merchants and additional condominiums to spur critical mass.

“We realized, almost immediately, that downtown was something special, and could become even more special,” says Charles “Butch” Isaac, the company’s president.

“The demographic research indicated that the city needed more upscale retail, not only restaurants and clothing outlets but a variety. Condos also were underbuilt, in our opinion, we saw there was a need for additional residences, too.”

At the time, just a trio of new condo projects — one at 1350 Main St., another at 100 Central Ave. and a third at Main Street and Pineapple Avenue known as Plaza at Five Points — had been developed downtown in the past two decades.

To bring its vision to fruition, Isaac Property began buying up available storefronts along a concentrated area comprising Main Street, Lemon Avenue and State Street. It entered into negotiations with a downtown church that owned a large surface parking lot in the center of it all.

Eventually, Isaac partners would coax the city into footing the bill for a multideck, 395-space parking garage to meet increased parking demands and its own requirements.

Isaac’s ambitious, $200 million Pineapple Square rolled out in phases.

In place of a failed night spot called Café Ovo, the Isaacs recruited Hyde Park Prime Steakhouse, an upscale eatery and bar. Burger King gave way to tony clothier Brooks Brothers.

Just down Lemon Avenue, kitchen emporium Sur La Table opened in a fully renovated building, followed by Eileen Fisher at the street’s corner with Main Street.

Eventually, restaurant Boca Kitchen moved in, as did clothiers J. McLaughlin and Sara Campbell, together with Brooks Brothers replacement Bluemercury, an upscale cosmetics store.

“We felt the city needed what we described as ‘bridge’ retail,” Isaac says. “Not Gucci, not luxury, but something more upscale than what was in place. Retail created the ambiance that was needed to make the whole project work.”

Isaac Property also put in place modern, mall-like systems to coalesce the several blocks of downtown that were part of the project.

“Butch had the vision, the drive and the energy, and he became very involved in the local community,” says Lee DeLieto Sr. an agent with the commercial division of Sarasota-based brokerage Michael Saunders & Co. who represented Isaac Property is many of the negotiations for acquisitions.

“He introduced security into the downtown area, which made tenants and patrons feel more comfortable, and brought in valet parking to make getting around easier,” DeLieto adds. “Everything they did was for the benefit of their tenants and the community as a whole.”

Those systems and the merchants they catered to gained traction both with locals and tourists, in time generating average sales per square foot of more than $640 per square foot, according to an offering memorandum from commercial real estate brokerage Holliday Fenoglio Fowler L.P. (HFF) — double the numbers many enclosed malls today are able to muster.

When the economic recession of 2009 cast a protracted cloud over developments like Pineapple Square, however, it became clear that Isaac Property’s vision would have to either dramatically evolve or be curtailed altogether.

“The economy just killed it,” Isaac says.

In 2016, Isaac Property retained DeLieto — whose firm also was tapped for property management of Pineapple Square’s assets — to begin marketing the church parking lot for sale. The company says it lacked the management team needed to pull the project off.

West Palm Beach-based The Kolter Group, no stranger to Sarasota from its development of the Vue Sarasota Bay hotel and condo project elsewhere downtown, snapped up the opportunity.

Today, its 12-story The Mark, a mix of 157 condos and roughly 50,000 square feet of office and retail space, is nearing completion.

Earlier this year, Isaac Property hired HFF — in advance of the firm’s July 1 merger with commercial brokerage JLL — to market the remaining pieces of Pineapple Square.

The “Downtown Sarasota Collection,” as it was billed, sought $14 million.

The properties at 1500 and 1501 Main Street and 22 and 35 Lemon Avenue, totaling 30,188 square feet, were described in marketing materials as a “rare collection of urban retail assets.”

“This collection of assets represented the rare opportunity to acquire a dominant retail position within the submarket with the area’s largest concentration of national retailers,” says HFF Director Eric Williams, who worked on the sale along with the firm’s Daniel Finkle and Luis Castillo. 

After a national campaign, a Canadian entity known as Lemon Avenue SRQ Properties L.P. with ties to Sarasota was selected with a bid of $10.35 million.

“I knew Butch Isaac, I think he’s a very smart guy who brought some great tenants to downtown, and everything they did was first class,” says Lou Donato, the owner of Lemon Avenue SRQ who also owns several Main Street retail properties, including the buildings occupied by restaurants Duvall’s and Patrick’s.

“I knew those properties had been very well managed, and with everything happening in Sarasota, it’s truly one of the best small towns in the country,” adds Donato, a native of New York who retained DeLieto to represent him in the negotiations with Isaac Property.

“There’s a lot of development, people are moving into the city, it’s all positive.”

Indeed, since Isaac Property decided to sell rights to the church parking lot that would have been the epicenter of Pineapple Square, the city has seen more than 1,400 new rental apartments and 500 hotel rooms built.

Since 2016, some 500 new condos have either been delivered, are under construction or are planned.

Michael Saunders, the founder and CEO of the brokerage firm bearing her name, says Isaac Property deserves significant credit for much of what’s transpired downtown since Pineapple Square was first conceived.

“They were a large part of the renaissance of downtown and one of the catalysts that prompted so many people to want to live downtown,” she says.

“They never compromised on their vision.”

 

 

 

 

 

 

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