Church Street Plaza | 28-Story Office/Hotel [Phase 1 Under Construction]

[GRS328]

On ‎10‎/‎12‎/‎2016 at 1:21 PM, castorvx said:

That's a shame. Hopefully that "other tenant" is a real thing. I'll believe it when I see it. Cautious optimism.

 

I'm not inclined to believe it is a real thing.  Unless they've got a large corporate user planning to relocate in their back pocket or they've got plans to do this with alternative-type financing (both of which are a stretch IMO), I just do not see this one getting off the ground. 

[Dale]

If that's the case, it seems like it's a function of downtown Orlando, not a deep-pocketed developer who has a hotel sighed on and has minor tenants to boot.

This then would go back to my larger point about a downtown in decline.

 

 

[John Hargrove]

Regardless of what happens, I don't think Downtown is in decline. It may be true that some parts of downtown were more thriving in the 90s (I wasn't here), but even the last 10 years I've been here there has been consistent improvement. I mean, in the time I've lived here (since 2006-2007), I have seen:

1. Infrastructure
   1. The introduction of SunRail
   2. General improvements to all of the wayfinding signage downtown
   3. Lymmo expansion
2. New construction/venues
   1. Literally thousands of residential units built in downtown
   2. Amway Center, DPAC, OC Soccer Stadium
   3. Mad Cow's new space on Church
   4. Church Street Station seeing revitalization due to SunRail, restaurant investments
3. Sports
   1. Magic relocating to the core
   2. MLS team
   3. Citrus bowl renovation
4. Services
   1. New theater, grocery store/pharmacy, dentists
   2. New OFD Station 1

I'm sure I'm missing a lot. Downtown Orlando, for all of its faults, has undergone a great deal of progress over the last 10 years. I fail to see the decline.

I think what you're doing here is looking at microcosms of contraction (Church Street, commercial office leasing in general) and extrapolating that to a broader picture of Orlando which isn't very accurate.

[JFW657]

The downtown Orlando of the 90's was much more tourist & entertainment driven. There weren't a fraction of the residential units that there are now. Several busloads of tourists used to come up from the Disney and I-Drive hotels every night to visit Rosie's then stroll Orange Avenue during the summer months. Some nights Orange between Central and Church was like Times Square. Crowded, Noisey, frenetic. Of course, as we all know, Downtown Disney and Universal City Walk ended all that.

As far as the issue of commercial office space like Tremont is concerned, that's hard to put a finger on because downtown Orlando has always had a hard time attracting corporate tenants. Either too much cheaper suburban competition or just not  a big enough population in the surrounding metro area to attract corporate and convince them to invest in opening offices there. For whatever reason, there just never seems to be a large demand for more new office buildings downtown.

At some point, the number of 24/7 downtown residents will reach a point where the demand for retail and services just cannot be ignored. I know we keep saying it, but these residential projects don't just pop up overnight. They take time to go up then fill them up.

I don't know what if anything will ever spur office building development. 

Anyway, I don't see downtown so much in "decline" as much as it's just different than it used to be. Otherwise, our downtown just hasn't "gotten there" yet.

 

 

[GRS328]

I don't think Tremont's not proceeding (if that proves to be the case) is a sign of a downtown being in decline.  It's more just a matter of economics particularly with respect to the current office market.  Class A office space in Orlando CBD is doing very well, and there are certainly companies that would love to be there.  But the costs of a building like Tremont will require substantial pre-leasing commitments in order to be able to achieve financing.  All of these developments require some hybrid of equity and debt to finance the construction.  The debt is required for the equity investors to achieve their required returns.  In order to get the debt, the lender needs to be assured the project is sufficiently pre-leased so that it can pay back the debt.  I saw some numbers on Tremont Tower over a year ago.  They had some LOIs from some prospective tenants (including Fairwinds), but nothing concrete, and even the office space would have only been about 30% pre-leased.  Most lenders - especially bank lenders - can't take a flyer like that.  Another part of the problem, too, is cost.  Costs to build that thing are substantial.  And the rents required to justify that cost just aren't there in Orlando at this time.  I suspect that may be why they are having a hard time finding tenants.  Lots of smaller local companies would love to be downtown, but they're not willing to pay rent commensurate with more attractive markets (e.g. Miami, et al) in Orlando.  

