Tampa firm has refocused its efforts on development as it seeks to grow its footprint in the region and beyond.
When cousins Jonathan Levy and Lee Burdman formed Redstone Commercial nearly three decades ago, the pair decided to develop properties with the intention of owning them for several years.
At the time, the concept had fallen out of vogue. Development giants like the Trammell Crow Co. and other merchant builders were making fortunes in the late 1980s and early 1990s by developing real estate with plans to shed it upon completion and stabilization.
Even after Redstone decided to jointly headquarter its operations in Youngstown, Ohio and Tampa, the company remained focused on developing primarily retail projects for its own account.
“We build quality assets that will own for the long haul,” Burdman, a Redstone managing partner, says on the company’s website. “As a result we take the time to be sure that we make decisions that benefit both our tenants and our own long-term outlook.”
As Redstone’s portfolio grew — to 75 properties with 4.5 million square feet in 15 states — so, too, grew the need to internally manage leasing activities.
That need was further exacerbated in 2003, when Redstone acquired a firm that specialized in developing so-called “big box” retail stores for Lowe’s and others in Tampa and elsewhere.
Three years later Redstone plunged into the brokerage and property management services side of the business by acquiring Summit Advisors, a firm that leased and managed a portfolio of properties owned by insurer Travelers Cos.
The push into brokerage amped up further in 2010 when the company hired Patrick Kelly, an industry veteran with more than 35 years of experience with The Vantage Cos. and others, to lead its leasing activities and Redstone Commercial’s president. (In 2014, Kelly would be inducted into the NAIOP Tampa Bay chapter’s Hall of Fame for his commercial real estate industry contributions).
Brokerage opportunities also rose in prominence when Redstone bought the Austin Center office complex in Tampa’s Westshore Business District, in 2015, for roughly $28.5 million.
While the five-building, 299,000-square-foot office complex provided a solid cash flow, many analysts believed the real advantage would come in redeveloping the property’s 10.4 acres.
The same was true for a 16-building industrial portfolio Redstone bought for about $30 million in 2018: The 500,000 square feet of space near Tampa International Airport offered a steady income stream and was more than 90% leased, but the land that came with the purchase was widely considered to be much more valuable.
But sometime last year, Redstone’s operating philosophy began to shift.
Amid an increasing amount of new urban and suburban office space that had been planned in the Tampa area, Levy and Burdman struggled with how to position Austin Center to compete effectively.
In early 2019, Redstone sold the complex to an investment entity controlled by Franklin Street founder Andrew Wright for $28.9 million. In the wake of its purchase, the commercial real estate firm moved its headquarters to 22,000 square feet there and embarked on a long-range redevelopment plan.
“We just couldn’t get comfortable taking the next step,” says Levy, a Redstone managing partner.
The sale, in turn, prompted a larger discussion internally about Redstone’s future. When a few members of Redstone’s brokerage team left for other jobs, the company’s fate was sealed.
“We came to the conclusion that we should reset our focus on development,” Levy says. “It’s what we do and do well. We’ve always tried to fly under the proverbial radar. We don’t do big, splashy projects, and brokerage is to an extent the opposite of that.
“Brokerage needs lots of exposure to gain business. I think we did a great job building our brokerage team up, and we saw a number of high-profile deals and had the chance to participate in them that we probably wouldn’t have had,” Levy says.
“Developing grocery-anchored shopping centers is our bread-and-butter,” Levy says.
To maintain that focus, last year Redstone completed a Publix Super Markets Inc.-anchored center called Sango Square in Clarksville, Tenn., and it’s constructing a shopping center called Kathleen Square in Lakeland now.
The company also owns land in Lakeland, Tampa, Venice, Naples, Plant City and Ohio where it can develop, according to its website.
Redstone’s property management division now oversees roughly five million square feet of space in 16 states, including the Tampa industrial projects.
“The Tampa industrial space offers a good footprint for us,” Levy says. “We knew the sellers who were from Ohio for many years, and we like the idea of being one of the low-cost providers in the market. We had an opportunity to buy and compete at a level without having to worry about every last dollar in a deal.”
Redstone still has a few brokers on its staff, as well, to handle the leasing of its projects internally.
Kelly, meanwhile, joined Franklin Street as regional managing partner for the Tampa Bay area in late 2019.
“I had an outstanding time there,” Kelly says of his decade at Redstone. “It was a great environment to work in and it was highly entrepreneurial. To this day I have great friends at Redstone in both Youngstown and Tampa. I think it turned out well for all concerned.”
Redstone hasn’t completely jettisoned other potential revenue streams, though. Since the 1990s, Redstone Funding has been a division that works to acquire real estate debt — especially of distressed properties — and restructure property deals.
Still, development now and into the future will remain Redstone’s primary task.
“We decided it would be best to stick to our knitting,” Levy says.