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Feldman Equities LLC, Tower Realty Partners and City Office REIT Inc. and affiliates have been part of deals that have invested some $200 million to acquire a handful of St. Petersburg and Tampa office buildings over the past five years.
So what's another $35 million or $40 million, give or take, to fix them up -- especially if that further investment translates into higher rents and occupancy levels?
For the trio, the capital campaigns are extensions of the acquisitions themselves, and often transform aging structures into modern workplaces with amenities today's tenants covet.
The improvements also have directly translated into higher occupancy rates, increased rent rolls and a slate of desirable, credit tenants.
“The work we do following buying a building is critically important,” says Feldman Equities' CEO Larry Feldman, whose company is among the largest office landlords in the Tampa and St. Petersburg area with a portfolio of more than 1.5 million square feet in five buildings.
“Buying the building is step one, but following up and knowing what tenants want in the way of improvements or amenities is just as significant, especially when it comes to leasing vacant space up.”
Take First Central Tower in downtown St. Petersburg, for instance. When Feldman, Tower Realty and a City Office affiliate bought the 17-story building for $29.15 million, it was 50% vacant.
Roughly $10 million in capital improvements later to enhance the building's lobby, air conditioning systems, parking garage and elevators and install a new high-end fitness center, First Central is 95% committed to BB&T, SunTrust Bank and others.
While many investors inject fresh capital into assets in the wake of buying them to boost occupancy, raise rents or modernize equipment, Feldman and partners have turned the science of improving buildings almost into an art.
The partners plan to do the same at Park Tower, a 36-story office building at 400 N. Tampa St., in Tampa, that they bought in conjunction with City Office last November for $79.75 million.
The 44-year-old tower is slated to receive upgrades to its lobby and parking garage, and a new cafe, fitness and yoga center, conference space and “chill lounge” will be installed for the benefit of tenants.
Perhaps the most dramatic improvement, however, will occur on the 475,000-square-foot building's façade, through the installation of glass and lighting designed by architectural firm Gensler.
In addition to the “light box,” the new owners intend to paint the building's exterior a lighter color.
“The renovation of Park Tower will use glass and light to reposition this prominent historic structure as one of the most notable and exciting buildings on Tampa's skyline,” City Office CEO James Farrar says, in a statement.
Feldman believes the improvements, which are scheduled to be completed by the end of March 2018, will boost occupancy. Park Tower is currently 81% committed.
“We'll start within the next 30 to 60 days, and it'll be a pretty dramatic improvement,” Feldman says. “I estimate we'll spend about $10 million, and actually the final price could go well above $10 million, when factoring in everything.”
If history is any guide, it won't take area businesses long to flock to the rejuvenated and modernized tower.
At City Center, a 12-story property the trio bought in January 2011 for $16.5 million, occupancy jumped from 44% to 100% today following a $4 million renovation effort.
“We set out to enhance the building's modern architecture with a series of aesthetic upgrades, as well as safety and energy management improvements,” Feldman says.
Elsewhere in St. Petersburg, the trio took the 17-story Morgan Stanley Tower from 65% occupancy at the time of their $20 million purchase in 2013 to 96% today, thanks in part to the addition of a new fitness center and upgrades to the 187,000-square-foot building's lobby, garage, bathrooms and lighting.
Feldman and Tower Realty have had equal success in downtown Tampa, too.
At the 22-story Wells Fargo Center, which the pair bought for $44.8 million in early 2013, the percentage of leased space rose from 75% at the time of purchase to 97% today.
In all, the pair executed leases totaling 96,000 square feet in the 390,000-square-foot tower, thanks in large part to a multimillion dollar modernization that included a new roof, elevators and air-conditioning system.
In addition, Feldman and Tower Realty installed a new restaurant and fitness center and made significant improvements to the building's parking garage, lighting, bathrooms and carpeting.
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