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A decade ago, Pineapple Square was lauded as a way to transform downtown Sarasota's retail landscape with an injection of national retailers and upscale condos.
But, after bringing in merchants such as Brooks Brothers and Sur La Table, the development stalled amid the recession. Now, its developers hope to sell the rights to the planned $200 million phase two of the project.
Ohio-based Isaac Group Holdings LLC says it lacks the team to pull the deal off, and has set a deadline of May 11 for bids.
“Today, we believe the economy has recovered and Sarasota is in the midst of significant hotel, condominium, retail and apartment growth,” an offering memorandum developed by brokerage firm Michael Saunders & Co.'s commercial division states. “IGH has decided that it does not have the management team needed to bring a project which is worthy of Sarasota and maximizes the potential of the property to fruition.”
Pineapple Square was among the most high-profile developments proposed in Sarasota during the real estate boom of the last decade. Its initial phase landed national merchants like Hyde Park Steak House and Eileen Fisher to downtown's largely mom- and-pop retail offerings.
Under terms of a development agreement approved by city officials in late 2010, Isaac Group is entitled to construct as many as 157 condominiums and 80,920 square feet.
Meanwhile, Sarasota is constructing a 395-space parking garage on city-owned land nearby, a move that fulfills a contractual obligation it made with Pineapple Square's current developers. Although a sale now might jump- start the development, it faces further hurdles. National retailers' interest in downtown has waned, and it will have to battle heightened competition for condo buyers from other developments.
“The question is whether the market can absorb that much project right now,” says John Harshman, president of Harshman & Co. Inc., a Sarasota- based commercial real estate brokerage firm. “Retail downtown, in particular, has slowed from its pace of two years ago. Now, some significant spaces downtown remain vacant, and we've not seen the attention from national retailers we once had.”
Even so, Pineapple Square's developers contend their concept remains viable.
“Phase one of the project was highly successful,” says John Simon, who led the Isaac Group effort a decade ago. “There's just not the appetite to go forward, so other developers can come in now and benefit from a development agreement and site plan in place.”
A selection from the proposals submitted to Saunders' Leon De Lieto will be made on or before June 8.
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