Towering ambitions

It's been 10 years since a new skyscraper went up in downtown Tampa. Despite a flurry of proposed projects last year, don't look for one any time soon.

By STEVE HUETTEL, Times Staff Writer
© St. Petersburg Times
published December 16, 2002

TAMPA -- As the sputtering economy dimmed prospects elsewhere, office developers saw a ray of hope in downtown Tampa last year.

Bank of America, one of downtown's largest tenants, was shopping for top-shelf space for about 450 employees who are now split between two high-profile office towers. The nation's biggest bank, and Florida's, also wanted to make a statement about its commitment to stay in Tampa's business core.

Developers all but drooled over the chance to build downtown's first skyscraper in 10 years. While Bank of America was the biggest catch, real estate broker Robin Bishop said, two of the area's three largest law firms -- Carlton Fields and Holland & Knight -- also were hunting for space.

"Everybody was buzzing," Bishop said. "How could you catch one or two or all three of these deals? It would be a home run . . . to have all three."

The result was a frenzy of maneuvering and a handful of grand plans. Most have since proved to be mostly wishful thinking. The experience provides a lesson in the hype and gamesmanship that often fuel the development business.

Among the would-be contenders: a plan promoted as the largest development ever downtown, another as a catalyst for the emerging cultural arts district and a third as a low-profile corporate headquarters for an age of terrorism.

Players included both big-name local developers and relative unknowns to the area. Among them was a 38-year-old developer who was fighting foreclosure suits on other properties even as he vied for the big prize.

Even deal-loving Tampa Mayor Dick Greco got into the act, urging Bank of America's chief executive to move its Tampa operations into a new building, instead of existing office space, to revitalize downtown.

In the end, all the plans and dreams of a new downtown skyscraper evaporated.

As early as this week, Bank of America is expected to announce it is staying in one or both of the buildings it already occupies.

That's not the only setback for development-minded downtowners. The downtown office market actually will end up losing rented space as the two big law firms relocate.

Carlton Fields agreed in July to move from Harbour Island to the new Corporate Center Three near International Plaza. That followed Holland & Knight's decision in December 2001 to move from 400 N Ashley Plaza to less space atop 100 N Tampa, the region's tallest high-rise.

Barring a new major corporate relocation, some developers say, it could be another decade or longer before someone builds another office tower downtown.

Among the factors working against it: high downtown land values, suburban developers offering more floor space and parking, and a trend among smaller professional firms to buy rather than lease office space.

"I don't see many 50- or 40- or even 30-story offices going up," said Mike Hogan, chairman of the Hogan Group, which scrapped its Heritage Park office project when its financial backer decided there was already too much vacant office space downtown. "The challenge will be to build urban downtowns with smaller buildings."

Developers were commissioning renderings of sleek new office towers for some time before Bank of America and the law firms actively began looking for new leased space.

"To everybody in our business, it was no secret that a substantial amount of space would expire in 2004 and 2005," said Hogan, a longtime local developer whose projects include the Channelside complex. "All of us were trying to capture a portion of that demand."

Hogan Group was the first to make a public move aimed at the bank, announcing plans in March 2000 for Heritage Park. It was to include a 40-story tower, two smaller office buildings, a 4-acre park with an amphitheater and a walkway to the waterfront just south of downtown's core.

The $200-million project was promoted as nothing less than "the largest and most ambitious urban development project ever scheduled for downtown Tampa."

Hogan president Ray Mills later acknowledged the grand plan was a trial balloon to determine whether enough potential tenants would surface to make the project work.

After deciding the answer was no, Hogan and financial backer TIAA-CREF, the giant retirement fund manager from New York City, quietly scaled back to a single building of about 15 stories designed for Bank of America.

Operating below the radar was Bob Abberger, chief of Florida development for Trammell Crow Co., the nationwide commercial real estate developer and manager based in Dallas. Since the Sept. 11 terrorist attacks, he had talked with architects at Hellmuth, Obata+

Kassabaum about a new kind of corporate headquarters.

They came up with a 21-story office tower with an adjacent garage. The building wouldn't be an appealing target for a car bomb or any other attack, Abberger said. Its squat design would provide roomier floors, he said, giving tenants more flexibility in designing floor plans.

"Headquarters firms don't want to be in the tallest, most inefficient towers in town," said Abberger, whose company developed the Tampa Marriott Waterside.

A former vice president of properties for Tampa Electric Co. parent TECO Energy, he also had a site in mind for what was dubbed the Bank of America Financial Center: two large parking lots the utility company owns beside its downtown headquarters.

Developers without such longtime ties to Tampa also joined in the competition for BOA's business.

Hal Barry, chairman of Barry Real Estate in Atlanta, proposed a 10-story building on the Hillsborough River beside the Brorein Street Bridge. His company has developed 13 office buildings in Dallas and the Southeast in recent years but none in Florida.

Bromley Development Co. of New York convinced Bank of America to consider Tampa Bay 1, its development of two office towers, a luxury hotel and specialty retail shops at Interstate 275 and N Dale Mabry Highway, a couple of miles away from downtown.

Finally, there was Chesapeake Atlantic Holdings, a 6-year-old Tampa commercial real estate company that owned or held options on most of three square blocks on the north side of downtown.

Its 28-story Renaissance Tampa tower, on Madison Street across from Lykes Gaslight Park, would be an integral part of the city's cultural arts district, chief executive Gregory Hughes said.

So much so that the company commissioned a master plan for the district that included the planned new Tampa Museum of Art and Tampa Bay History Museum, plus cafes, shops and a footbridge across the Hillsborough River to the University of Tampa.

