Tampa Commercial Real Estate | Florida Commercial Property

Attendees:        Eric Odum with Ken Evans, Principal at Evolution Advisors

Date:                January 9, 2012

Subject:            The Market Minute

EO:      Good afternoon and welcome to today’s Market Minute. I’m Eric Odum, principal Real Estate Broker for Net Lease Commercial Advisory. Today we have Ken Evans with us. Ken is a friend of mine now, but we originally met three years ago. Ken came to us for office space and it was the first time I had worked with somebody in his industry. Ken has been in technology for 30 years and his expertise lies in technology development and product development (software). He’s from New York originally, he has worked in Atlanta, he was part of the big Seattle Tech scene, and now he’s in Tampa. Ken was one of the first people to bring the ‘co-working‘ concept to the Tampa Bay area and that’s what we’re going to talk about today.   So, welcome Ken, appreciate your time with us.

EO: So, you originally came to Net Lease to talk about office space and I was unaware of the issues affecting the Tech industry at the time and how technology companies were dealing with office space. I think the truth is, today, the biggest issue is that landlords do notknow how to adapt to the tech industry because they have very distinctive needs, don’t they?

KE: They do, and any small business has distinctive needs but by the very fact that technology companies are volatile, they also experience very high growth. When they catch on, they grow substantially in size. They have little need for distribution, warehousing, and manufacturing but in so far as staffing, they must expand very quickly when things do catch on. So with regards traditional office space as we know it, and projecting how big the tech company is going to be in the next few years, that scenario really doesn’t apply in the technology industry. Most of the time in the tech industry, people get together and you find a number of companies under 0ne roof until one of them spins out, which is one of the benefits of co-working. People work together in an office environment, the idea catches and the company and founders spin out and do their own thing.

EO:      So if I understand correctly, essentially what happens is; you have an individual, he has an idea, the guy in the garage, the Steve Jobs type, and he graduates. He/she graduates and then they collaborate with other people. They then go the next step and go from maybe two or three people in a small office space, to 20 people working for them in year two and to 100 people working for them in year three.

KE:      It can go that way, those cases are unusual – not everyone is going to be a Google or a Facebook, but they do grow very quickly when things catch on because the market takes over. If you don’t keep up with market demand, your competition will step in and take that share, so you do have to grow very quickly. Generally nowadays, tech companies start virtually, especially in the last couple of years, because it means you don’t have to invest in infrastructure, practically everything you need is available virtually and on line, as in on “The Cloud”. So all you really need is people. Most of the time it starts with people working remotely in their garage or in their living room.

EO:      And those are people who can’t afford to sign a three year lease, right? It’s just impossible.

KE:      No, they can’t and they don’t need to. You don’t want the fixed costs when you’re starting a new business. I’ve done a number of workshops and a lot of work with emerging tech companies and that’s the one thing you want to avoid – a lease and office space is a fixed cost. What you need to be doing is plowing any capital you have, whether it’s maxing out your credit cards or spending a little bit of seed capital from an investor,  into the development of your product and your customer.

EO:      So let’s talk a little bit about co-working because you originally introduced me to the idea. Tell me about what stage co-working is typically suited to the company development process.

KE:      We see it for all stages of the development process. We were actually doing co-working when I came to you three years ago. We were doing co-working on an ad hoc basis in coffee shops where we would get together for a mini workshop or session, and people could come and discuss what challenges they had, what they were working on and ask for help from other people in the tech community.  Co-working appeals to a broad range of people, from the individual that’s working on the idea, to the person that is actually growing the business. This doesn’t necessarily mean that a business owner is adding staff because people don’t add staff like they used to. They’re not adding full time employees; for example W-2 employees. They are adding 1099 freelancers because they have project based work. They are designing new web products, doing graphic design work, or web programming so they d0n’t need a full time hire. So, again, avoiding the fixed cost is a key component.

EO:      Let’s back up a bit here and define co-working. If you’re a landlord and you’re listening to this, how would you explain co-working to them?

KE:      Co-working is an office space where people can get together and use a desk for a day. That is probably the best way to describe it. Co-working started out in New York and the Bay Area at pretty much the same time….

EO:      San Francisco Bay Area

KE: …yes, and a creative agency, a marketing agency, or ad agency would have extra space and would work with a lot of freelancers and web developers, and they would rent them a desk. This would cover the cost of that desk, allow someone to come in and use the facility, and that agency could use their capabilities and work side by side with other people working on similar projects. That creation of critical mass, the gathering of people all doing similar things, creates a creative spark for people to work together and it’s better than working alone. Sitting at home on your couch with your cat doesn’t really do much for the creative process.

