Maddux Report - Tampa Bay's Business, Finance and Development Magazine

ST. PETERSBURG SEES A NEW DAWN

BY MELISSA WELLS

"Localized lightning" spurs one medical firm's growth.

In its 20-year effort to revitalize, St. Petersburg has had some bumps, scrapes and bruises along the way. Victories have come over time. The Pier was renovated, then the historic Renaissance Vinoy Resort. The city's nearly two million square feet of office space in 1999 carries a single-digit vacancy rate. Perhaps the most tortured part of the plan involved Major League Baseball. Teams were the subject of intense rumor, then disappeared. In the early '90s the dome-covered baseball stadium was completed and sat there awaiting a dream team that must surely come. But the stadium stood like a forsaken bride at the altar. Teams were announced, but none showed up.

That wound was cauterized two years ago when the Tampa Bay Devil Rays made their appearance at the tate-of-the-art Tropicana Field. And the private sector responded with an investment in new businesses and upgrade of old buildings to cater to baseball fans. As a result, a new, improved St. Petersburg has been emerging. The sports team goal for the city has been met. What's next?

"That's a question this organization has been asking,"says Martin Normile, executive vice president of the St. Petersburg Downtown Partnership. "For the past 20 years it was baseball that has been the driving force for downtown. Now it is the Bayboro campus of the University of South Florida that will have a major impact on the next wave of redevelopment. Expanding it to a four-year institution, growth of the marine science complex, collaborations with All Children's Hospital and the Humanities Council - all of those things augur explosive growth. This is something unique to St. Petersburg. It will have a dramatic impact."

Normile's vision of expanding companies in St. Petersburg is well grounded. The city serves as one of the western anchors of the I-4 High Tech Corridor and has a strong base of medical device manufacturers.

Rob Saron, president of Aaron Medical Industries Inc.,
enjoys the fact that his firm is the nation's largest
producer of pocket-sized cautery devices that run
on two "AA"- sized batteries.
Photo by Timothy Healy

Electricity in the OR
One of those high-growth firms is Aaron Medical Industries Inc. (NASDAQ: BOVI), a manufacturer of electrosurgical and cautery equipment. The company is the nation's largest producer of battery-operated cauterizing devices and last year purchased Bovie Medical - a pioneer of electrosurgical equipment and the "generic"brand of such equipment in operating rooms - from Maxxim Medical.

The dramatic growth at Aaron Medical Industries Inc. has been due to advances in the way surgery is performed. The firm manufactures the electrosurgical devices that are now in demand in operating rooms. One of three makers of such devices in the U.S., its employment has jumped from 40 to 100 workers.

Its dramatic growth during the past three years, however, has been due to advances in the way surgery is performed. Aaron Medical manufactures the electrosurgical devices - such as stainless steel electrodes in the shape of blades, balls, needles and loops and wave-form generators - that are now in demand in operating rooms. As one of three makers of such devices in the United States, the firm's employment has jumped from 40 workers prior to entering the market to its current level of 100. " We're constantly adding staff," says company president Rob Saron. "

Most surgery today is done with electrosurgical equipment," Saron says." It is localized lightning and can stop bleeding. Wave form affects coagulation."

The firm's 28,000-square-foot facility in the Tyrone area is at capacity and a 15,000-square-foot expansion is in the works. " We were using half this space when we moved in four years ago," says Saron, whose company last year had annual sales
of $9.5 million. " Our growth in sales is driving the expansion. We sell all over the world, with the exception of Antarctica.
But 80 percent of our market is the United States."

The Florencia, foreground, and The Cloisters, both on
Beach Drive Northeast, will offer 83 upscale high-rise
condominiums close to St. Petersburg's waterfront
Photo by D.J. Wilson.

Saron anticipates that the ratio will change. " We recently received our ISO9001 certification and CE certification required by most West European countries," he says. " We also have a broader line and expect export sales to increase to 30 percent."

A dramatic increase in sales is also driving a significant expansion at Omega Insurance Services Inc., a firm that provides worker's compensation investigation services for insurance companies. " This business started two and a half years ago in an extra bedroom," says Tim Fargo, Omega's founder and president.

In the interim Omega, which provides services throughout the southeastern United States, has increased to 76 employees (many are investigators working from home offices) and posted annual sales of $2.2 million. Fargo estimates that this year's sales will surpass $5 million.

The demand for Omega's services is underscored by " fraud that has cost property/casualty insurers more than $60 billion over the past ten years," Fargo writes in his surveillance manual. In such an atmosphere, expansion seems natural. " We're entering California, Arizona and Nevada. Our goal is to be licensed in every state by the end of the year."