A month after presenting the Renaissance Tampa plan to Bank of America, Hughes went public with a fancy catered luncheon at the art museum.

About 400 guests, including Greco, dined on beef tenderloin and Champagne. Blake High School performers danced ballet to classical music.

Reporters received four-color press kits replete with Renaissance art and renderings of a modern, $100-million tower of limestone and glass that featured a six-story television screen displaying images of actor Peter Sellers and Tampa Bay Buccaneer coach Jon Gruden.

"We believe it is a rebirth of a new city," Hughes told the crowd. "It is a place to live. It is a place to work."

The big splash belied problems that were catching up with Hughes.

A California lender was suing to foreclose on two properties owned by Hughes, including the 12-story building in downtown Tampa that housed Chesapeake Atlantic's offices.

Another lender bought out Fremont Investment & Loan's mortgage and dropped that suit in September. But a judge in Polk County foreclosed on an old Lakeland department store that Hughes was leasing to a call center operator.

Hughes also lost a small storefront in downtown Tampa in October after the former owner sued for nonpayment. And the Internal Revenue Service filed a $166,858 lien against him in Hillsborough County on July 2 for overdue income taxes.

Hughes said he got in a cash crunch after a lender, whom he would not identify, changed financing terms for a large project on closing day. The lien stems from a disagreement with the IRS over whether his refinancing of a property was taxable as a capital gain, he said.

"At the end of the day, I didn't have the money to pay," Hughes said.

Two weeks after the art museum party, Hughes cited public support and media coverage of the event in a letter to an executive of Trammell Crow in South Florida who acts as Bank of America's contact for real estate developers on office and commercial property deals.

He stated that Carlton Fields made a "preliminary commitment" for 100,000 square feet of office space in Renaissance Tampa and named five other potential tenants.

But Thomas A. Snow, chief executive of Carlton Fields, said he could not recall ever talking to Hughes or anyone at Chesapeake Atlantic. Snow said he did have discussions with Hogan and Barry about their projects before signing a lease for Corporate Center Three.

Hughes said he made presentations to a Carlton Fields search committee but never received a commitment, formal or otherwise.

Meanwhile, Greco was making a pitch for Bank of America to move into a new downtown office tower.

The city was pushing for projects that would spark redevelopment in Tampa's downtown, especially around the cultural arts district, Greco wrote Kenneth Lewis, the bank's chief executive in Charlotte, N.C. Greco also wanted to convince Lewis that Tampa, where he had once worked, should be the bank's headquarters city for Florida.

Bank of America has substantial operations in big cities across the state, and there's no single Florida headquarters, spokesman Mitch Lubitz said.

But the bank's previous Florida president, Cathy Bessant, worked in Tampa during a brief tenure that ended with her promotion to the Charlotte headquarters in November 2001. Successor Tim Laney, a longtime member of the bank's Florida team, decided to stay in Jacksonville, so that city is once again widely considered the megabank's unofficial state headquarters.

Greco wasn't promoting one project over another, said Ron Rotella, the mayor's special consultant.

And he wasn't trying to take business from Bank of America Plaza and 400 N Ashley Plaza, where the bank has been leasing space, Rotella said, although a new building would clearly do that and dump more capacity in a market awash with empty offices.

Developer Dick Beard, who built the Bank of America Plaza and still owns part of it, said Greco was just doing his job. Abberger of Trammell Crow agrees. "If he'd succeeded in getting BOA to move from Jacksonville to Tampa, we'd have built a statue of him downtown," he said.

Greco floated the idea at two sessions with local bank officials. They called the pitch "pretty bold," Rotella said, but that's as far as it went. He and Greco left the second meeting convinced the bank would stay put, consolidating in some of its existing space.

"The gap between the cost of space in a new building and an existing building was too wide," Rotella said.

By March, the financier for Heritage Park pulled the plug. TIAA-CREF officials decided that even if they could land Bank of America, renting out the remaining space would be too difficult with downtown vacancy rates at more than 14 percent.

The huge pension fund management company, which owns SunTrust Financial Centre, also was worried about owning too much office space in downtown over the long term, Hogan said.

"The real concern was, what would happen in 10 years when Bank of America decides to move out to the suburbs?" he said.

What of some of the other ambitious projects?

-- Bromley has yet to break ground on Tampa Bay 1, after spending more than $12.5-million assembling the 17-acre site. The company is still looking to sign a big tenant that can kick start the project, said Robin Bishop, a broker representing Bromley.

-- Hughes says his Renaissance Tampa isn't dead, just waiting for a major tenant. But the owner of a building on the block where the tower would go is renovating the space as office lofts.

-- Abberger of Trammel Crow acknowledges that without a 600-pound gorilla like the bank, his project -- or any other tower in downtown -- won't find a lender. "Without a BofA, it's not underwritable," he said. "Nobody's going to (build) something that's less than 40 percent preleased."

Still, not everyone has given up on prospects for a downtown high rise.

The developer of the proposed 41-story Hillsborough River Tower across Kennedy Boulevard from the University of Tampa said all the commotion over Bank of America's move shows the contrast between long-term and quick-baked projects.

The Jeffries Cos. quietly assembled land for the tower in the mid-'90s and modified the design over the past four years while looking for potential tenants, said John Avlon, a principal in the company. The company didn't make a proposal to Bank of America after deciding rents on existing office space downtown were too low to make leasing a new building attractive.

"Some people leap to (create projects for) tenant opportunities," Avlon said. "We're refining what we hope to offer so when the time is right, we'll have a slam dunk."

-- Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.

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