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Crowdfunding proves popular for downtown St. Pete’s First Central Tower

Margie Manning



First Central Tower at 360 Central Ave.

In less than a week, Feldman Equities raised $21 million of its $22 million goal for investor funding for First Central Tower in downtown St. Petersburg.

The company is recapitalizing the high-rise office building at 360 Central Ave. and has opened opportunities for real estate investors to get an ownership stake on July 15.

This is the third time Feldman Equities, a Tampa-based company that owns or manages more than 4 million square feet of Florida office space, has crowdfunded investments in its properties.

“It blew away our last record, both in speed and amount,” said Mack Feldman, vice president of Feldman Equities.

He attributed the quick raise to the company’s straightforward approach to talking about the impact of Covid-19 on the office market.

“A lot of sponsors would try to dance around the Covid question, what is the future of office space. We hit it head on. We were pretty frank that no one knows the future of office space,” Feldman said.

There are threats to office demand. As more people work from home, some employers question why they should rent space. There also are mitigating factors, Feldman said.

“The vast majority of employers don’t expect to keep most of their employees at home. It’s really only 5 to 10 percent that may end up working permanently from home … When those people do come back – and even if there are fewer of them – we could have more office demand, because people will have to be much further spaced apart,” Feldman said.

It’s hard to practice social distancing in the open-space office setting that many tech companies favor, he said. But he doesn’t think older styles of office space, with private offices with windows on the perimeter and administrative spaces in the center, are coming back.

“It’s got to be somewhere in between,” he said. “Until a vaccine is developed, a lot of employers will be rotating people in and out.”

Some tenants will ask landlords to reconfigure their floor space in exchange for a longer lease term. Others will ask Covid-related safety measures. One tenant at a Feldman Equities’ property asked for an ionization system that neutralizes microbes in the heating, air conditioning and ventilation system.

Related: Here’s what a downtown St. Pete tower owner is doing to get tenants back in the office

Feldman also took a conservative approach on the financials of the First Central Tower deal.

The property is 95 percent occupied, but Feldman Equities assumed it was only 90 percent occupied in presenting the offer to investors.

“That brings down the cash flow artificially, just in case we do have more credit losses than we’ve been expecting,” Feldman said.

Feldman Equities previously crowdfunded investments in the Morgan Stanley building in downtown St. Petersburg, and Carillon at Castille in the Carillon Office Park. Mack Feldman said the company is considering similar action for its other properties.

“We have a lot of private equity partners in these buildings who came in when the market was a little weaker. They were looking for more of a value-add profile with higher returns and they were willing to take more risk, and they rode with us. After a certain point, private equity firms say, OK, I want to get out,” Feldman said. “What crowdfunding has enabled us to do is offer those private equity guys a way out.”

Feldman Equities is a long-term owner and operator and wants to maintain control of its properties.

“We have control over these buildings with crowdfunding that we didn’t have with private equity partners,” he said.

For instance, private equity partners want to weigh in on lease approvals and capital improvements such as new stairwells or ramps.

While still being accountable to investors, crowdfunding allows Feldman Equities to make more decisions on its own, he said.

To learn more about First Central Tower, click here.

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