The Urban Land Institute annually gathers local and national industry leaders and development visionaries to offer key insights into forces shaping the real estate industry in the Tampa-St. Petersburg area. The Feb. 4 ULI Tampa Bay 2021 trends conference showed that St. Pete is well-positioned to meet much of what’s ahead in the industry.
The St. Pete Catalyst has talked with two experts — Larry Silvestri, founder of commercial real estate firm Silvestri Law, and Anne Pollack, managing member and commercial real estate attorney at Fletcher Fischer Pollack P.L. — to get their take on how the emerging trends highlighted during the conference are playing out in St. Petersburg.
In the second part of this three-part series, the focus is on what’s ahead for office and retail spaces.
Return to the office
Although the Covid-19 pandemic resulted in many office workers staying home to do their jobs, longer-term trends indicate the corporate office is far from obsolete, Byron Carlock, U.S. real estate practice leader for PwC, said during the emerging trends conference.
“In the spring, 86 percent of CFOs in the Fortune 1000 were saying they were going to greatly reduce their office space. By year end, that mood had changed dramatically and 51 percent said they would actually need more space,” Carlock said.
In St. Petersburg, the thinking likely is similar, said Larry Silvestri, founder of Silvestri Law.
“I know that we are going to go back to office culture. People need interaction,” Silvestri said.
But the office of the future will look different, he said.
“There’s already been some backlash from open-plan offices because people realize for a lot of things you need your own room, not just all out in the open. You need collaboration space but you also need quiet time space, and I think that will work its way into the office,” Silvestri said. “And from what we’ve learned with Covid, the health concerns aren’t going to go away immediately. People are thinking we need more personal space.”
Carlock also expects to see a return to enclosed offices as well as modernized cubicles, conference rooms that are set up for social distancing, improved sanitation and improved air quality.
“Remember that 80 percent of our [national] office stock was built in the ’80s or before. Some of it is mechanically obsolete. 5G telecom will be the first relevance factor to decide which buildings will take us into the future. Air quality will be the second. And then many office buildings will have to be converted to other uses, from residential to last-mile ecommerce fulfillment,” Carlock said.
While St. Pete’s office supply will need to be modernized, Silvestri said it can be done within the existing four walls of most current structures.
“You’re talking about something designed for flexibility. Structural supports need to stay, but beyond that there’s a lot you can do with an interior. The office towers won’t be obsolete. They’ll be reconfigured,” Silvestri said.
Retail properties were struggling for years and the pandemic accelerated those struggles, Carlock said during the emerging trends conference.
“St. Pete is over-stored and has been since the ’90s,” Silvestri agreed.
Regional malls are undergoing changes. Westfield Countryside in Clearwater is in foreclosure while Westshore Plaza in Tampa is being redeveloped with office spaces, apartments and a street grid to make it more walkable.
Tyrone Square in St. Petersburg has been reconfigured with new retailers, including Hitchcock’s Green Market, and likely will continue to draw shoppers because of its central location, Silvestri said. He won’t rule out some modifications around the edges, as the department store anchors face their own financial difficulties.
Although retail sales continue to move online, there’s still a need to grow brick and mortar stores for those who want to have an experience, said Anne Pollack, managing member at Fletcher Fischer Pollack.
“Retailers have been working to make it more fun to come to the store, so there’s a reason to come to the store other than just buying something you need,” Pollack said. “Creating that entertainment experience is what retailers have to do.”
There are overlooked opportunities in retail, said Tracy Hadden Loh, a Fellow with the Anne T. and Robert M. Bass Center for Transformative Placemaking at Brookings Institution.
Black neighborhoods are systemically under-retailed and there’s a lack of retail that people can walk to in most communities, even though walkable retail commands a high rent premium, Loh said during the ULI emerging trends conference.
Those disparities also are true in St. Petersburg, Pollack said.
“We are over-retailed in most areas. We are heavily under-retailed in areas that are historically disadvantaged. We are also under-retailed in places that are walkable. That’s where St. Pete can thrive and move forward,” Pollack said.
South St. Petersburg especially would benefit from the jobs and economic stability that an increased retail presence would bring, she said.
“There are projects there that are seen as catalysts for creating more of a market so that people will go there. The Manhattan Casino, Deuces Live – as the city and community organizations and developers and businesses work together to make those more successful, that will continue the ball rolling to bring retail there,” Pollack said.
Part three of this series will look at what’s ahead housing and equity in real estate.