St. Pete real estate veterans open an office in the city’s next hot spot

Backstreets Capital, a family investment firm, has set up shop in a former law office on Mirror Lake Drive.

It’s the first public-facing office for the company, co-founded in 2014 by Will Conroy and Craig Sher, and it is meant to demonstrate Backstreets’ commitment to St. Petersburg, the company said.

Backstreets  is part of the joint venture team that makes up Edge Central Development Partners, the group developing Orange Station at the Edge, a mixed-use project at the old St. Petersburg Police headquarters. Other projects in Backstreets’ portfolio include The Salvador and St. James Townhomes in downtown St. Petersburg, and Icaria on Pinellas, an apartment complex in Tarpon Springs. Backstreets recently announced a capital investment with Canopy Builders, a high-end custom home builder looking into expand its spec home program.

For six years after Backstreets was founded, the company worked out of Sher’s home office, said Sher, former CEO and former executive chairman of The Sembler Co., a St. Petersburg-based real estate firm. He stepped down as executive chairman at Sembler in 2019. “I’ve been doing real estate in town for over 40 years but have never had an office in downtown,” Sher said.

Sher and Conroy, an equity partner at the Johnson Pope law firm, share the new space with Jay Miller, president of J Square Developers, and attorney Howard Miller, which makes it a “family office” in more ways than one. Conroy is Sher’s son-in-law; Jay Miller is Sher’s brother-in-law; and Howard Miller is Jay’s brother and Conroy’s former law partner.

Under the name Stone Pony LLC, they bought the former law office at 248 Mirror Lake Drive for $501,000 in March, Pinellas County property records said. They renovated it over the summer, moving in in September, Conroy said. They call the property “The Clubhouse.”

Backstreets Capital’s office at 248 Mirror Lake Dr. N.

“I’ve been part of the family for 13 years, but the family has been investing together for a lot longer than that, going back multiple generations. So it was a very natural extension to physically office together,” Conroy said.

He called Mirror Lake the next hot spot for development in St. Petersburg, citing the physical amenity of the lake as well as projects such as Reflection, a planned 18-story mixed use development with 88 condominium units at 8^th Street and 3^rd Avenue North.

“It’s the same thing that makes the rest of St. Pete great. You can walk, you have good visibility, you have water,” Conroy said.

Partnerships

Backstreets Capital is a relationship-driven investment firm that focuses on partnerships, including with J Square and Canopy, both based in St. Petersburg, as well as St. Petersburg-based Weller Residential, one of the 20 largest multifamily apartment managers in the U.S. Other partners are DDA Development, a multifamily developer, and Osprey Capital, a private equity firm, both in Tampa. Backstreets does multiple deals with its partners.

“We like to make money and we want to make as much money as we can. That’s why we’re in business. But we’re not purely transactional. We find the right people to work with. We create what we hope is a  long-term platform and in the nearly seven years that Backstreets has been around, we have taken great pride in the fact that we have done multiple investments with our partners,” Conroy said.

In addition to development, Backstreets gets involved in a variety of deals, Sher said.

“We lend money. We’re working on acquiring some existing assets,” he said. “Will handles legal and financial. I’m more they gray-hair advisor, with relationships and connections.”

The company has plenty of opportunities and is selective about what it takes on.

“It’s not just my money and Will’s money. It’s the family’s money and we guard that,” Sher said. “We’re doing quite well.”

Investing climate

The Covid-19 pandemic and change in presidential administrations have created a unique climate for real estate investing.

Retail is not popular right now, and there’s a big caution flag on office projects, but multifamily is as strong as ever and industrial property is “the new darling,” Sher said.

“Regardless of the climate there’s always opportunity. Everyone thinks of development — buying a piece of land and building something. But there’s renovation, there’s rehab, there’s repurposing. There’s buying assets that other people have trouble with now. There’s buying debt. There’s lending money to others. There’s a variety of ways to be in the investment world. All climates like this do is re-order what you are interested in,” Sher said.

He’s hoping the new administration will strike a bipartisan plan to invest heavily in infrastructure, including roads, bridges and mass transit.

Covid-19 also has many residents of larger and more densely populated cities thinking about relocating to places like St. Petersburg, Sher said.

“We’ve had conversations with two state-level legislators over the past month, one from each party and one from the House and one from the Senate. Both of them talked about the net migration to Florida from the rest of the United States,” Conroy said. “They each talked about how our state is poised to have a phenomenal growth decade. We have sunshine. We have a pro-business growth environment. We’ve got our fiscal house in order at the state level.”

While Orlando and its tourism-specific jobs have been hit hard by the pandemic, St. Petersburg and the Tampa metro area are still places people where people want to live, Conroy said.

“I think that bodes well for the community at large. It certainly bodes well for the business community because, like Craig said, there are going to be opportunities. We may not know exactly what they are but when you have projected growth of up to six million people over the next decade that creates a lot of demand — whether it’s housing or consumer goods or education — and it’s going to be very good for our state and for our area,” Conroy said.