Investors exit Clearwater due to political turmoil

Two prominent Clearwater-based real estate investors have liquidated their respective portfolios due to municipal government turnover, underwhelming growth and the city’s lack of a cohesive vision.

Daniels Ikajevs, developer and owner of One Clearwater Tower, and Festus Porbeni, a real estate investor who previously served on the city’s Downtown Development Board, sold seven properties and retail space in the Water’s Edge condominium building for a combined $57.75 million. They told the Catalyst that two limited liability corporations purchased their portfolios.

Ikajevs has lived in the area for 25 years and convinced Porbeni to explore downtown investment opportunities in 2010. The two had high hopes for the city but said political instability mitigated growth opportunities.

“You spend a lot of time and energy working on projects, and you might call the next day and not have the same answer,” Ikajevs explained. “Or the person you were talking to is no longer there.

“But the tipping point was Mayor (Frank) Hibbard’s resignation.”

The sale included One Clearwater Tower, three buildings on Cleveland Street, the retail space and three developable, vacant parcels throughout the city. “The largest one is a two-acre lot, for example,” Ikajevs said. “So, you can build towers.”

He said the city’s community redevelopment agency went through five directors – two in an interim role – since 2022. Ikajevs said they had to resubmit previously approved applications and restart processes whenever someone new took the helm.

Porbeni said they also worked with two city managers in the past two years. “At that point, it just becomes very unstable,” he added.

Ikajevs noted that the same person would often oversee multiple departments. However, he stressed that Hibbard walking off the dais and announcing his resignation during a March 20, 2023, budget hearing was the “last straw that kind of triggered us.”

The city’s recently elected mayor and two new city council members did not factor into their previously determined decision to sell. “Hopefully, they can figure out the 25-year puzzle of downtown Clearwater,” Ikajevs said.

Municipal government turmoil was not the only factor. Ikajevs blamed the city’s inability to match Tampa and St. Petersburg’s growth on a lack of unified vision between local officials and developers.

“We don’t have an identity,” he added. “We don’t know what we want to be known for.”

Porbeni said the city needs a master plan to create a sense of direction. He thought growth along the beach would eventually reach downtown, “but, obviously, that has not happened in the past few years.”

The two bought most properties between 2010 and 2013 following the real estate crash. Ikajevs relocated from St. Pete Beach and thought the downtown Clearwater’s unique elevation would protect investments from storms. He also credited the “beautiful” sunsets.

However, the sun also set on several proposed projects, starting with the Clearwater Marine Aquarium scuttling plans to open a facility downtown in 2015. Ikajevs said the two were not part of most failed developments, “but a lot of things did not happen, unfortunately, throughout the years.”

He was one of the three developers who sought to redevelop two city-owned properties on the downtown waterfront, now known as The Bluffs. Clearwater officials selected a $400 million proposal from The DeNunzio Group and Gotham Property Acquisitions.

The development team subsequently asked the city’s permission to drastically reduce the project’s scope, as they believe it is no longer financially viable. Ikajevs opined that The Bluffs “came up short of expectations.”

“Ultimately, what we all, as a community, voted on during the referendum – and what we all saw during the public forums presented by the development group and former Mayor Frank Hibbard – is not the same as the end project,” he elaborated.

The original Bluffs redevelopment plan called for two residential towers. Developers now believe those plans are no longer viable. Renderings provided.

The two also expected Imagine Clearwater, Coachman Park’s $84 million redevelopment, to create more of an impact. Ikajevs called it a nice upgrade that failed to attract new businesses.

Porbeni agreed and said Imagine Clearwater generates the same revenue around the site as Coachman Park. “People come for events, they leave after events and they don’t necessarily patronize downtown after the event,” he said. “That’s what has doomed downtown.”

Ikajevs stressed that the two never wanted to control the area. He said they wanted to see other investors enter the market and collaboratively grow downtown Clearwater.

The duo said they will keep their residences in the city. Ikajevs co-owns The Ring Workspaces, which will remain a tenant in One Clearwater.

The two will now look for investment opportunities elsewhere. They are fond of St. Petersburg but noted the difficulty finding available real estate for acceptable prices.

“Which is a credit to the local government and private sector coming together and envisioning what St. Pete’s downtown is,” Ikajev said. “That life and energy is needed in downtown Clearwater, as well.”