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In Search of Hip
By Sean Roth
Real Estate Editor
Like a good chef, Sarasota developer/architect Frank Folsom Smith thought SRQ Innovation Green needed to simmer. Ask Smith about the four years the development has spent on paper, and you are likely to see a smile. He knows it's been a long time, but Smith, chairman and CEO of The Folsom Group, says he knew it would happen eventually. Now, Smith and staff are gearing up for the homeward stretch that should have shovels hitting dirt in the fourth-quarter of the year.
"This is a much better plan than we started out with," Smith says. "We have had a lot more time to reflect on it, and this new plan is lot better. The lease market has changed a lot. And the overall market in Sarasota has changed as well. The city has grown to another level."
SRQ Innovation Green is the interim name for a mixed-use development planned on eight acres at the northeastern corner of the University Parkway entrance to the airport. Smith and a silent business partner have agreed to lease the parcel from the Sarasota Manatee Airport Authority for 70 years. In broad strokes, the $50 million development will be built around a mixture of about 200,000 square feet of office and commercial space, a 150-seat restaurant and a 200-room hotel, but Smith has grander goals. He believes he can build a development with that often-elusive quality of hip-ness.
"This project was originally conceived as an urban village in a somewhat suburban location," Smith says. "But this is really an urban village in the center of the North Trail, in the airport district and in the cultural ... college district. This is just the logical next step."
Why call it SRQ Innovation Green? Smith says it refers to his architectural style, which tends to emphasize environmentally friendly building principles and open spaces.
The story of SRQ Innovation Green's development plan really begins in the early '90s when the airport authority started looking for possible private users for the eight-acre parcel. Fast forward a decade and the airport still had no lessee for the space.
"I fly a lot for business," Smith says, "and I usually fly out of that airport when I can. It's usually more convenient."
On one of his trips to the airport, Smith noticed a dilapidated sign near the airport's entrance advertising for applicants interested in developing the site.
"The sign had to have been there for 10 years or so," Smith says. "There have been numerous opportunities for fast food and budget motels users, but they had always been turned down. The airport had a vision of something special there. It was their entrance and they wanted something special - something of higher quality ... a mixed-use development."
Smith was interested.
With the help of Fred Piccolo, president and CEO of the airport, Richard Rossi, former manager of properties, the airport authority and their respective staffs, Smith and his partner agreed to lease the property for a maximum of 70 years.
"They got an appraisal for the lease rate, and it was quite low, because the land wasn't approved for anything" Smith says. "But the airport knows if we do this right, we will set a higher standard for development of the rest of the (leaseable) land."
On top of the land lease, the developers will also split a percentage of the gross revenue from any food or beverages sold on the site with the airport.
Smith and his partner also have to wait for the airport to get a substantial change to its Development of Regional Impact. Growth planning for the airport is never an easy or quick process; aside from being a major traffic hub, the airport is located in three municipalities: Manatee and Sarasota counties and the city of Sarasota, and is covered by two regional planning councils: the Tampa Bay Planning Council and the Southwest Florida Planning Council.
"We thought it would take not quite two years, but I was prepared for three years," Smith says. The DRI took about three-and-a-half years.
What held it up was planning to resolve traffic problems at the intersection of U.S. 301 and University Parkway. Piccolo says the biggest issue was planning and obtaining grant funding for a $10 million project to add turn lanes and a through lane to the intersection.
While the airport was pursuing its larger planning process, Smith continued revising plans for the site largely unaffected by the extra wait.
"We had no bank loans," Smith says. "My partner put in half the funds and (The Folsom Group) put up the other half. Some developers make the mistake of leveraging the front-end of a project, but we never do that."
At the same time, although the partners had agreed to lease the property back in about 2001, the airport authority has not charged rent during the DRI process.
"We didn't feel we could charge them rent for land that they couldn't develop on," Piccolo says. Because of the delay the airport also has not increased the rental rate from its early 2001-level. Contractually the airport lease calls for rent increases every three years based on the consumer price index once the rent commences.
"That was really out of fairness to the developer," Piccolo says. "They had contributed sweat equity during the DRI process." Smith is expected to start paying rent in June.
And, of course, major development occurred along University Parkway during the waiting period. The large retail strip center University Walk was built at University Parkway and Tuttle Avenue, the current two-building University Health Park has developed (a third building is under construction), a large number of residential subdivisions have been constructed or are underway, and several smaller retail, office and residential have been created.
Meanwhile, college, city and county leaders and North Trail property owners ramped up interest in developing a University District (see 'Where is the college town?'), and organizations such as Sarasota's Young Professionals Group continued pushing for an area for the creative crowd. So Smith started incorporating the idea of making the site a trendier, hipper development to appeal to both the college crowd and the creative business class.
"We are looking for a more lively center with an outdoor piazza, a cyber cafe and a restaurant to provide the type of nighttime entertainment that was shut out of downtown (Sarasota) because of the noise ordinance," Smith says. "With the airport on one side and University Parkway on the other, I don't think anyone is going to be complaining about a little music after nine at night."
Smith's conceptual plan is to create a 24-7 community, which emphasizes a hotel, cyber cafe, book store and office work during the day and more restaurant, music and dancing related-activities in the evening.
"There has been a frustration in the community about where they could cluster creative businesspeople such as artists, writers, architects, technology workers, industrial designers ... (and) photographers," Smith says "What better place for a more urban night life than in the University District?"
Smith is still refining the exact design of the buildings, but has decided on industrial chic as the overall style.
"That generally means it will have a mix of warm woods and metal, lots of glass, tall ceilings, balconies and lots of color," Smith says.
On the business side of the development, Smith plans to develop at least three of the office buildings and the outdoor piazza in the first phase and then sell them as commercial condominiums. The hotel is slated to occur in the later phases as the development becomes more established.
"As the master developer and architect we would create design standards to regulate the buildings," Smith says. "We certainly don't want this to turn into a typical suburban office park."
Smith says he plans to finalize the designs and submit site plans in the next 30 to 45 days. He hopes to start construction as early as November.
"We are probably looking at seven to eight months (prior to construction) including all permits before we start the first phase," Smith says. "We will start marketing in the next 60 to 90 days." The expected preconstruction sales price is projected at $250 a square foot, according to Smith.
"We are still waiting for his plans and specifications," Piccolo says. "We have to make sure that it is in agreement with the concept that was pitched to us four years ago. We also need to make sure it is compatible with the area. It's true that the airport won't mind the noise, but there are some residences just down the road that we are very cognizant of. We just completed about 15 years worth of work on noise mitigation for the runway. We are concerned that people think we are good neighbors."
Piccolo says the airport is interested in the structure of the condominium sales, because at the end of the 70-year lease, the airport doesn't want to have to deal with a number of owners.
"We are obviously looking forward to start of the project," Piccolo says. "It's been a long road to get here." Smith also hasn't completely given up on a possible conference center being near the airport.
"We are quietly waiting to see whether the conference center supporters will be successful in locating downtown," Smith says. "If it ends up downtown that's great, but if it's not successful the conference center consultants selected the airport as the third possible site. I think if the center were to be located up here it would be a huge asset to the universities and the airport as well."
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