Commission turns away retail buyer

 

Commission turns away retail buyer

 

Date: October 7, 2010
by: Robin Roy | City Editor

 
 

Negotiations to lease the retail space below the coming Palm Avenue parking garage have not produced results, so city management proposed to the City Commission that the space should be sold instead of having a buyer lease the space.

A buyers group came forward and told commissioners it was offering to pay the city’s $2 million asking price and have six businesses open their doors about the same time the garage opens.

The commission’s response: no, thank you.

“I’ve spoken to two commercial Realtors, and they said if you don’t need cash immediately, it’s a bad time to sell,” said Mayor Kelly Kirschner.

Only one of the four commissioners in attendance at the Oct. 4 meeting was firmly in favor of selling.

“There’s no guarantee the sale or lease price goes up in a year,” said Commissioner Terry Turner. “I don’t think a public body should be (involved in) real-estate speculation.”

Built into the first floor of the Palm Avenue parking garage is 12,000 square feet of undivided retail space. A buyer or lessee would have to construct the space and the walls between up to eight retail spaces.
Garage construction is expected to be complete in December.

The city’s chief planner, Steve Stancel, explained the staff recommendation to sell, saying the city could quickly recoup its costs, save management and operating costs, avoid competing with other commercial leases downtown and avoid any potential loss of revenue through vacant retail space.

If the city leased the space for the current downtown market rate of $16 to $18 per square foot, it would take up to 23 years for the city to break even.

But, City Manager Bob Bartolotta said that’s assuming that there is never a vacancy in that 23 years, which is unlikely.

“If we had someone come to us and want to lease for 20 years, our recommendation would be different,” said Bartolotta. “We’re not in the business of managing retail property.”

The buyers group interested in the retail space is made up of six downtown business owners, including restaurants Café Epicure, Café Americano and Mediterraneo; upscale rug retailer Art to Walk On; art galleries Dabbert Gallery and State of the Arts and a third art gallery and antique store that wishes to remain anonymous for now.

“We’re all established business owners, and we have a bank mortgage ready to go,” said Eileen Hampshire, owner of Art to Walk On.

Four of the six business owners plan to open an additional location at the garage. Only Art to Walk On and Dabbert Gallery would relocate, but that’s because both are currently in Dolphin Tower, which evacuated all its residents and tenants in July because of major structural damage.

“We’re going to move somewhere,” said Hampshire. “We hope it’s in the city.”

Kirschner said he would rather the city hire a real-estate broker, who would go after tenants the city desires for the retail space.

The mayor is also looking ahead to when the vacant property directly to the north of the parking garage is developed. The city hopes a large hotel will be built there.

“When the hotel is developed, the (garage) retail space could be part of the package,” said Kirschner.

In the end, the commission balked at making a decision, preferring to hear input from the volunteer Community Redevelopment Agency Advisory Board members first. The board will meet Oct. 28 to discuss the issue.

“I’m very concerned about what goes in here,” said Commissioner Suzanne Atwell. “This is critical space for us.”

Hampshire said she didn’t understand the reluctance.

“We can make this fabulous,” she said. “We’re ready to go.”

Chief Planner Steve Stancel provided commissioners with a list of advantages and disadvantages of selling the 12,000-square-foot retail space in the Palm Avenue Parking Garage.

BOX
Sale vs. Lease
Advantages

• Quickly recoup costs
• Avoid management and operating costs
• Don’t compete with private sector commercial Realtors
• Don’t risk loss of revenue on vacant space
• Generate property-tax revenue

Disadvantages
• Reduced control over tenants
• Loss of long-term lease revenue
• Loss of opportunity for special offers to civic groups

Contact Robin Roy at rroy@yourobserver.com.
 

 

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Currently 1 Response

  • 1.
  • They asked $2m, the offer was $2m and they said "no."
  •  
  • Pete Theisen
    Thu 7th Oct 2010
    at 10:33am
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