Cousins Properties succeeds by being customer centric
Company intends to leverage its tenant-focused philosophy as it develops a new office building in Tampa's Westshore submarket.
| 6:00 a.m. January 25, 2019
Commercial Real Estate
Cousins Properties’ Tampa Managing Partner Kyle Burd has been a Westshore Class A commercial landlord, an office turnaround expert, manager of a collection of Class A assets and an innovator of unorthodox spaces.
In the next few months, though, Burd and his Atlanta-based company will take on another, vastly different and more complex role: Developer.
Cousins plans to begin work on its first building project in this market, Corporate Center at International Plaza V. The planned six-story building, being designed by HKS Inc., joins roughly a dozen new office developments that have been proposed or begun construction in Tampa’s downtown and suburban Westshore submarkets.
In addition to Cousins, Strategic Property Partners plans to come out of the ground with at least a pair of speculative, Class A office buildings this year at its downtown Water Street Tampa project; Vision Properties expects to build new office space at its suburban Renaissance Center business park; Bromley Cos. is working on a 22-acre, mixed-use concept with a trio of new office buildings at Midtown Tampa; and the developers of The Heights near downtown are pushing ahead with more space, among others.
Each of the developers is hoping to capitalize on shrinking vacancies, rising rental rates and the relatively scant amount of new office product that has been constructed in the Tampa area in the past quarter century at a time of vast business growth.
Burd contends Cousins’ 180,000-square-foot project will appeal to customers — he never refers to tenants as such — because Corporate Center V will have, in addition to a location near major highway systems and Tampa International Airport, larger floorplates than most of the competition and ample adjacent deck parking.
Delivery of Corporate Center V is slated for Fall 2020, a time when many analysts believe the nation’s economy, and perhaps that of Florida, to an extent, could be grappling with either slower growth than recent years or recession.
Burd, 60, largely shakes off the concern.
“We’re okay with developing late in the cycle, but we’re not comfortable developing on a purely spec basis,” he says. “So we’ll make sure we have a portion of the building, call it two floors or so, pre-leased before we move forward and put up the building.
“But we’re moving ahead; we believe in the Tampa market,” says Burd, whose company also owns major office projects in Atlanta; Austin, Texas; Charlotte, N.C.; Dallas; and Phoenix.
“It’s all about trying to raise the bar, continually, and provide best-in-class service. We’re all about trying to meet that need.” — Kyle Burd, Cousins Properties senior vice president and managing director.
Cousins structure as a publicly traded real estate investment trust should also provide financing mechanisms that are unattainable to others.
“And because we’ll be developing a Class A building, my belief is even if we have some sort of a downturn it will still lease up because of its quality.”
Location, naturally, plays a large role, too.
“Our customers come here because they want to attract and retain the best possible talent they can,” he adds. “And we have everything they want. We’re near the airport — we have a shuttle that runs from all our buildings to it — and our amenity package is phenomenal. On top of that, there’s shopping nearby and food options galore.
“I think there’s plenty of room in the market for our project and others, especially Water Street Tampa downtown.”
Cousins has retained JLL to lease Corporate Center V, where asking rents will be in the $43 per square foot to $44 per square foot range, similar to many of the other proposed developments.
“They really go the extra mile to provide great service their tenants, and they’re great listeners,” says Ron Ruffner, a JLL senior vice president who, together with JLL Senior Vice President Clay Sovich, is charged with leasing Corporate Center V.
“They want to hear from everybody. They hold a town hall-type meeting every quarter to talk about ways to improve their service. I don’t know of any other landlord out there that does that.”
The strategy appears to be working. Cousins Properties’ Corporate Center I, II and III buildings are 100% occupied, and building IV has a vacancy under 10%.
Late last year, in one of the largest new office leases executed in the Tampa market in all of 2018, insurer Baldwin Krystyn Sherman Partners committed to relocating its corporate headquarters to two floors in Cousins’ Corporate Center II building.
The insurance brokerage’s 61,598-square-foot lease in space being vacated by Baltimore-based financial manager T. Rowe Price & Associates was negotiated by JLL’s Ruffner and Sovich and commercial brokerage Franklin Street’s Chris Butler and Ryan McCurdy.
Cousins’ two other Tampa-area properties, which the company absorbed along with the Corporate Center portfolio as part of a $2 billion merger with Parkway Properties in 2016, are located on Tampa’s Rocky Point. There, the 10-story The Pointe is nearly full, while the seven-story Harborview Plaza carries a roughly 35% vacancy, the result of Laser Spine Institute’s move to a new headquarters developed by Highwoods Properties in Tampa.
Overall, the company’s 1.7 million-square-foot portfolio is about 94% occupied, says Burd, who spent two decades with what became commercial brokerage giant CBRE Group before joining a private equity firm that merged with Parkway in 2011.
It hasn’t all been smooth sailing, however, despite the portfolio’s premier location and amenities.
When Parkway acquired the Corporate Center buildings, all of which were built in the early 2000s, the properties all needed significant work — to improve building systems, amenities and aesthetics. Burd estimates Parkway and Cousins have spent millions of dollars on the portfolio to bring the buildings back to Class A status.
At the time, they were some 35% vacant, too, which required a shift in the landlord’s attitude.
“The buildings all have good bones, they were built really well,” Burd says. “But they were like a really great car that never went to a mechanic. We had issues everywhere. We were expected a one-year turnaround period, and instead, that process took three.
“We knew we had to make the buildings perform better, and that extended to us, as well. We had to figure out how to say yes more. I knew what would allow us to excel was customer service,” he adds. “Because we wanted to be more than just rent-collecting landlords.”
To get there, Burd turned over his staff and began considering occupancy from the standpoint of the tenant, and ways that that process could be streamlined and improved.
“Today, we ruthlessly experiment on ourselves to better understand what our customers are going through,” Burd says.
Three years ago, that experimentation took the form of developing modular spaces within its buildings, which provided tenants with increased flexibility and ultimately saves money on tenant improvement costs for Cousins.
“They’re one of the only landlords in the county doing this,” says Ginger Gelsheimer, manager of corporate real estate with Amgen Corp., who worked with Burd at both CBRE and Parkway. “It’s really cutting edge, and smart.”
Clare DeBoef, COO at Agile Thought LLC, a custom software solutions company that occupies 43,000 square feet in The Pointe, agrees.
“They’ve done some interesting and creative things for us from a financial and space utilization perspective,” DeBoef says of Cousins’ modular systems. “It’s been really effective without the sometimes lengthy construction build-out process.”
For Burd, the new type of offices is but symptomatic of a larger desire to give businesses what they want and need in a place to work.
“It’s all about trying to raise the bar, continually, and provide best-in-class service,” he says. “We’re all about trying to meet that need.”