Now, as I mentioned in my earlier post - if they have a larger corporate tenant in their back pocket who is prepared to relocate to ORL and take 125,000 - 150,000 sf of the Tremont Tower's 2000,000 sf of office space, then it suddenly becomes more plausible.  I would love for that to be the case.  Guess we'll see.  The problem with that is most large users who are looking to relocate will want to have the space available within a timeframe generally much shorter than it will be required to deliver the space.  That's the quandary Orlando - and other growth markets - are in with respect to building new office towers.  There are firms across the country who would love to relocate here, but they need a lot of floor space that doesn't currently exist right now, but they're unwilling or unable to wait the 2+ years it would take for such space to be developed.  Orlando's challenge is somewhat magnified compared to others in that it really doesn't have much of a base of substantial corporate users already located here.  Downtown office is dominated by law firms (which many are downsizing), banks (most of which are HQ'd elsewhere) and Red Lobster.  

[JFW657]

Look for downtown Orlando's high rise construction to be exclusively residential for the foreseeable future then I guess. As it has been since the last commercial office high-rise, which was CNL II/PNC.

Not such a bad thing, but getting a little boring.

Would love to see something spiffy looking go up right off I-4.

 

Edited October 14, 2016 by JFW657

[Dale]

The profusion of apartments has somehow not contributed to the sort of vitality I witnessed in the 90's. Part of this is that Church Street was in its heyday. Another part was that Orange and environs had a nicer mixture of night and day establishments, whereas that stretch is largely given over to bars in recent years.

Never mind hoping for another office tower. It is apparently a herculean task to get a skinny, mixed-use tower going.

 

 

[jack]

Economics and timing. They could not get their equity inked and Fairwinds could not sit around waiting forever. Office has been a lag on most major markets not including the largest cities. It is not just Orlando that is not building high rise office. 

[sunshine]

We have a lot of office activities, they are in UCF area, Maitland and Lake Mary.

[Dale]

Don't get me wrong, downtown Orlando has a lot going for it. But the perception here is that it peaked awhile back and other Florida cities are catching up. And some are hurtling past Orlando at breakneck pace. St. Pete, in particular, is kicking a** and taking names. Never mind Florida, it may be one of the best mid-city downtowns in America.

[Jernigan]

St Pete is awesome - but what specifically is happening there that is hurling them forwards?  New office tower?  Corporate HQ moving there?   Serious question as the only time I see them in the news is for the Rays possibly leaving.

[JFW657]

They also demolished their iconic 5 story, upside down pyramid pier in favor of some schlocky looking modern artsy-fartsy nonsense designs that keep on changing because everyone hates them and will hopefully never see the light of day.

 

 

 

[jack]

Lots of residential development for a smallish town but comparing our two cities is not exactly fair. Simply put, they have water. And they don't have office development either. Tons of condos and they are just now getting rental multifamily. 

[prahaboheme]

St Pete is a great, mid-sized urban city.  Not only does it have water, it also has the benefit of "bones" like older northern and Midwestern cities that have maintained some semblance of their urban tradition (even those in decline).  

St. Pete is probably on par with development of Orlando's urban core, and is certainly outpacing bigger brother, Tampa.

[tennis32801]

I think its a combination of geography, the State's conservative tax policies, and local progressive mindset.

[Dale]

Unfortunately, subscription only: http://www.growthspotter.com/

[Tim3167]

Any good or bad news ?

[bqknight]

It sounds like good news from the blurb but I can't see the full article. 

[Kaz]

Mentions a potential hotel partner. 

[jack]

Potential hotel partner is Concord out of Raleigh. Not confirmed by Tremont or Lincoln. 

[John Hargrove]

Some excerpts.

New partner:

Raleigh-based Concord Hospitality Enterprises, a hotel developer, owner and operator with a hand in five Orlando properties, is targeting the market for growth and negotiating a joint venture for the hotel in Downtown Orlando's proposed Tremont Tower, a lead executive with the company told GrowthSpotter. 

The relevance of it:

The company's next Orlando investment could be a joint venture with Lincoln Property Company (LPC) to develop, co-own and manage the 180-key AC Hotels by Marriott planned for the mixed-use Tremont Tower in downtown, Kellock said. 

The JV negotiations are still early, and subject to change, he said. The hotel within Tremont Tower could be under construction by late 2017 and open in mid-2019, Kellock added. 

Some non-news on the Fairwinds replacement:

Lincoln said that a deal with a larger replacement tenant would be announced soon. 

 

My take: it's neutral news. Not a lot of substance here. The project isn't dead but this joint venture isn't a done deal either. Wait and watch.

[JFW657]

I wonder if the DPAC financing news has had or will have a positive impact on TT being that they are in such close proximity to each other.

[jack]

The problem with Tremont is the office, not the hotel component. 

[Dale]

It's an Orlando problem.

[Tim3167]

That's just kind of an odd thing to throw out there.