In October, Omega will become one of the first tenants in the newly renovated Bay View Tower, the former William C. Cramer Federal Building on 1st Avenue South. The firm will occupy 7,200 square feet, tripling in size from its current office at downtown's 501 Building on 1st Avenue North. Fargo chose St. Petersburg as his company's headquarters because of the proximity to his home. "

The beauty of St. Petersburg is the lack of traffic congestion," he says. " There's no reading novels on the way to work. My employees can live in a nice neighborhood and be close to work."

Another company that has recently tripled its office space is Elevator Interiors. The firm, which specializes in creating decorative interiors in elevators, occupied a 70,000-square-foot building at 43rd Avenue North along U.S. Highway 19 earlier this year.

"The city government and the Pinellas County Department
of Economic Development have been extremely helpful in getting
rid of red tape. We like their aggressive attitude toward attracting business."
-James MacDougald, president, Ceridian Benefits Services Inc.

First step for Ceridian?
The shift along U.S. Highway 19 is also occurring for Ceridian Benefits Services Inc. (NYSE:CEN), formerly known as ABR Information Services. Acquired earlier this year by Minneapolis-based Ceridian Corp- oration for $750 million, the benefits administration firm has outgrown its space in Palm Harbor and purchased the 50-acre former headquarters of Florida Power Corporation in south St. Petersburg. An ongoing $30-million renovation of the 400,000-square-foot facility should be completed by the end of the year. "

We scraped the plaza to bare concrete and started over again," says James MacDougald, Ceridian's president. " It will have a fountain in a clear pool and more trees. The campus has a daycare facility, employee cafeteria and jogging trails. And we'll conduct higher education courses on the premises."

MacDougald says that the only changes in the company since Ceridian acquired it are that " it has learned about the St. Petersburg area and is looking for other applications to move to our new facility."

An expansion that will add 80 rooms is in the works at
the Heritage Holiday Inn hotel on 3rd Street North.
Photo by D.J. Wilson

Ceridian has 12,000 employees in subsidiaries located throughout the nation. "

They like the city," he says. " It's pretty and a good place for attracting people. It's booming, obviously, residentially and commercially, and the population is going from a base of people that didn't work (retirees) to a population of younger people who like to work close to home. And we can draw workers from Bradenton. We're excited about the potential for growth of our work force in that area."

Another factor in Ceridian's favorable view of St. Petersburg has been the local government's " business-friendly" climate. " The city government and Pinellas County Department of Economic Development have been extremely helpful in getting rid of red tape," MacDougald says. " We like their aggressive attitude toward attracting business."

Ceridian Benefits Services will move 1,000 employees into its new headquarters. " Our St. Petersburg facility has room for 2,000," adds MacDougald. " And we'll keep our building in Palm Harbor, which has room for 500."

This move of a large mass of employees to St. Petersburg continues a trend that has occurred over the past few years. Bankers Insurance, Florida Power Corporation and Andersen Consulting have accounted for much of the absorption that has reduced the downtown vacancy rate to 8.5 percent, as reported in the July 1999 Maddux Report office analysis.

"We bought the (former William C. Cramer Federal) building because
it's in a terrific location in a tight office market in need of more space."
- Joel Cantor, president, Gulf Atlantic Real Estate

Upgrade at Bay View Tower
More Class A office space - 171,042 square feet of it - is on the way as the conversion of the William C. Cramer Federal Building to Bay View Tower continues. Tampa-based Gulf Atlantic Real Estate earlier this year purchased the seven-story building at 144 First Avenue South for $3.9 million and is investing another $3.5 million in renovations. "

It will have fine lobby landscaping with an art deco motif," says Joel Cantor, Gulf Atlantic's president. " The lobby and common areas will have a lot of white with blue Brazilian granite flooring and custom stone walls. The building has been wired by GTE with fiber optic telecommunications lines, making this St. Petersburg's first SmartCenter. It will give small companies access to high-speed services that normally only large companies can afford."
Extras that Cantor inherited in the former federal government building include a dual electrical system, which means there is uninterrupted power to the building at all times, and a 3,000-square-foot, raised-floor computer room complete with its own dedicated air conditioning system. "

The building is 20-percent preleased," Cantor says. " Baycare is putting a rehabilitation center on the first floor with a 12,000-square-foot workout area. They'll have a separate entrance. "

We bought the building because it's in a terrific location in a tight office market in need of more space. It provides proximity to the Yacht Club and the Pier and is surrounded by four parking garages. And it has views of the water from the third floor up."

