Case Studies - Commercial Florida Realty Services, LLC - Boca Raton Florida

501 East Kennedy

Tampa, FL

Acquired: $42,000,000 || Sold: $67,350,000

Property and Opportunity

Commercial Florida Realty Partners acquired 501 East Kennedy (501) in 2016. 501 is a class A, 1980’s vintage asset in Tampa’s Central Business District (CBD). The 20-story building includes 270,000+ SF of office space, 13,000+ SF of retail, 3,000 SF of tenant storage, 8,000+ SF of amenity space and a parking garage for tenants and guests.District (CBD). The 20-story building includes 270,000+ SF of office space, 13,000+ SF of retail, 3,000 SF of tenant storage, 8,000+ SF of amenity space and a parking garage for tenants and guests.

Commercial Florida was awarded the opportunity to acquire the asset, which was facing a near term vacancy by long term law firm tenant, Fowler White, as a result of consolidation of offices through a recent merger with a national law firm, requiring repositioning in the Downtown Tampa marketplace. At the time of purchase, 501 was 91% occupied, however with the departure of Fowler White, occupancy dropped to 57%, exposing the largest block of contiguous Class A space availability in the area. The vacancy was further complicated by the lease rights of two floor law firm Banker Lopez to move up the stack if Fowler White ever vacated. 501 would require substantial capital and tenant improvements, attentive management strategies, and a thoughtful and aggressive leasing campaign to maintain competitiveness in the CBD.

501’s existing competitive advantage included its parking structure, 9’ finished ceiling height as well as its central location in the Tampa CBD, which yielded tenants’ easy access to government buildings and leisure amenities. Through a comprehensive business plan and hands on management strategies, Commercial Florida built on existing advantages for a complete repositioning.

The Strategy

The business plan was to increase occupancy to 90+%, by signing new leases on roughly 115,000 SF. Commercial Florida capitalized on favorable market conditions and tailored lease up strategies for a variety of tenant floorplans, including a program to build speculative suites. Commercial Florida worked to improve relations with in place tenants which increased renewal and expansion probabilities. Additionally, various capital improvements were undertaken to keep 501 in line with the competitive Downtown buildings in the CBD. Notable capital projects include:

Street Scape – Updating the curb appeal addressed safety concerns with overgrown landscaping and poorly maintained hardscapes. Specifically, sidewalk, curb and gutter replacement, overgrown tree removal and replacement along with shrub/landscaping updates and complete repainting of the garage envelope and sealing of the all glass façade.
Parking – Repaired exposed reinforcement and spalling in garage. Replaced asbestos tiles with non-friable tiles. Increased parking capacity outside of the building garage in nearby lots through negotiations with an owner and operator of local parking facilities as well as the nearby City of Tampa downtown parking garages.
Interior Improvements – Updating common areas, sealing of windows, replacing skylights, and modernizing elevators.
Tenant Relations – Commercial Florida worked with an existing tenant who had an in-place relocation right to move up in the building. The tenant exercised said right, strategically making contiguous floors 14-16 (60,000SF) available. This provided an opportunity for a new major tenant to lease all three floors. The strategy was pivotal in the rent roll stabilization and was a direct result of Commercial Florida’s hands on management practices and broker relationships.

Disposition

In 2019, Commercial Florida’s third year of ownership, 501 was over 95% leased with a fully updated exterior and modernized interior. Floors 14-16 had an executed lease with WeWork and tenant improvements were underway. 501 East Kennedy became known as WeWork Place!

Commercial Florida was approached with an opportunity to sell WeWork Place in an off-market transaction in conjunction with the sale of its Westshore Tampa Office Portfolio. The disposition was successfully negotiated and executed by Commercial Florida at the end of 2019.

While the capital improvements increased leasing velocity and maintained alignment with the competitive buildings, it was Commercial Florida’s comprehensive hands-on management strategy and strategic leasing expertise that led to the successful acquisition, reposition and disposition of WeWork Place.