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A bright spot in development

Commercial construction in some hot spots is booming, even if the housing market is cold.

By CHUIN-WEI YAP, Times Staff Writer
Published November 9, 2007

Wesley Chapel 

Wesley Chapel's first KinderCare Learning Center is getting ready to open Dec. 10, but its bright yellow signs are a foreshadowing of something much bigger.

Stretching into the distance on Cypress Ridge Boulevard, office complexes are swiftly rising out of the ground.

"When we did our research on the area, the business and housing growth was so strong, we felt it was right for us to come in," said Michelle Ruggiero, district manager for the national chain of childhood development schools.

Across the growth corridor of State Roads 54 and 56, new offices are feeding off the approach of three big malls under construction, which together are going to be 17 times the size of St. Petersburg's BayWalk entertainment complex.

There's a quiet frenzy going on.

By the end of October, the value of construction contracts for offices and stores in Pasco reached $92-million, already surpassing last year's total of $77-million, according to county data.

Along Cypress Ridge Boulevard alone, at least 217,000 square feet of offices are under construction along less than a mile of road.

A 94-room Hampton Inn & Suites hotel is slated to open there in January, said Doug Ritchie of the North Tampa Hospitality Group, the company behind the new Hampton Inn.

Around it, the names blend into a dizzying permutation of words - Cypress Ridge Professional Park, the Cypress Glen Professional Park, the Cypress Creek Office Park and the Offices at Cypress Creek - but the net effect is the same: more offices.

Up and down State Road 54, small office parks, typically taking 10 to 20 acres each, are popping up from Longleaf to Oakstead.

A lot of that apparently has to do with businesses eager to set up branches to ease commutes for their workers.

"One thing is, what they're doing is they're making it easier when people move, instead of having them commuting up and down the Veterans," said Donald Kipp, a development consultant with the Tampa firm of Atwell-Hicks. "There are a lot of branches."

Commercial rent prices have also leveled out in the past two years, Kipp said.

"They're trying to keep rates down and keep the offices filled out," he said.

Bill Buffington of TriStar Realty estimates rental rates at $18.50 to $22 a square foot in the area, a level that "makes economic sense," he said.

What's happening here reflects a national trend.

"Nonresidential construction employment grew again in October, belying the notion that the housing slump is dragging down all construction," said Ken Simonson, chief economist for the Associated General Contractors of America, citing a November payroll employment report from the U.S. Bureau of Labor Statistics.

As September's residential construction spending slumped 16 percent from a year before, nonresidential work was up almost 17 percent, Simonson said.

This kind of upswing brings out the doubters. "Clearly, we had an industry that over the last seven or eight years incredibly overbuilt the real estate sector, plus we had an artificial stimulation with interest rate drops," said Stan Eichelbaum, a commercial market expert with Fort Lauderdale's Marketing Developments consultancy.

"With the softening of consumer sentiments, there will be a price to be paid," he said. "There are tough waters ahead. The question is, when? The consumer has spent at an unbelievable rate in the last five years."

[Last modified November 8, 2007, 07:32:24]