Looking for more Class A
With such a tight office market, the city government projects that developers will soon move to fill the need. " People are �kicking the tires' about bringing more Class A office space downtown, but there have been no submissions yet," says Joseph Johnson, the city's director of economic development. " It's coming for sure. We'll see at least one additional Class A high rise in the future. The land assemblies for a high rise are available and the demand is there. The issue is timing and quality of development. The mayor and the city council are looking for top-quality developments. Anything less than Class A or four-star is unacceptable."

"We'll see at least one additional Class A high rise in the future.
The land assemblies for a high rise are available and the demand is there.
The issue is timing and quality of development."
- Joseph Johnson, director of economic development, City of St. Petersburg

Echelon International Corporation, developer of downtown's NationsBank Tower, this year completed the McNulty Station parking garage, adding 716 parking spaces to the downtown count, and providing retail space for Midtown Sundries restaurant on the first floor. It has future plans to build 110,000 square feet of office space atop the eight-story structure, when the market is right.

Condo fever
While it may be some time before cranes reappear at McNulty Station, they have been cranking away at the 21-story Florencia, one of several condominium developments appearing in St. Petersburg. This high-rise structure, developed by JMC Communities, will provide 51 homes. "

We're drawn to the site because we're in a downtown environment yet on the water," says Steve McAuliffe, the firm's vice president of sales and marketing. " Each home has a view of the water. Very few areas across the nation have such a great location that is easy walking distance to many restaurants and stores."

Echelon International Corporation's McNulty Station added 716
parking slots and space for the new Midtown Sundries restaurant.
Photo by D.J.Wilson

The 21-story condominium, at 80 Beach Drive Northeast, sits on the site of the former historic Soreno Hotel. " We've worked hard to pay tribute to the Soreno in our architecture," McAuliffe says. " The building will have artifacts from what was the first million-dollar hotel in St. Petersburg and incorporates features such as archways and fountains that were at the Soreno." The structure should be completed next spring.

Before then, the Cloisters is opening its 32-condominium tower at Beach Drive and Third Avenue North. A high-end deli and jewelry store will occupy the development's retail component. " We're more and more excited about downtown St. Petersburg," says Bob Strickland, president of the Cloisters of Beach Drive Corporation, " especially with BayWalk breaking ground."

Vinoy Place Development Group Ltd. is ready to break ground on its residential component adjacent to the Renaissance Vinoy Resort. " Vinoy Place consists of 10 two- and three-story homes fronting on Fifth Avenue and 42 condominium homes and a penthouse in each of two buildings," says Craig McLaughlin, a principal in the company. " The market reception has been phenomenal, proving that downtown is a residential address. We're fortunate to be located on a point of property surrounded by water."

McLaughlin adds that, since each home is a corner unit, " owners will have wrap-around views of Tampa Bay, the Vinoy Marina and downtown St. Petersburg, which is phenomenal with all the lights at night."

A unique feature of the 10-story condominium homes is the elevator system. " The elevators open directly into a private lobby area, even though there are two homes on each floor," McLaughlin says. " The homeowners can decorate their lobby as part of the home. Only those people with keys will have access to those floors."

The Promise of BayWalk
With all these new residences under way, the retail industry is responding in kind. The Sembler Company, a St. Petersburg-based retail development company, is ready to break ground on BayWalk, a 150,000-square-foot, open-air retail plaza anchored by an 84,000-square-foot, 20-screen Muvico Theater. The amenities at the theater - state-of-the-art sound technology, stadium-style seating and wall-to-wall curbed screens - tend to draw movie buffs from as far as away as 25 miles instead of the five-mile industry standard, according to Sembler research. If so, it will bring even more consumers downtown.

With this concentration of entertainment venues - BayWalk and the Florida International Museum - in the central business district (Second Avenue and Second Street North), the city government has not been slow to address the need for additional parking. Plans are under way to build a 1,300-car parking garage on property adjacent to the center. " A pedestrian promenade will lead to BayWalk," says Johnson.

Sembler projects that the economic impact of the $38-million development will be 500 new jobs, a $1.89-million increase in annual sales tax and just under a $500,000 increase in annual tax revenue for the city.

The former William C. Cramer Federal Building will become
Bay View Tower with 171,042 square feet of Class A
office space when renovations are completed in October.
Photo by D.J. Wilson

Why build downtown? " The opportunity is there," says Craig Sher, the company's president. " There are a lot of cities around us starting to do this, but our major reason is it's our home town. We've been in this area for over 30 years and want to do something for the community. This project is in scale for downtown and hopefully will be the catalyst for further development."

"The opportunity (to develop BayWalk) is there.
The project is in scale for downtown and hopefully
will be the catalyst for further development."
- Craig Sher, president, The Sembler Company

Meetings at the Vinoy
Another project exciting economic development officials is the new conference center under construction at the Renaissance Vinoy Resort. " This conference center will attract additional business travelers and business meetings downtown," Johnson says.

