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Commercial Real Estate
Business Observer Friday, Jan. 4, 2019 5 months ago

On the Cusp

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Water Street Tampa will experience the first in a wave of significant vertical construction in the coming year.
by: Kevin McQuaid Commercial Real Estate Editor

By the end of 2019, the 53-acre swath of downtown Tampa being transformed into the Water Street Tampa neighborhood will be replete with construction cranes, cement mixers and swarms of construction workers.

After years of planning, vertical construction will be in full swing during the next 12 months as work on a half-dozen buildings is underway, including office and retail collection Sparkman Wharf; the Marriott Waterside Hotel & Marina; and the $152 million University of South Florida Morsani College of Medicine and Heart Institute.

By mid-2019, work will have also commenced on 1001 Water Street, a 20-story, 380,000-square-foot speculative office building adjacent to the medical school.

The USF Morsani building, which will rise 13 floors and contain nearly 400,000 square feet in all, is slated to be the first major building completed within the $3 billion development surrounding Amalie Arena when it’s delivered at the end of 2019.

“I think the medical school’s move to that location downtown will end up being viewed as one of the most important things ever to happen in Tampa,” says Mayor Bob Buckhorn.

“It’s going to have multigenerational impact,” the mayor adds. “It’s cementing the educational and medical and science cluster downtown, which in the years ahead I believe is going to be a big driver of the economy in Tampa Bay.

“But even beyond that, we consider Water Street Tampa to be a game-changing project for that side of downtown,” Buckhorn says. “Other than perhaps Hudson Yards in New York City, Water Street Tampa is one of the largest urban redevelopment projects in the entire country at this point.”

In addition to the medical school, master developer Strategic Property Partners LLC has also begun work on a new 26-story, 519-room JW Marriott Hotel within Water Street Tampa, and a five-star Marriott Edition hotel and 815 Water St. — a twin-towered residential building with more than 400 units — will commence soon, with an anticipated completion date of late 2020 or early 2021.

Though each is significant in its own right, the new office building at 1001 Water St. is garnering considerable attention, and not just because SPP — a joint venture between Tampa Bay Lightning owner Jeff Vinik and Microsoft Corp. Co-Founder Bill Gates’ Cascade Investment LLC — is constructing the tower on a speculative basis.

When completed in the latter half of 2021, as is expected, 1001 Water Street will become downtown Tampa’s first new, ground-up office block in more than a quarter century, and contain a raft of modern amenities currently unavailable in the Tampa market.

“People work differently than they did 25-plus years ago, and they want different things from their office space,” says Jim Moler, a senior vice president at commercial real estate brokerage firm JLL, which is marketing 1001 Water St. and another SPP office development at 400 Channelside Drive.

“We’re taking all of that into account in the design, and this will be the premier office environment as a result.”

Moler says while 1001 Water Street’s asking rental rate of roughly $55 per square foot may seem off-putting to tenants accustomed to rents in the low- to mid-$30 per square foot range, the differential will be worth it in both tangible and intangible terms.

“People will see the value in it, and one has to remember that rate is on a gross rent basis, so the developer will be absorbing many of the costs associated with occupancy,” Moler adds.

The 19-story 400 Channelside building will contain 500,000 square feet, but construction there won’t begin until well over half of 1001 Water St. is committed, Moler says.

While Water Street Tampa will likely be under development through at least 2026, the coming year will frame much of what the new neighborhood — slated to contain 9.5 million square feet in all, including 3,500 new residences — will look like in the years to come.

“They’re going to build buildings for the future, and they have the resources to ensure that,” says Buckhorn. “This is going to be a signature moment for Tampa.”

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