Original Story: 83degressmedia.com
Urban renewal is a now-familiar headline across the United States. After half a century of looking to suburbs, Americans are returning to downtowns en masse, swapping white picket fences for Brooklyn brownstones. Contact a Tampa custom home builder today.
How is this broader narrative of urban transformation playing out in Tampa, a city that largely grew up around the automobile and suburban single family home? One way to understand the change happening locally is to look at “infill” development, a real estate and urban planning term that refers to building and investment in areas that are already developed.
83 Degrees asked three local developers working in the infill space to reflect on a few of the key trends, challenges and opportunities shaping their work today. With custom homes in Tampa everyone should be able to get what they are looking for.
Here’s who they are and a glimpse at what they’re up to:
Ken Stoltenberg directs Mercury Advisors, a two-man outfit currently developing the Channel Club, a 22-story, 323-unit apartment tower with an $80 million-plus price tag in downtown Tampa. Stoltenberg also developed Grand Central at Kennedy, a $145 million mixed-use condo project at the heart of the up-and-coming Channel District.
Scott Shimberg leads Hyde Park Builders, which has designed, built and sold over $250 million in local real estate since 1987. He is a custom home builder Tampa.He’s currently working on the first three single-family homes on a 70-homesite project in East Tampa. Shimberg hopes to price the 3-bed, 2-bath homes near 22nd street at a price attractive to working families. He also has a portfolio of midcentury single-family homes in South Tampa that he’s rehabbing for the rental market, among other projects.
Steve Armstrong, Vice President at Comvest Builders, is building two new infill homes in West Tampa this year, which he hopes to market as an affordable alternative to a South Tampa clientele. Comvest’s ten-person team also has a number of custom home and commercial building and renovation projects underway across the Tampa region.
All agree that infill is a relatively flexible term that finds definition in a wide variety of developments that can be seen across Tampa, at once taking the form of midrise rental apartments popping up in Westshore, new mixed-use towers rising in downtown, posh raise-and-rebuild projects happening lot-by-lot across South Tampa, and single-family workforce homes being built in ex-industrial East Tampa.
Finding the local sweet spots between housing demand and supply
Although each of these developers works in different corners of the market, they collectively point to two demographic variables driving demand for development in Tampa’s urban heart: city-minded Millennials and downsizing Baby Boomers.
“Being close to town and amenities is ever more important,” says Armstrong of the Tampa market, pointing to Seminole Heights and South Tampa.
Stoltenberg agrees. He says that although his clientele includes a fair number of Millennials, it’s the “Baby Boomers who are done raising kids in the suburbs and want to be down here (Downtown Tampa) where they can get to things easier and get to amenities” like concert venues, museums, restaurants and nightlife.
Shimberg reasons that while Boomers were focused on raising their kids in Carrollwood and Brandon, now that they’ve found empty nests they can start to “think about themselves.” Long drives across the Crosstown and yard work become less and less appealing when Tampa’s old neighborhoods can now offer “the ability to have every aspect of your lifestyle within that core area, your restaurants, your cool little shops and bars.” Tampa custom homes gives each type of family what they need.
Developers like Stoltenberg were on the “front lines of those trends,” continues Shimberg. “If you look at an area like the Channel District, years later you see tenfold the amount of development. It’s not just residential – it’s retail too. Development feeds on itself.”
Consumer preferences for walkable neighborhoods and amenities like nightlife aren’t the only dynamics driving how and where local redevelopment, however. Not only did the Tampa real estate market absorb some of the biggest shocks from the 2008 global financial crisis, the local real estate market in many ways played a key role in fueling the subprime mortgage meltdown that underpinned it.
For several years, Wall Street lenders and real estate investors balked at the prospect of investing in new construction in inner city Tampa. Large private equity firms like Blackstone picked up “distressed” properties in bulk and helped to create a local real estate owned-to-rental market that attracted investments from builders like Shimberg.
Today, with more confidence in the local market and the broader economy, investors are warming up to multi-family rental housing, including those amenity-rich, upscale rental mixed-use developments that seem to be sprouting up everywhere. Jeff Vinik’s ambitious plans for the Channel District, backed by Bill Gates’ Cascade Investment, have played a critical symbolic role in boosting investor confidence in the Tampa market for new construction.
That growing investor interest, coupled with low interest rates, is translating to more construction around town and inspiring more to take the “leap of faith” and move to Tampa’s older neighborhoods.
“People are starting to realize that Tampa is a market they can lay claim to and make an impact in. The more that happens, the more folks that look to live down here,” says Shimberg. The idea of moving back to the city? “It becomes a ‘sure, why not?’”
Both of these observations are consistent with the broader themes reflected in the Emerging Trends in Real Estate report released by the Urban Land Institute earlier this year. That report identified other trends like local food systems, climate change and innovations in transportation as drivers of change in cities across America.
