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Business Observer Friday, May 3, 2019 6 months ago

St. Pete rocks the headquarters relocation business

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The sun shines bright on St. Petersburg in the race to win headquarters relocations. Says one official: ‘We are just getting started.’
by: Mark Gordon Managing Editor

Christmas came early to St. Petersburg economic development officials in 2014, when, on Dec. 10, New York City-based outsourcing and logistics company iQor announced it was moving its headquarters to downtown.

The move itself was big – more than 100 employees and senior leaders relocating from the Big Apple to the Sunshine City. The company took prime real estate: three renovated floors in Priatek Plaza, also known as One Progress Plaza, St. Pete’s tallest building.

Beyond the move, one person who came with it — CEO Hartmut Liebel — proved to be a key cog for St. Petersburg, not just for iQor, but also for convincing other companies up north to flee New York. “Hartmut was a big turning point,” says Sophia Sorolis, director of the recently formed St. Petersburg Economic and Workforce Development department, adding Liebel became something of a St. Petersburg evangelist. (Liebel has since left the CEO role, but remains with iQor.)

Word-of-mouth directly from a prominent CEO, combined with the efforts of several economic development agencies, working in concert and eschewing turf wars, has paid off in St. Pete: At least 10 companies have moved a headquarters to St. Petersburg in the last four years. The list includes L3 Communications, which leased two floors in the Tampa Bay Times building earlier this year for its commercial aviation headquarters, projected to eventually have some 200 employees; iSocrates, which does media marketing and planning, and projects $4 million in 2019 revenue with clients including News Corp. and CBS; and PandaDoc, a document automation firm that opened a U.S. East Coast headquarters in the city in late 2017, maintaining its West Coast headquarters in San Francisco.

“St. Pete had the right amount of weird for us,” Jared Fuller, PandaDoc vice president of sales, said in a release at the time. “It felt much closer to a young San Francisco than most Eastern cities.”

iSocrates CEO Bill Lederer, in an interview earlier this year, says getting out of the company’s former home state, Connecticut — he calls it a “very difficult place to do business” and hard to find talent — was the first victory. St. Pete, like several other executives say, then wowed him over in a multitude of ways.

One challenge to the momentum? Space — or a possible lack of it. Officials say they never want to be in a situation where a company turns away from St. Pete due to lack of space. Greater St. Petersburg Area Economic Development Corp. President J.P. DuBuque says at least three developers are talking about building new Class A office space downtown, which would help alleviate those concerns. “The word is getting out,” says DuBuque. “People are calling. St. Pete is a place that people want to be in and want to do business in.”

“Expect more from us,” adds DuBuque. “We are just getting started.”

A glance at three of the companies to move to St. Pete includes: 

TAO Connect

Relocating to St. Petersburg was a no-brainer for Software-as-a-Service firm TAO Connect, founded seven years ago in Gainesville, the brainchild of Sherry Benton, then the director of counseling services at the University of Florida.

One key reason? Hiring.

Mark Wemple. TAO Connect CEO Bob Clark helped the company move from Gainesville to St. Petersburg.

“It’s easy to recruit people in Gainesville if you want someone right out of school, but nobody stays there — they all go someplace else,” says Bob Clark, who moved TAO Connect to downtown St. Pete six months after being named CEO, in fall 2015.  “Finding experienced talent in St. Pete is much easier.”

It’s easy, Clark says, because of the Tampa Bay area’s emergence as an affordable alternative to high-priced tech-hub cities in Silicon Valley and the northeast. TAO Connect can pull from a local labor pool that includes both graduates and established professionals, as well as a growing number of skilled workers from other cities and states who are drawn to the area’s low cost of living and high quality of life.

“Recruiting talent is the biggest challenge for young, growing companies in a tightening labor market,” Clark says. “People I’ve recruited here have said, ‘I want to work here because now I don’t have to leave Pinellas County; I get to stay here; I don’t have to go to Silicon Valley.’”

To back that up, says Clark, in less than four years since its move to the Sunshine City, TAO Connect has grown from four employees to 19 and tripled its office space. The privately held company does not disclose its revenue, but Clark says sales have doubled every year since the firm was founded and it expects to double revenues again in 2019.

The chief information officer at JSA Healthcare before DaVita Medical Group acquired it, Clark was an early investor in TAO Connect. The company produces an online suite of telehealth tools that makes it easier for psychologists, counselors, therapists and other behavioral and mental health professionals to serve patients who suffer from depression, anxiety and issues related to substance abuse. Benton remains with the company, as majority shareholder and chief science officer.

'It’s easy to recruit people in Gainesville if you want someone right out of school, but nobody stays there — they all go someplace else. Finding experienced talent in St. Pete is much easier.' Bob Clark, TAO Connect

Its platform has been a hit with colleges and universities, whose mental health counseling professionals often struggle to meet demand for their services. TAO Connect serves 140 colleges and universities across the United States and Canada, as well as a growing number of private-sector clients. The educational institutions pay about $14,000 per year, on average, for a subscription to the software.

