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Tricera Capital has been investing in St. Petersburg since its formation in 2017.
Over the course of those four years, the Miami firm has acquired a half-dozen properties, mainly along hip Central Avenue: 443 Central, 658 Central and 1246 Central to name but a few.
But even as it was buying properties like 442 W. Kennedy Blvd., in Tampa — on the way to owning 20 assets with about 800,000 square feet — the company kept hearing about the “buzz” coming from Sarasota.
“When we checked out Sarasota, we saw a lot of the same attributes, a lot of the same characteristics in place as in St. Petersburg,” says Scott Sherman, a Tricera co-founder and managing principal, who formed the company with former RKF broker Ben Mandell.
When the Spector family decided to sell its 1800 2nd St. office building in downtown Sarasota last year, Tricera “jumped at the chance” to buy it.
The company and partner Merrimac Ventures closed on the $35.1 million purchase late last month, in a deal negotiated by Marcus & Millichap’s Institutional Property Advisors division.
Prime Finance provided $28.5 million in financing through a three-year bridge loan for the acquisition, property upgrades and leasing expenses, according to Berkadia, whose Miami and Orlando offices arranged the debt.
“We like the macro-economic trends in Sarasota, the population growth and the influx of younger people into the Rosemary District and elsewhere,” says Sherman, a former asset buyer for Thor Equities in New York.
“We believe jobs and office demand will follow that.”
The nine-story, red-brick building at 1800 2nd St. represents Tricera’s first pure office play, following a series of investments in retail and mixed-use properties — including the former printing plant of the Palm Beach Post on the East Coast.
“With COVID-19, we saw a real opportunity to buy office buildings in markets we like,” Sherman says. “We don’t believe that we’ll be dealing with the pandemic for the long term, but it has accelerated a migration of businesses to cities in Florida. In two or five years out, we think we’re going to look really smart.”
The Spector Building, as 1800 2nd St. has been known since its completion in the mid-1980s — named after the family that developed it — contains some unique attributes, Tricera says.
Chief among them is a 500-space parking garage on floors two through six.
“What’s really special about the building is that it was designed, decades ago, for a post-COVID world,” Sherman says. “It caters to small tenants, from 1,000 square feet to 5,000 square feet, every office has its own private bathroom, kitchenette and HVAC system, and separate air flow. And there’s an open-air atrium on every floor.”
But Tricera faces challenges at the 240,000-square-foot building, too. Currently, vacancy stands at about 30%, and that percentage could grow over the next 18 months as long-term tenant the FBI departs for smaller quarters and BB&T Corp. contemplates consolidating operations nearby with new corporate partner SunTrust.
Together, the FBI and BB&T occupy about 25,000 square feet.
To counter the losses, Tricera and commercial real estate brokerage Robbins Commercial intend to make a series of “cosmetic upgrades” to the building’s individual floor lobbies and atriums, add seating, an executive center and a fitness center.
“The building is terrific, we’re just going to be doing a few mainly little things to make it more modern and inviting,” says Kevin Robbins, of Robbins Commercial.
If the bank vacates its ground-floor space, Robbins and Sherman say they may search for a medical office user or a more traditional retailer to backfill the space, which has been occupied by financial institutions for roughly the past two decades.
“We’re going to look at what’s missing and needed downtown,” Robbins says.
“The good news is every tenant there loves the building,” says Sherman. “And the beauty of ground-floor space is its optionality. We’re not afraid of that, that’s what we specialize in. We love creative, adaptive re-use projects.”
Sherman adds that 1800 2nd St. may not be its only deal in Sarasota.
“We don’t like to go into a market and be one-and-done,” he says. “That’s how we’ve operated in Miami, in Tampa and St. Petersburg and elsewhere. We want to be a part of the Sarasota market for the long term.”
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