ALTHOUGH THE NATION HAS BEEN AWASH IN the economic uncertainty that followed the September 11th terrorist attacks, business in Sarasota has been recovering quite well. Companies that need new operational space, for example, are moving forward with their expansion plans. "This has given people more resolve," says Bill Kleiber, a commercial real estate broker and partner at Richardson Kleiber Walter. "They've made decisions more quickly than they had in the past. I find that fascinating. We're not going to be backed down."

Nick Branica, president and CEO at Comdial Corp., has led a restructuring of the telecommunications firm that includes relocating its headquarters and 100 jobs to Sarasota from Virginia. photo by Alan Ferguson

Among the hardest hit of industries is hospitality, but Atlanta-based Ritz Carlton Hotels Inc. says it's keeping firm its November 16th opening of the 266-room luxury hotel in downtown Sarasota. The presence of the hotel is expected to be a boon to the city. "This is a real testament to what's happening in our community and the long-term viability of our hospitality industry," says Kathy Baylis, vice president of the Sarasota County Committee for Economic Development. "We'll see additional economic activity with higher-end retail. We've already had a couple inquiries from national restaurants."

Baylis is quick to point out that notice from national sources are putting the spotlight on Sarasota. Money magazine last year named Sarasota as the best small city for its affordable lifestyle, outstanding schools and brisk job market. Entrepreneur magazine cited Sarasota sixth in its list of the best medium-sized cities in the nation. And Expansion Management magazine gives the community a five-star rating for quality of life and its "Gold Medal" designation to the county's schools.

"We're the only school district in Florida to receive that rating," Baylis says. "We have a lot of attributes that you might find in larger metropolitan areas but without the hassles of those areas. The arts and cultural opportunities are outstanding for a community of our size. We have our own opera company, our own ballet company and our own symphony."

And high-tech isn't missing from the list, either. A report from Florida's Agency for Workforce Innovation shows that the number of computer-related companies has increased 63 percent from 1995 to 1999, compared to an overall business growth of 12 percent. The number of workers in computer-related industries increased 31 percent compared with 10 percent overall.

"That's a good indicator that we're having a nice growth of high-tech businesses here," Baylis says. "These are primarily in information technology and communications technology. Our big technology relocation this year was Comdial. They brought 100 high-tech jobs to Sarasota."

Comdial Corp. (Nasdaq:CMDL; www.comdial.com), previously headquartered in Charlottesville, Va., makes telephone systems for small to medium-sized businesses. In 1996 Comdial purchased Sarasota's Key Voice Technologies Inc., which develops voice processing systems. Last year it expanded its facility on Cattlemen Road. "Now we're using that expanded space to house Comdial," says Nick Branica, Comdial's president and chief executive officer.

Comdial's relocation is part of a total restructuring of the firm. That included moving Branica from president and CEO of Key Voice to the same function for Comdial itself. "Comdial ran into financial problems that required this restructuring last year," Branica says. "As we began our restructuring we saw the market getting difficult, so we moved to adapt to changing market conditions. We've emerged a strong and lean company. We're not happy with conditions of the market place but we're pretty well poised. The disaster at the World Trade Center didn't help."

The restructuring included the sale of Comdial's 500,000-square-foot corporate headquarters and manufacturing facility in Virginia, where it has leased back 100,000 square feet for engineering, support, and research and development. The manufacture of telephone systems has largely been outsourced. "We're changing our focus from manufacturing to design and marketing of business telecommunications products," says Branica. "At the start of 2000 we had 900 people. Now we're at less than 400, half in Sarasota and half there."

Comdial functions that moved to Sarasota include finance, administration, sales, investor relations, corporate communications and information technology. "We've hired about 60 people and are heading toward 100 eventually," Branica says. "Most of those employees are high tech. We've had no trouble finding staff."