The first event at the 11,350-square-foot conference center is scheduled January 27. The Palm Court Ballroom has been designed in the resort's Mediterranean Revival style and will also have a 5,000-square-foot " prefunction" space. " Its 22-foot ceilings and 12-by-12-foot doors will permit use of the center for the display of automobiles and boats," says John Williams, the resort's general manager. " This will be an ideal setting for corporate meetings. Employees can enjoy our golf course, tennis courts and marina. They can do anything from golf tournaments to sailing lessons."

Yacht renovators
It has been love of sailing and the marine industry that has lured Bill Maker and Gary Baker, owners of Renovators Yacht Company Inc., back to their roots. The partners, natives of St. Petersburg, are building a multi-million dollar marine facility on Salt Creek in the south section of the Bayboro district. " We originated our company in Tampa six years ago and moved to St. Petersburg two years ago," Maker says. " We found a piece of property that was a sore spot. We were familiar with the property and had watched it for years. Our intentions are to build a nice headquarters and expand with a dry storage facility."

The firm restores vintage yachts - Bertram, Hatteras and Blackfin, for example - and installs state-of-the-art power and electronics systems. " These boats are equal to or better than a new boat," Maker says. " Our customers want the character of the older boats, with the blend of woods in the interior, and current-day amenities. They do get tired of people �oohing and ahhing' but a great sense of pride comes with ownership of these restored vessels."

Work is under way to expand the curriculum at the
University of South Florida's Bayboro campus to
a four-year undergraduate program.

Bayboro expands
The " oohs and ahs" may also be heard at USF's Bayboro campus, now that so much new construction is under way. The University of South Florida and All Children's Hospital have joined together to build a 50,000-square-foot, $12-million pediatric re- search center, due to be completed next summer.

Research activities initially will include immunology, allergy, molecular genetics, cardiology, oncology and developmental pediatrics.

" Other disciplines are being developed," says Gary Litman, Ph.D., USF Hines Professor of Pediatric Research. " This is a unique circumstance in academic medicine today. Rather than follow the national trend of cutbacks in research, upper management at All Children's Hospital anticipated this happening years ago and took action to secure sufficient funding so that these programs can be sustained for a long period of time. Investigator physicians can focus their efforts on research that can bring basic discoveries to aid in the care and management of patients more effectively."

Other developments at USF include the 13,000-square-foot, $5.1-million Florida Center for Teachers, a project in partnership with the Florida Humanities Council which will provide continuing education programs for teachers throughout the state.

Work is also under way to expand the university's curriculum to a four-year undergraduate program. "

This requires approval by the state's Board of Regents," says Dean Bill Heller. " We believe the board supports making the decision to expand because the campus is located where there is demand and it has the capacity. It would give students in Pinellas County access to a four-year campus within the county."

The U.S. Geological Survey has plans for expansion of its programs at Bayboro and is sharing its facility with the USF Marine Science Center. "

They'll utilize about 3,000 square feet to house the microelectromechanical systems here," says Lisa Robbins, chief scientist at the USGS. " This is a fairly new program for USF and we have a joint interest in facilitating this project because of our needs for use of microelectronics in our equipment offshore and in the coastal area. We have had a lot of interchange between our facility and the USF Marine Science Center for 10 years now."

Although the USGS has no immediate plans to expand its facility, which was rehabilitated in 1989, Robbins does see future programs coming to St. Petersburg instead of to USGS facilities in other parts of the nation. " We're the newest facility and have been expanding a lot because St. Petersburg has been a low-cost area," she says. " This is a key facility in terms of expanding the program."

That type of expansion, Robbins explains, is the addition of staff from other divisions of the USGS at St. Petersburg. " Our field center is part of the geologic division," she says. " We're adding three or four people from the biological resources division this fall. We're looking at the feasibility of expanding the center modestly initially, and as things become more evident later on, we will expand greatly."

The USGS has two other divisions: water resources and mapping. The work done by the geologic division, the main focus of the St. Petersburg field center, is coastal erosion and reef demise. " We have projects in Louisiana," says Robbins. " Our reef work takes us to Hawaii and the Caribbean. We have state-of-the-art high-tech equipment to measure elevation and topography of the coast to see how it changes over time. Our expertise lies in hurricane hazards and coastal erosion as well as wetlands assessment."

