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Magnificent Seven

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The Sarasota Square Mall is buzzing these days — and Christmas is still three months away.

The source of the buzz, though, is Santa-esque in that the gift is a new Costco for the mall, owned by Australia-based Westfield Corp. Mall Marketing Director Todd Beckwith says the late summer crowds have been significantly larger than past years since the Costco, the first of several going into Westfield properties nationwide, opened Aug. 17.

“The retail business is first and foremost dependent on foot traffic,” says Beckwith, “and the addition of Costco has been a huge hit, for both Costco and Westfield.”

The addition also represents an early Christmas present for the beleaguered Gulf Coast construction industry, albeit a small one.

In fact, the Costco is part of a positive trend: It's one of seven top-dollar projects out of 30 in the region that's a straight-up business expansion, as opposed to one connected to a public school, road or housing development. The list ranges from a shopping center in south Sarasota County to a surgical supply manufacturing facility in Naples to a new office building in Tampa. The seven projects are worth a combined $104 million, 12.6% of the total $823.46 million value, of all 30 of the most lucrative projects in 2012.

In 2010, business expansions made up three of the top 30 projects on the Gulf Coast, ranked by total value. That figure doubled to six out of 30 in 2011. The Business Review's annual list of the top projects in the region analyzes any commercial, infrastructure or multifamily project where site work began from June 2011 through June 2012. (See section B for the complete list.)

[For an update on the Sarasota Memorial Hospital Courtyard Tower featured as a 2011 top project, click here.]

While public sector and housing construction historically drives the industry, several local executives say a return to business expansions is a good sign the recession could be fading — finally.

Maurice Opstal, president of Lakewood Ranch-based Stellar Development, says business expansions, especially in retail, dominate his company's work list. Stellar had $6.7 million in 2011 revenues; it made Inc. magazine's list of the 500 fastest-growing companies in the country in 2011 and was on the top 5,000 this year.

“I see a surge coming back, a little bit,” Opstal says. “I'm hoping it's a sign of the times in a positive way. I definitely think it's an expansive market.”

Stellar Development has projects on both coasts of Florida. Opstal adds that it's also currently bidding on work for Fort Myers-based women's retailer Chico's FAS, to build stores for the company's Boston Proper brand. Boston Proper apparel, so far, is only available online and through catalogs. But the first brick-and-mortar stores could be built on the Gulf Coast, possibly in downtown Naples and St. Armands Circle in Sarasota.

Other local construction firms report an uptick in business expansions of the kind where clients take over adjoining business or build outs on vacant land. “We are doing an awful lot of that kind of work,” says T. Craig Campbell, vice president of Sarasota-based Holland Construction.

Holland has completed several business expansion projects recently in health care and hospitality, says Campbell. Those areas are two of the most active in business expansions on the Gulf Coast.

'Process control'
The growth in business expansions, no matter the sector, is certainly timely.

That's because, no surprise, given the recession, the total value of the 30 largest projects on the region is on a three-year downward trajectory. The $823.46 million in 2012 dropped 18.2% from $1.01 billion in 2011. That figure was down 14.7% from $1.18 billion in 2010. Overall, the value of the top projects on the Gulf Coast has fallen 30.2% since 2010.

[For an update on the University of South Florida - Center for Advanced Medical Learning and Simulation featured as a 2011 top project, click here.]

Yet many of the businesses in expansion mode, like Costco, create anti-recession good vibes. More retail growth, for example, is forthcoming in Sarasota County, courtesy of Benderson Development. The prominent developer and landlord has begun to expand its Cocoplum Village Shops, on U.S. 41 in North Port. The $9.49 million project includes a Famous Footwear store, a Sports Authority and a Beall's Outlet.

A non-retail example of the business expansion trend, meanwhile, comes from Naples-based Arthrex. The surgical device manufacturer is building a two-story $19 million facility and warehouse that's expected to generate 400 to 500 jobs by 2016. Arthrex, with $1.12 billion in sales, is building the plant to meet current needs and projected future growth, says Andy Owen, the company's director of manufacturing.

“The employees understand that this facility could have gone overseas, or it could have gone anywhere in the U.S.,” Owen says. “We need to get our products to our clients faster than our competitors. To do that, we want to control our process in-house.”

Vienna, Va.-based Feld Entertainment, a show production firm, also seeks more control over its operations. That's why the company plans to turn a onetime wind turbine manufacturing facility in Ellenton, in north Manatee County, into a high-tech multipurpose facility. The $14 million project will eventually be Feld's headquarters for behind-the-scenes production work. Shows Feld puts on include Ringling Bros. and Barnum & Bailey, Disney On Ice and Monster Jam.

The company will eventually relocate 235 employees from northern Virginia and other facilities to Ellenton, on top of 150 employees Feld already has in Manatee County. The Feld and Arthrex expansions, like several other projects among the top 30 in the region, include some performance-based incentives and grants. In Feld's case, the subsidies, from Manatee County and Florida, are potentially worth at least $3.77 million.

“We consider ourselves strong members of the community,” Feld spokesman Steve Payne says. “Plus, a lot of our people are looking forward to not having to deal with snow.”

Sunshiny days
Two other significant business expansion projects in the region, past Arthrex and Feld, come from publicly traded companies: Chico's and Sarasota-based Sun Hydraulics.

Chico's, with $2.19 billion in fiscal 2012 sales, is building a 146,000-square-foot office complex on its 60-acre campus in Fort Myers. The three-story building, which will house e-commerce, human resources and IT, includes a 117-seat auditorium. Executives with Chico's (symbol: CHS) say the project will support future growth.

Sun Hydraulics is also building a new facility on land it owns, just east of the Sarasota Bradenton International Airport. The $16 million facility, on an 11.5-acre site, will have 60,000 square feet of manufacturing space and 16,000 square feet of office space. Just like at Chico's, the facility is to prepare the company, which manufactures and sells screw-in valves and manifolds, for future growth. Sun (symbol: SNHY) had $2041.1 million in 2011 revenues.


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