While Charlottesville and Sarasota have many similarities, Branica says, "there's more technology talent in this area. Our location at I-75 and Fruitville Road, less than an hour from Tampa and north Fort Myers, gives us a much larger area to draw employees from than in Charlottesville."

Tail wags dog

Branica says the restructuring effort is working. "We had our first positive EBITDA [earnings before interest, tax, depreciation and amortization] in the second quarter this year," says Branica. "This is a story of the tail wagging the dog. It has gone really well. Our team has done a tremendous job of adapting to new responsibilities. It has been a tough situation to work through. Our employees here and in Virginia did tremendous work in helping restructure the company and made it an absolute success in an unbelievably short time frame."

Two essential components to the restructuring included shifting the company's focus from manufacturing to research and development of next-generation technology in telecommunications while improving the pricing structure of existing product.

FCCI Insurance Group's 500 employees can look out on Lake Osprey from the company's new corporate headquarters at Lakewood Ranch. photo by Lakewood Ranch Realty Co., Inc.

"That has paid off for us big time," Branica says. "We've brought out new products that are more driven by price and demand for our customers in the lower end of the market place and driven by technology in the higher end."

One example of the type of new technology Comdial is creating is unified messaging. "Text-to-speech is part and parcel of this technology," says Branica. "The telephone device will look the same but will be wired into your PC network. You can drive down the road and listen to your E-mails on your cellphone and reply to them with your voice-mail attachment. And you can control your mailbox for voice features as well as E-mail features. A follow-me feature can direct your phone calls according to your schedule for the day, either at the office, your cellphone or at home. This is an example of the transitionary technology that's a piece of the next generation that we're able to bring to the market place."

Among the growing number of technology firms that Comdial joins in Sarasota are Indigo Investment Systems Inc. and LexJet Corp., which last year earned rankings on Inc. magazine's list of the nation's 500 fastest-growing firms. Indigo Investment Systems, which was at No. 55, develops software for investors in the stock market. LexJet Corp. (at No.175) makes products for the wide-format printing industry. (Both also finished high up on the 2001 Florida High Tech Corridor Technology Fast 50 list compiled by Deloitte & Touche. LexJet came in at No. 2 and Indigo Investment at No. 9. See MADDUX REPORT, October 2001.)

Comdial's neighbor on Cattlemen Road is L-3 Communications Aviation Recorders, makers of the "black boxes" that record airliner flight data and cockpit voices. The company is currently developing a similar catastrophe-proof recorder for use in the maritime industry.

Parview Inc. (MADDUX REPORT, May 2000) has recently added staff and expanded its facility along the I-75 corridor. The firm makes global positioning systems for golf courses. These systems have been installed at more than 160 courses throughout the United States and Canada.

And a Sarasota biotechnology company is working on projects that study DNA extracted from human blood. DNAPrint Genomics Inc., founded by a group of scientists with research experience in high-level mathematics and molecular genetics, is filing patents covering tools and methods used in the field of personalized medicine.

Also taking advantage of leading-edge technology is Sarasota Memorial Hospital, which recently received for the fourth year in a row the designation of being among the nation's top hospitals by the National Research Corp. The firm chose the hospital as one of 122 ranked highest among 2,500 hospitals in the nation. In addition, Sarasota Memorial received a nomination from Microsoft chairman Bill Gates for a Computerworld Smithsonian Award for its development of CareVISION, a computerized medical records system. And it was one of the nation's first hospitals to use a less-invasive robotic device in heart surgery.

Missed opportunity?

While many of these high-tech firms and high-tech related institutions have been weathering a downturn in the nation's economy, downtown Sarasota may have missed an opportunity prior to that downturn. "We had three Class A office buildings planned during the strongest economic times that our country has seen in the last 40 years and none of them happened," says John Harshman at Harshman & Co., a commercial real estate firm. "We currently have a vacancy rate of 6 to 10 percent in downtown. We had a low vacancy rate for a long time at 3 to 5 percent. You'd expect during times of such low vacancies that you'd have at least one building constructed."