"We have a joint interest in facilitating the (expansion of the USF Marine Science)
project because of our needs for use of microelectronics in our equipment offshore
and in the coastal area. We have had a lot of interchange between our facility and
the USF Marine Science Center for 10 years now."
-Lisa Robbins, Ph.D., chief scientist, U.S. Geological Survey

Yet another key expansion in South St. Petersburg is under way at the Poynter Institute. The 31,000-square-foot training center for journalists will add 26,000 square feet in a $6.3-million project designed by Jung/Brannen Associates, the architects of the original building.

In the same general area, the Betty Jones Spa & Salon is due to break ground any day. This 30,000-square-foot, $3.2-million project is to be a three-story facility that will house a spa and fitness center as well as office, retail and restaurant space. HBJ Investments and Betty Jones, mother of baseball's Gary Sheffield and aunt to pitcher Dwight Gooden, are part of the ownership group.

The city is also investing in the Bayboro District with improvements to infrastructure. A $4-million streetscape project and a stormwater removal project should be completed in the summer of 2000.

Hotel modernization
In the midst of all this new construction, older structures are also being updated. The St. Petersburg Hilton hotel is still being renovated and the Heritage Holiday Inn is adding 80 hotel rooms as well as a Denny's restaurant designed in a classic '50s style.

The 111-year-old Hotel Detroit at Jannus Landing, St. Petersburg's first hotel, is undergoing a $1.5-million rehabilitation into 54 condominiums. Jannus Landing Ltd., a partnership of local investors, bought Jannus Landing and the hotel for $3 million last December. Florida Five Star Properties is buying the Hotel Detroit from the partnership. "

We figure St. Petersburg is on its way back," says Ed Jackson, the firm's president and co-owner of Jannus Landing. " This will be an income-producing property that will be run like a hotel. It will have a front desk, valet service and nightly check in. Signature suites will be named after famous individuals who stayed there - Mae West, Babe Ruth and Ernest Hemingway. And it will be decorated in that time period. We are preserving the bird-cage elevator, the oldest in Florida."

The city is also investing in the Bayboro District with
a $4-million streetscape project and a stormwater removal
project, which should be completed in the summer of 2000.

The Ponce de Le-n Hotel, built in 1922 at 95 Central Avenue, has been renovated and the Colonial Bayfront Hotel at 126 Second Avenue Northeast, another 1920s property, reopened earlier this year after conversion to a bed-and-breakfast.

Preparing for JFK
St. Petersburg's cultural life, it can be argued, was given a lift by the opening of the Florida International Museum in 1995. Last year's Titanic exhibit drew record-breaking crowds. "

You have to go back to the Monet exhibit in Chicago in 1995 to surpass the success of Titanic," says Wayne Atherholt, the museum's marketing and sales director. Despite disappointing attendance at the last exhibit, Empires of Mystery, to date more than two million people from throughout the United States and more than 100 nations have visited the museum's exhibits.

Currently preparations are being made for the next exhibit, a collection of more than 500 artifacts from the life of John F. Kennedy. The exhibit is to open in November and, when it closes next May, will be converted into a permanent display. "

Our advance ticket sales are comparable to advance sales for Titanic," Atherholt says. " We will use the president's voice as the narrator as much as possible."

A new venue for the performing arts opened in St. Petersburg this year with the conversion of the former First Church of Christ Scientist to a theater. The Palladium is a mid-size hall with 850 seats. " We're dealing with activities that mainly attract groups of 300 to 600," says Paul Stavros, the theater's managing director.

Seventy-seven years after it was built, the renovated
Ponce de Le-n Hotel reopened early this year
Photo by D.J. Wilson.

With all this private-sector investment in St. Petersburg, the city government is also working on improvements. " The city has approved a port plan," Johnson says. " The Albert Whitted Airport terminal is being renovated and will have 60 new hangars. And Al Lang field has had a $2-million renovation. Florida Power is its signature sponsor. With all the development occurring downtown, we anticipate more. We'll see housing in mid-range prices developed at the western tier of downtown."

And what about those Rays, the Major League Baseball team the city wished for for so long? They are still the main act among all the downtown activity, although attendance has fallen away dramatically this year, averaging only 21,000 a game during the first half of the season. But sponsors are sticking with the team and the team's owners are trying creative approaches to lure fans to the stadium.

Russell Sloan, president and CEO of the St. Petersburg Area Chamber of Commerce, isn't worried. " This drop in attendance is to be expected," he says. " The first year of anything is like a grand opening, attracting curiosity. This is an expansion team. When it builds to championship status, that's when the crowds come."

Sloan also expects crowds at BayWalk. " This will give downtown an after-five attraction every day of the year," he says. " Throw baseball into the mix and that traffic creates a catalyst for other activities. This is what we needed for economic development to come full circle downtown."