Bringing infill to market
Aside from marrying investors with would-be renters and homeowners, developers juggle a unique set of challenges and opportunities in the infill space. Density -- the concentration of development, usually measured in the number of dwelling units per acre -- makes infill development viable, explains Shimberg.
But with density comes higher construction costs, more logistics and planning codes that don’t always favor city-minded development. Shimberg points to parking minimums in Tampa’s current planning code, which were created during a more car-centric era. “If the code requires two 200 square foot parking spaces for each house, that’s 400 square feet that could go towards living space or a granny flat.” Those requirements can impact project costs and undermine efforts to create a more walkable neighborhood.
Many infill sites are also burdened with pollution from previous land uses, or have infrastructure that wasn’t built or maintained with high-density development in mind. That’s where the City of Tampa enters as a partner for development, helping builders to clean up so-called “brownfield” sites and using mechanisms like tax increment finance, or TIF, to help pay for new public infrastructure.
Both Stoltenberg’s Channel Club project and Shimberg’s East Tampa project are in Community Reinvestment Areas, or CRAs, special areas where the city uses TIF to support private development. Stoltenberg says that the 30-year Channel District CRA facilitates between $3-4 million a year in public infrastructure investment in the neighborhood, including a new sewer and stormwater system.
Unlike other corners of the city, South Tampa doesn’t have a designated CRA. Tampa Mayor Bob Buckhorn is currently shopping a citywide stormwater assessment fee proposal to fund fixes for the low-lying area’s growing flooding issues. A combination of increasing development pressures, deferred maintenance and rising seas has put the area’s aging stormwater infrastructure under stress – an infill challenge in some ways unique to coastal Tampa.
“Everyone’s taking the 1950s, ‘60s, ‘70s homes and knocking them down and putting in newer homes. You see a 1,500-square-foot being replaced by a 3- or 4,000-square-foot home on the same plots with a lot less yard, with minimal outdoor spaces, and lots of living square footage,” says Armstrong about South Tampa.
That development leaves less room for ground absorption and strains infrastructure. Ironically, it may be National Flood Insurance Program requirements, designed to improve community resilience to flooding, that is tipping the balance in favor of rebuilds over renovations. NFIP rules limit the amount of money that can be spent renovating existing homes insured through the program to no more than 50 percent of their market value, explains Armstrong.
Much of South Tampa is in the NFIP-designated floodplain, and about 40 percent of all NFIP policies cover Florida flood risk. The heavily indebted program is currently facing significant pressure for reform. Recent tweaks to the program have had major impacts on the affordability of flood insurance in areas like South Tampa, in some ways shaping who can afford to renovate or rebuild their homes, Armstrong adds.
A new report from the global real estate consulting firm CoreLogic -- released just in time for the start of the 2016 Atlantic Hurricane Season -- ranked Tampa the third most at-risk city in America for hurricane-fueled storm surge. The Tampa area’s exposure: nearly half a million homes with a replacement value of over $80 billion.
Taking the longer view
A slew of other reports have also identified Tampa as one of the world’s most at risk when it comes to the related, longer-term impacts of sea level rise making the need for a Tampa custom home builder with experience even that more important. Earlier this year, 83 Degrees published a 7-part series on climate change adaptation efforts underway across Tampa and the broader region, including how the real estate and property insurance industries are evolving to cope with changing climate risks.
Despite these current and emergent challenges, Stoltenberg says he isn’t too worried -- at least not yet. “Two or three feet of sea level rise wouldn’t do anything to our building so long as the public infrastructure around us worked,” he says. “It’s not the newer buildings” that are at risk to flooding and other environmental risks, he says, but “it’s newer buildings in areas with old infrastructure.”
Collectively, this group says their investors -- on Wall Street and Main Street alike -- aren’t screening for climate change risks, at least not yet.
Steve Armstrong hopes to help weave sustainability into more local development. He’s a certifying agent for the Florida Green Building Council and he’s on the board of the Sustany Foundation, which promotes sustainability in the Tampa Bay area. One day, he hopes to build a personal home that can serve as a net zero, low impact showcase for climate-smart local living.
Shimberg, whose father moved to Florida in the 1950s to develop Town ‘n’ Country, is also hopeful that the local development community will evolve to help the city meet the challenges posed by climate change.
While Tampa is “discovering itself,’’ Shimberg says, “the development community is open to ideas as to what might be the right solution. They want to be part of the conversation.”
Even with these big picture issues in view, be it regional transportation and congestion woes, sprawl and growth management, or sea level rise and climate change, Tampa’s inner city construction boom continues. Cranes perch over downtown streets. The Tampa Riverwalk thrives and Curtis Hixon Park overflows during weekend concerts and festivals. Cafes and bars open on to street corners once quiet. And, piece-by-piece, project-by-project, Cigar City rediscovers its urban roots.