Harshman had been marketing space for the planned Five Points tower, a 192,000-square-foot, 14-story Class A office building. The Wynnton Group, the developer of the project, has instead put the property on the market. Sarasota entrepreneur Piero Rivolta developed plans for a 12-story office building downtown and Tangerine Development Co. had proposed four office buildings as well. None has moved forward.

"From a perspective of houses for jobs it's unfortunate that our downtown central business district didn't have one [new] Class A office building during those strong economic times," Harshman says. "In this financial climate, we won't have a speculative office building."

The interest is instead on multifamily residential construction. "That's a strong sector," says N.J. Olivieri at Horizon Corp., which provides financing for residential and commercial development. "We've seen a pulling in of the horns as far as people acquiring large Class A office buildings and Class A shopping centers. It's tough to find properties. People don't want to sell if they own them. There aren't many being sold."

The Class A office buildings that never came off the drawing boards may represent a lost opportunity in another way, too. City officials recently adopted a revised master plan for downtown development that impacts heights of buildings. "The new code would restrict buildings to five stories in some central business district properties," Harshman says. "That's a significant reduction in height. There is a corresponding loss in value and as a property owner it changes the highest and best use of our central business district property to residential."

In response to the change, the business community has formed a coalition to urge city officials to study the impact of reduced building heights on development. The coalition includes the Association of Downtown Commercial Property Owners; the Argus Foundation, which is composed of 180 presidents and chief executive officers of Sarasota companies and acts as a watchdog for public policy; the Gulf Coast Builders Exchange, with a membership of commercial contractors and developers; the Downtown Association, representing retailers; and the Greater Sarasota County Chamber of Commerce.

"Elements of our downtown master plan are good and good policies underlie it," says Bruce Franklin, president at ADP Group Inc., an architectural firm, and member of the coalition. "It creates a pedestrian friendly downtown and will help revitalize our central core. Some of the implementation techniques proposed in the plan are good.

"Having said that, however, there are issues that we have significant concerns with. One area that needs a serious evaluation is the potential impact of the plan on the economic base of the city. The plan proposes reducing building heights and in exchange having the city build satellite parking garages. Where was the fiscal analysis that says we can fulfill that obligation? And where is the study on the economic impact to see the plan's effect on decisions companies make about relocating to downtown, or values of the commercial tax bases that are fundamental to operating this city? None of that has occurred. That is our focus."

The group voiced these concerns to the city's planning board at its first public hearing for code. "We got no reaction," Franklin says. "We're in a strange time because we're just transitioning into a new city manager. And there's a major initiative to put a referendum on the ballot in March to have an elected mayor. We've had three mayors in less than six months. [At the moment, the city's largely ceremonial mayoral duties are passed among city commission members, depending on tenure.] That's a lot of transition. We're not sure if they [city officials] will step back and rethink [the master plan]. And there's no public way to input into the process at this point. We beseeched them not to adopt it but to accept it as a policy framework and then evaluate the details and understand its impacts to make sure we get all the opportunity we can from it. Members of that coalition are the most talented people in the community. We want Sarasota to be great and successful. Our motivation is pure.

"If our city manager and commissioners take advantage of this input in a positive, proactive way, then I see great things," adds Franklin. "Money magazine called Sarasota the best small downtown and that's true in its potential. We have a lot of problems right now and we're trying to deal with them."

Notwithstanding these issues, "from a residential perspective we've had successes," says Harshman. "The Ritz-Carlton [with 48 residential condominiums on its top nine stories] is moving along handsomely as is Beau Ciel, the condominium tower adjacent to the Ritz."

The Wynnton Group's 240-unit Renaissance high-rise condominium development "is doing very well at over 50 percent sold," Harshman says. "As part of Phase II at Renaissance, a 95-room Holiday Inn Suites is going in to provide a live/work component along the Boulevard of the Arts and Coconut Avenue."