SPP chief foresees a busy year ahead for the $3 billion Water Street Tampa
Strategic Property Partners (SPP) CEO James Nozar got to enjoy a little R&R around the holidays, which was good: With the year he has ahead, he’s going to need it.
Nozar is quarterbacking not only the largest new commercial development along the Gulf Coast with Water Street Tampa, but the $3 billion project — encompassing more than 50 acres in downtown Tampa — is one of the largest seamless redevelopments being undertaken anywhere in the U.S.
When completed later this decade, the joint venture between Tampa Bay Lightning owner and hedge fund magnate Jeff Vinik and Microsoft Corp. Co-Founder Bill Gates’ Cascade Investment LLC is expected to add 9.5 million square feet of new commercial space and 3,500 residences, along with urban amenities and added open space, to the city’s core.
In 2019 alone, the 53-acre project will break ground on, or continue construction of, nearly a dozen distinct buildings, from new hotels to a twin-towered apartment project to multiple office offerings and an educational hub of higher learning.
“For us, 2019 will be a year of executing what we’ve been working on and planning for the past several years,” Nozar says.
Among the new buildings to commence construction this year will be 1001 Water Street, a planned 20-story, 380,000-square-foot “trophy” building that will be the first new ground-up office development in downtown Tampa in more than a quarter century; the Marriott Edition Hotel & Residences, a luxury 172-room hotel with 35 condominiums that will be the city’s first five-star lodging property; and a pair of new apartment towers at 1010 Water St. and 1077 Water St. that could add another 900 new residences.
“They’ll really start to frame out what Main and Main will look like for the neighborhood,” Nozar says. “Together, they’ll create a hub for the neighborhood as a whole.”
The new projects will augment the already considerable amount of vertical development — in four separate projects — that began in the first half of 2018.
They include the 13-story, 400,000-square-foot University of South Florida Morsani College of Medicine and Heart Institute; a 26-story JW Marriott Hotel with 519 rooms and ample meeting space; 815 Water Street, an apartment block with more than 400 units; and Sparkman Wharf, a mixed-use office and retail complex totaling 245,000 square feet.
SPP also is finalizing a major renovation to the 727-room Marriott Waterside Hotel & Marina later this year.
The USF Morsani building is slated to be delivered by the end of 2019, a permanent home for the school’s 1,800 students and faculty, and a topping out also is scheduled for the JW Marriott, which is expected to be completed next year.
Sparkman Wharf’s 180,000 square feet of loft-style office space, too, is anticipated to be completed late this year. Nozar says SPP intends to move its headquarters into about 25,000 square feet of it.
The 815 Water St. residences, meanwhile, won’t be ready for occupancy until late in 2020.
Nozar describes the JW Marriott as a “really important piece of the puzzle” for the overall success of the new neighborhood because of the visitor traffic and entertainment elements it will provide.
He anticipates Sparkman Wharf also will be successful based on initial interest by prospective tenants.
“With the ceiling heights there and the amount of glass, the amenities that will be provided and the ground-floor restaurants, I think leasing activity there will be very, very strong,” he says.
Office space in Sparkman Wharf is expected to rent in the mid-$40 per square foot range, Nozar says.
At 1001 Water St., asking rents will be even higher, around $55 per square foot on a gross rent basis. Though that figure is considerably higher than downtown Tampa tenants are accustomed to paying — the market for Class A space currently hovers around $34 per square foot to $36 per square foot — SPP believes companies will be willing to step up to the higher rates to be part of the new neighborhood and a new, signature building.
Even with all the new development planned for the year ahead, still more could be on the way.
If leasing activity in 1001 Water Street meets expectations and a majority of the space becomes committed, SPP will start construction on 400 Channelside Drive, a 19-story office building containing roughly 550,000 square feet of space.
Like 1001 Water St., it will be developed on a speculative basis, without pre-leasing commitments from tenants.
And while Nozar says a ground breaking at 400 Channelside could occur in late 2019, he won’t commit to that timetable. Market conditions will prevail.
“We won’t start 400 Channelside until we’re comfortable with the market and the leasing activity at 1001 Water,” he notes. “But right now, we feel so good about 1001 Water Street that I think it’s very possible we’ll break ground on 400 Channelside in 2019 as well.”
He adds that tenant interest in 1001 Water St. has come largely from technology-related companies.
“Interestingly, we’re skewing a lot toward innovation firms and tech-related companies, exactly the type of employers that the city and the region have been talking about wanting to attract,” Nozar says.
Despite all of the new product slated to come online, Nozar says he isn’t concerned about over supply.
Neither is the SPP chief worried about the impact a potential economic recession — many economists say the nearly decade-old economic growth cycle has been showing signs of slowing, at least globally — might have on Water Street Tampa, either, even though several of its projects, such as the Marriott Edition and 1001 Water St., won’t be completed until late 2020 or into 2021.
“We don’t worry about it,” Nozar says. “Our team is very long-term focused and so is our capital. We feel Tampa, specifically, is a different place with all of the growth throughout the area.”