Office Demand Mark Commercial Real Estate in 2006

New elements altered the Tampa skyline in 2006 while existing structures continued to trade at slightly reduced prices after two years of feverish investment.

Sales of longtime office buildings attracted far less money over the past year compared with prices approaching the $200-a-square-foot mark during 2004 and 2005. The 38-story Tampa City Center building was purchased in late September for $87.8 million, or $119 per square foot.

Park Tower, Tampa's oldest office skyscraper, went for $50 million, or $105 per square foot, in mid-January with Colonial Bank's logo replacing the Lykes family brand atop the 35-story structure.

While office sales lost their lead, investment in retail property entered record territory with the April sale of Northbay Commerce Center in Oldsmar for $28.9 million, roughly $300 a square foot. Also, the Walter's Crossing complex in Tampa sold in July for nearly $35 million, around $100 a square foot.

Making progress
Progress Energy Florida's 16-story headquarters opened to its first employees this fall, who will greet others moving in through spring as interior floors are finished. Before the 245,000-square-foot building was even finished, an out-of-state brokerage put it on the market with an asking price of $77 million -- an unprecedented $314 a square foot.

Falling vacancy rates and continued job growth prompted nearly 1.5 million square feet of new office projects throughout the Bay area this year.

Highwoods Preserve, the massive 800,000-square-foot campus along Interstate 75 north of Tampa that took roughly a year and a half to backfill, actually added a 115,000-square-foot building for MetLife Inc. with construction starting in April. And work began in May on Highwoods Bay Center, a 209,000-square-foot speculative waterfront building in the Westshore business district.

Other commercial real estate transactions of interest over the last 12 months include the $10.7 million sale of a former Honeywell International circuit board plant at Waters and Himes avenues in Tampa. Honeywell bought the 17-acre industrial property in June to settle a decades-old dispute with property trustee David Simon over prior contamination.

Meridian Development Group made the year's biggest industrial deal just a few days into the new year, buying a former Winn-Dixie distribution center in Sarasota for $30 million. The 948,578-square-foot warehouse is being subdivided for large industrial tenants needing 100,000 square feet or more.

Other large commercial properties that were put on the market in 2006 remained there by year's end. Glimcher Realty Trust put University Mall in Tampa, the Bay area's largest with 1.3 million square feet, up for sale in May along with four others around the Southeast.

Two of Pasco County's three major retail developments made significant progress over the past year. Shops at Wiregrass and the Grove at Wesley Chapel went up against each other for various tenants, while Cypress Creek Town Center remained bogged down in government permitting.

Choppy waters
Residential condominium towers seemed to spring up everywhere from Clearwater Beach to Gandy Boulevard in 2006, along with an additional upscale hotel in downtown Tampa and the first new office building in St. Petersburg's central business district in the last 16 years.

Some well-located urban buildings were taken down over the summer to make way for new construction.

A former federal building in downtown St. Petersburg was demolished for replacement by a residential/office condominium tower called Signature Place. Across the Bay, the old Maas Bros. buildings in downtown Tampa will eventually be replaced with Six Ten Franklin, a planned condo/retail project.

However, not all aging buildings are being knocked down in the name of progress. Tampa's Floridan Hotel, built in 1926 and at one time the tallest building along the Gulf Coast, is undergoing a multimillion-dollar restoration with a gala reopening planned late next year.

Adding to Tampa's hotel selections this year was the 20-story Embassy Suites Hotel Tampa-Downtown Convention Center. The $100 million project adds 360 rooms to the city's urban accommodations.

Shoppers in the Bay area were given more options as national retailers opened additional stores. Kohl's Corp., which made its local debut in Lakeland in 2005, added three more locations in Brandon, Clearwater and Lutz, and is expected to open additional stores in the coming year.

by Carl Cronan, Tampa Bay Business JournalTampa Real Estate, Tampa Homes for Sale, Tampa Homes