“Dr. Benton got tired of having to tell patients that it would be five and half weeks before they could get an appointment,” Clark explains. “She built these tools as a way to sort of ‘force multiply’ a group of therapists and allow them to see more patients and have better outcomes.”

Dynasty Financial Partners

From horses to crooners, Shirl Penney had a wide menu of choices when he sought a new headquarters for his financial services firm last year.

The list for the decade-old firm, then based in New York City, included Lexington, Ky., Nashville, Charlotte, N.C., Albany, N.Y., and West Palm Beach. The list also included the city Penney, his board and senior leadership team at the company, Dynasty Financial Partners, ultimately picked: St. Petersburg.

File. Shirl Penney founded Dynasty Financial Partners, now based in St. Petersburg, in 2010.

While many of the choices offered similar advantages — lower taxes and rents than New York; high quality of life; and unique and ample recreation and arts-infused amenities — St. Pete went further. That was evident, says Penney, from the overwhelming positive response and assistance he got from St. Petersburg officials, from Mayor Rick Kriseman on down. (Kriseman texted Penney semi-regularly in the process, just to say hello, and attended the company’s first area board meeting.)

“The people in St. Pete were pleasantly persistent,” quips Penney. “It was like a community bear hug. Every time I came down here I had five or six CEOs who wanted to take me out for a drink.”

Penney knew the area somewhat; his wife’s family has had a home in Anna Maria Island for years. But it took more than familiarity and friendliness to woo Dynasty Financial.

Founded in 2010, Dynasty’s model is to be a one-stop-shop for Registered Investment Advisors, doing everything but the money management, says Penney. That ranges from back-office work to software consulting to real estate. “We are like the Staples easy button for our clients,” says Penney.

That client base has grown rapidly, to now nearly 50 large RIA firms, with some $35 billion combined in assets under management. With such a big client base, the company, in moving to St. Pete, requires top-notch airports, says Penney. “The Tampa airport is phenomenal, the St. Pete airport is great,” says Penney, noting that some of the competitors for the headquarters fell short on airports.

Two more keys to the move: rent and walkability.

On rent, Dynasty, while maintaining an office in Manhattan and Washington, D.C., took the 15th floor of the Priatek Plaza on Central Avenue — home to fellow New York refugee iQor. The company has 14,000 square feet there now, with more to come, and some 30 employees. Penney estimates he will save at least 60% in lease payments. “I expect to fill it up really quickly,” Penney says.

On walkability, you can take New Yorkers out of ‘the City’ but you can’t put them in suburban sprawl. Penney, in his multiple trips to town, pointed out the city’s tight-knit vibe and availability of bars, museums, restaurants and grocery options. “A lot of employees don’t even have cars,” he says. “Walkability was a big factor for us.”

CP Communications

Why would a company that specializes in television production and engineering services — with clients that include major broadcasters such as ABC, NBC, CBS and FOX — leave New York for St. Petersburg?

“Everything we do for our clients is about efficiencies — everyone’s got a budget,” says Kurt Heitmann, CEO of CP Communications, founded in 1985 as an Orlando-based walkie-talkie company. It has since evolved into a full-blown media production, engineering and equipment rental firm that brings in about $20 million per year in revenue. “As you continue to expand, you continue to expand your workforce and square footage, and for us, New York became too cost prohibitive.”

As it grew, CP Communications opened two offices in New York in addition to its original location in Orlando. But in January, it began the process of consolidating its operations at a 31,000-square-foot facility at Metropointe Office Park in northern St. Pete. It maintains a small engineering office in New York.

Courtesy photo. CP Communications CEO Kurt Heitmann.

The new digs give CP Communications easy access to both St. Petersburg-Clearwater International Airport and Tampa International Airport, which Heitmann says is crucial to achieving the cost efficiencies craved by the company’s hundreds of clients nationwide.

“We ship around the country, so that’s a big deal for us,” he explains. “When you’re five, 10 minutes away from the airport, there are no surcharges, no extra charges for the customer. It’s a hell of a lot cheaper to ship out of Tampa than it is LaGuardia, JFK or Newark. Those shipping cost savings, we can pass that off to our customers and clients.”

Heitmann is also impressed with the quality of skilled workers available for hire in the Tampa Bay region. And because basic necessities and housing are cheaper, he doesn’t have to pay exorbitant salaries.

“There’s a lot of technical talent down here, and it’s a labor force that isn’t weighed down by the cost of living in New York,” he says. “That was a big draw.”

Another factor that impressed Heitmann was the St. Petersburg Area Economic Development Corp., which connected him with the niche commercial real estate broker that found space for the company.

CP Communications has now gone all-in on St. Pete, signing a 10-year lease on its space, and Heitmann, who’s been with the firm for 18 years, has already bought a home in Dunedin. He anticipates major growth for the company, which has eight full-time employees based in St. Pete.

“We’re about to hire two more,” Heitmann says, “and we have a big roadmap for probably six to eight positions over the next year, and then another six to eight after that. We are going to build this facility up to be what New York was.”

(This article has been updated to correct the spelling of TAO Connect founder Sherry Benton's name.)

 


 

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