‘Transformational’ downtown St. Pete project advances as Kriseman makes his choice for a developer
St. Petersburg Mayor Rick Kriseman has chosen a joint venture between two local developers to build a new Municipal Services Center and renovate the existing MSC.
The plan, from Third Lake Partners and Echelon, calls for building a new 20-story MSC on the east side of a parcel of vacant land on 2nd Avenue North, just north of City Hall, as well as parking and a future 20-story residential and retail development on the west side of the parcel. The existing MSC, at Central Avenue and 4th Street, would be revamped to include new office space and ground-level retail. Eventually, the existing structure would be razed and redeveloped as a mixed-use project.
The existing Municipal Services Center is an aging facility that houses a variety of city offices. The city put out a legal notice of its intent to sell the property after receiving an unsolicited purchase offer in 2019. Five developers submitted plans and Kriseman narrowed that to two proposals in September.
The mayor confirmed the choice of the Third Lake-Echelon plan during an interview Tuesday morning with the St. Pete Catalyst.
Kriseman said he was gratified by the number of “outstanding” development proposals, but he favored the Third Lake-Echelon plan for two reasons.
“We always look at the financing and the impact on our taxpayers and city revenues. That one we felt was the most advantageous. We also liked that they are going to reutilize the old MSC and create some Class B office in downtown, which we need, until they feel the market is ready for a brand new development,” Kriseman said. “What we accomplish here is we put a building back into the market and bring it back to life and re-activate that area of the city, while at the same time creating more of a campus feel with City Hall and the MSC across the street.”
It would have been difficult to justify investing city money to renovate the existing MSC, Kriseman said. He also said the structure is not in the right location, because it breaks up the foot traffic along Central Avenue.
The Third Lake-Echelon plan can unlock value along Central, said Ken Jones, CEO of Third Lake Partners.
“We own the 200 Central building. We have a surface lot there. Then you’ve got the MSC across the street with a parking garage. We feel like if we can synergize those two assets together, that one plus one can equal three. We can make sure that we’re utilizing the surface lot and the old MSC site and the parking garage to the fullest extent possible,” Jones said.
The new MSC and multifamily project, combined with the revamped MSC, would be transformational for downtown, Jones said.
“It will provide more access for small businesses that are looking to rent affordable office space, because right now there are not a lot of large blocks of space available in the downtown market,” Jones said. “To have additional office space options in the downtown core is important.”
Details of the plan
Third Lake-Echelon submitted two options. A term sheet outlines the scenario that costs the city less money, Jones said.
The term sheet was not immediately available for review, a spokesman for the mayor said, but here are the key elements as outlined in Third Lake-Echelon’s July 2020 “best and final offer” to the city.
• The Third Lake-Echelon joint venture would buy the existing MSC from the city for $12.25 million in cash, with the closing occurring either after the construction of the new MSC or up front. If the city prefers the up front closing option, it will pay no rent at the existing space for the first 30 months, and then $9 a square foot until city offices relocate to the new MSC. The city has the option to apply proceeds from the sale to the construction of the new MSC.
• The Third Lake-Echelon joint venture would invest capital to provide new retail on Central Avenue, as well as renovate and reposition the existing office space to meet current market demands. The renovated office space would offer attractive and cost-effective space that is an alternative to Class A downtown space, helping the city meet a goal of job growth downtown.
• When market demand supports it, the existing MSC would be razed and redeveloped, incorporating mixed uses.
• It would take about two years to build a new MSC. Development costs of that structure are estimated at about $41.75 million.
• There would be shared parking for both the new MSC and the planned residential/retail development adjacent to it on 2nd Avenue. About 400 parking spaces are planned. The second building would have ground floor retail and 20 stories of multifamily units, of which 20 percent would be workforce housing.
A rendering of the planned new MSC and residential/retail tower on 2nd Avenue North, just north of City Hall.
The city would own 100 percent of the new MSC. The Third Lake-Echelon joint venture would own the multifamily building. The city and the joint venture would jointly own the shared parking.
Over five years, the cost to the city would be $33 million. Over 30 years the city’s costs would be $42.3 million.
After signing a term sheet on the project, the city and the joint venture will continue work out a more specific development agreement that will eventually go to the City Council for approval.
Third Lake, a privately held investment firm, and Echelon, which develops, owns and manages commercial and multifamily real estate, are collaborating on the development of WaterView at Echelon City Center at Carillon Park. They also jointly submitted one of the seven plans in the running for the redevelopment of the Tropicana Field site.
“We’re local. We’ve been in this community for decades. We own and operate other real estate assets, not just in St. Pete but in the Tampa Bay area,” Jones said. “We have the experience in building and operating real estate assets in the area. We have the financial wherewithal and the financial stability to make sure we see this project to its successful conclusion.”
