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Commercial Real Estate
Business Observer Friday, Jul. 19, 2019 1 month ago

At St. Armands Circle, investor popularity goes around and comes around

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Sarasota shopping district is receiving renewed attention after high-profile deals.
by: Kevin McQuaid Commercial Real Estate Editor

A trio of purchases on St. Armands Circle by one of the nation’s largest retail landlords and a longtime, high profile tenant illustrates that the Sarasota shopping and dining hub remains attractive to investors, merchants and consumers alike.

Last month, Benderson Development Co. bought a pair of St. Armands Circle properties for a combined $21.43 million, according to Sarasota County property records.

“St. Armands Circle is a one-of-a-kind gem,” says Mark Chait, Benderson’s executive director of leasing. “We’re very happy to be a part of it. It’s iconic and unique and an irreplaceable location.”

The acquisition of the real estate housing popular dining spot Café L’Europe, Starbucks and chic apparel stores Soma Intimates and Chico’s FAS, along with some second-floor office space, marks a first for the Manatee County-based company at the retail node.

Typically, Benderson either develops properties from the ground up — as was the case with Cocoplum Village Shops, in North Port in Sarasota County — purchases healthy properties that have the ability to be expanded or improved — as it did with the Target-anchored Sarasota Towne Center — or buys troubled centers for rehabilitation — as was the case in Sarasota with The Landings Shopping Center and Pelican Plaza.

The purchase at St. Armands, a shopping hub created by circus magnate John Ringling in the 1920s so his wife would have a place to shop when the couple wintered in Sarasota, also stands out for Benderson because of its urban location.

Benderson’s portfolio of more than 500 retail centers and other properties are heavily stilted toward suburban locales around stabilized neighborhoods or emerging residential areas, such as its holdings around the Mall at University Town Center, of which it is a joint venture partner.

Perhaps most notably, however, the company’s St. Armands’ purchases from Naples-based entities and a group led by Lakewood Ranch-based Casto Southeast Realty Services stand out because they represent a departure from a well-established Benderson strategy regarding property control.

At St. Armands Circle, Benderson now controls but a small slice of a larger shopping district with numerous landlords and an active merchants’ association.

COURTESY PHOTO — Columbia Restaurant Group fulfilled a long-time goal when it acquired its Sarasota restaurant for $18.25 million.

Benderson has proven successful for decades by maintaining a controlling interest in nearly every property it has acquired and managed, though in recent years that attitude appears to be changing internally.

Five years ago, the company bought a derelict Dillard’s department store in the Westfield Southgate Mall in Sarasota and added a Lucky’s Market and other retail to the property, despite a bifurcated ownership with Westfield Corp.

And more recently, the company bought a portion of Sarasota’s Town & Country Plaza, where it plans to demolish a former SweetBay Supermarket and replace it with a 48,000-square-foot Publix Super Markets Inc. store.

Like at Westfield Southgate, the majority of the space within Town & Country Plaza is currently controlled by another landlord, Gator Investments, which last year added a Planet Fitness and Big Lots! to the plaza to replace a shuttered Kmart store.

Chait says the company wanted to purchase of the two properties on St. Armands Circle, at 443 John Ringling Blvd. and 431 St. Armands Circle, because of their solid real estate fundamentals.

“They’re “A” real estate, in a prime location and on the grand entrance of the Circle,” he says, adding the company would consider further purchases there in the future.

Benderson paid $16.3 million for the Casto property containing Starbucks, Soma and Chico’s and another $5.13 million for Café L’Europe, property records indicate.

The Benderson deals follows another high-profile purchase in early June by Tampa-based Columbia Restaurant Group of its eponymous restaurant on St. Armands.

Columbia Restaurant spent $18.25 million to purchase 411 St. Armands Circle, where it has operated from since 1959.

Michael Kilgore, Columbia Restaurant’s chief marketing officer, says buying the 30,000-square-foot property, which also houses the company’s Cha Cha Coconuts eatery, had been a goal of company owners the Gonzmart family for decades.

“Owning that property has been a goal for a long time, but it simply hasn’t been available since the 1960s,” Kilgore says.

In 1960, Columbia Restaurant signed a 50-year lease for the property, a commitment that was later extended by a quarter century and was slated to run through 2035.

Company head Richard Gonzmart says Columbia Restaurant intends to make various improvements to the kitchens and back of the house operations at the two restaurants in the wake of the purchase.

Kilgore says the company was able to acquire the property last month because it maintained a “right-of-first-refusal” in its lease and the property’s seller, a trio of owners comprising St. Armands Circle Investments LLC, Clayton Mitchell Properties LLC and Deansus Properties LLC — entities all led by Myriam Colson, of Naples, according to state records — received an offer that triggered the clause.

That offer also helped determine the property’s market value and led to the parties to the $18.25 million price.

Of the 13 restaurants that Columbia Restaurant operates, the St. Armands Circle property becomes just the third the company owns, Kilgore says. The others in the portfolio, including seven Columbia restaurants and a pair of Ulele eateries and Goody Goody outlets, are rented.

Despite the sale, Casto Southeast CEO Brett Hutchens says his company remains bullish on St. Armands.

“It just no longer fit in with our portfolio, and the direction we’re moving in,” Hutchens says. “There’s no doubt that it’s still a viable shopping destination. The Chico’s store there is always in the Top 10 of the entire chain in terms of sales, out of something like 1,500 stores. It does a terrific volume.

“Everyone out there is doing well, in large part because of the strong tourist performance of the past several years,” he adds. “Starbucks has long wanted to expand its St. Armands’ store because they’ve done so well.”  

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