A Fortune 500 company is planning to relocate and establish its new global headquarters in St. Pete – but the office space it’s seeking may not be downtown.
The site selection firm assisting the company has been working with the city and the St. Petersburg Economic Development Corporation to explore sites, answer questions and discuss economic programs and community partnerships. Details on the exact potential sites have not been disclosed.
The company, codenamed Project Athena, would lease at least 100,000 square feet in St. Pete, according to city documents.
There is speculation that the unknown company may be Foot Locker Retail Inc. The company currently ranks as No. 385 on the Fortune 500.
Regardless of what the company could be, commercial real estate brokers and development experts say it would be a challenge to find existing available space of that size downtown.
“One of the biggest challenges in St. Pete is there’s much more demand than supply,” said Wendy Giffin, a senior director at Cushman and Wakefield.
Downtown St. Pete has a roughly 4% vacancy rate and has approximately 15,000 square feet of contiguous office space, she added.
There are new products underway in St. Pete that will offer office spaces such as Orange Station, which will have 50,000 square feet of speculative office space, and a pad for future office development. The Red Apple Group’s 46-story, mixed-use tower is another that will have flexible office space. Another is the 800 Block on Central Avenue that Moffitt Cancer Center, The Related Group and others are vying to plant their flag in and redevelop, in which the majority of the proposals include an office component.
However, these types of products may not come online fast enough if the company is seeking a turn-key location and is on a tight timeline.
“The timeframe to get a lease isn’t a short process. The leases are becoming bigger, and there are supply chain issues and delays in construction, which is partially due to architects and engineers undertaking vast projects and many projects that are still backlogged,” Giffin said.
While downtown may not be a likely candidate due to the limited supply, other areas could be up for grabs.
Giffin and others stated the competitive Gateway area may be ideal.
“The rates are lower, parking has much higher ratios and is free, and you would be in the heart of the Pinellas-Hillsborough region,” Giffin said.
The area has become a magnet, recently attracting larger firms. Earlier this year, CrossBorder Solutions, a $1 billion fintech firm, relocated its headquarters in New York to the 42,518-square-feet Valpak building in the Gateway district.
Class A office space in the Gateway typically has a range of $24-$27 per square foot for full-service rates. Meanwhile, Class B office space ranges from $20-$23 per square foot, Giffin said. However, there is a mix of products as many buildings are older but have been renovated.
In comparison, the rates for Class A office space in downtown St. Pete range from $32 to $36 per square foot.
Another candidate could be the mixed-use Echelon City Center development, said Don Mastry, a shareholder at the St. Petersburg office of the Trenam law firm which represents many developers and landowners.
The Echelon City Center is a 20.5-acre development initially unveiled in 2015. It’s expected to have over a thousand residential units, office space, a 120-key hotel and ground-floor retail space.
Not only is the large square footage a challenge if the company was scouting for sites downtown, but so are the high-end amenities that many corporations desire in a location for their workforce.
“They are coming out of the Northeast so they are likely used to having locations heavy with amenities,” said Mack Feldman, Vice President with Feldman Equities, a commercial real estate development firm with office properties in Tampa and downtown St. Pete including the First Central Tower, the Castille at Carillon and the Morgan Stanley Tower.
He cited examples such as buildings that have onsite cafes, fitness centers and other nearby retail and walkability that embraces a live-work-play environment.
While there’s certain criteria to be met, Feldman, Mastry and Giffin shared the same consensus that the Gateway area may likely be one of the top options for the company.
More information on the Fortune 500 company is expected to be revealed during the St. Pete City Council meeting Thursday.