EO:      And it’s happening now at places like Panera Bread or Starbucks.

KE:      It happens at Panera around the country and at Starbucks, but those businesses have pulled back on catering for people that are keeping a seat for hours on end. Starbucks and Panera have closed off their Wi-Fi accesses during lunch – they are really trying to push people through and get traffic, so those coffee shops are not as friendly as they used to be. So people are moving to other locations where they can get together, which is why co-working has cropped up in a number of different areas.  Its been very popular in dense urban areas like New York and San Francisco, but really it’s happening all around the world.

EO:      Well what was interesting to me was the first time you introduced me to co-working, I said “that’s not going to work – it’s not viable” (for the landlord), but then my phone started ringing and everybody was asking for spaces to ‘co-work’. There were so many unemployed people, and people that had been laid off. They were all trying to get back to work instead of hanging around in their pajamas all day. And the vast majority were advertising people, marketing people, attorneys, tech people, it was amazing! You also had the landlords in the Tampa area, accustomed to getting $23/sq. ft on their space; and all of a sudden you had all these displaced workers and suddenly there’s a disconnect because the workers were let go and vacancy is increasing. The workers are still present….. Just not with the same company. You have to figure out a way to get them back into your space.  Why don’t you talk about that a little bit? If you’re a landlord, how do you handle all these 1099 workers?

KE:      The way you handle the displaced worker is, if there’s a migration – and this doesn’t apply to people looking for jobs, or people out of work – but those that have made a shift from being a W-2 worker to being a 1099 (a freelancer), when they’ve made that shift, they will need a work space, but they’re not going to step up to a lease because of the financial commitment. If a landlord can only provide a space of 5000/ sq.ft or more, it’s completely impractical for the small business owner. In fact it’s no longer practical for the Tampa Bay Area, because we don’t really have employers of that size any more (moving to the area), so it’s just not practical for a workforce that has moved from predominantly being W-2’s to being 1099’s. Freelancers are going to want very flexible terms; and flexible office space. Co-working is one of the things you can do to achieve that, Executive Suites is another, and then there’s a middle ground between executive suites, which costs $800 to $1,000 per month, and an office space with open areas, so essentially, the work force is driving a new type of office adoption. So it’s really not about the landlords adjusting to the number of people, but rather to new businesses, the solo entrepreneurs/two person shops that don’t require a traditional lease.

EO:      It’s interesting you bring this up, I think it’s something that really should have started happening in 2000. It’s not an issue of a bad economy, it goes much deeper than that. Technology now allows people to work from home or out of the traditional office environment, and to say “Ok, I don’t need employees in my office 24/7/365.” I can use a freelancer and communicate with them just as effectively. So there is definitely a changing work force and technology has allowed that to happen (with Skype, email, etc.).  So it really comes down to one issue [from a landlord's perspective] – they need to figure out how to adapt to this change. It’s not going to go back to the way it was in 1985.

KE:      That’s right.  And this has been coming for a long time. In 1994 Compaq got rid of a lot of their sales force and said ‘you go work from home, you should be outbound x number of days per week.’ So they got all their sales people together and said ‘we’re going to build you home offices, and we expect you to be on the road.’ A couple years after that, IBM followed suit, they did what was called “Hoteling.” They had an office where people could have a desk for a day, but the sales team didn’t need to go in to the office every day, so IBM offices shrunk dramatically. That was then followed by the ‘telecommuting‘ idea in the commercial sector. I think the Government is trying to encourage this practice – it has done a significant number of studies and put programs in place for their employees to telecommute. They don’t want people in the office and they don’t want people on the roads.

EO:      You see law firms here too…

KE:      Absolutely.

EO:      …where associates are sharing office space and the lawyers only go in when they need to meet with a client. At Net Lease, I get those types of requests all the time. It’s really remarkable seeing the pressure on the downtown Tampa market because these law firms have shrunk in terms of space requirement. Law firms used to be enormous consumers of space because of the paper work they had to store and the amount of associates they had to accommodate. They are now finding ways to economize. So it’s even happening in law firms as well. The Tech industry has always been a little bit more on the edge, but you’re seeing the more traditional types of business follow suit.

KE:      The footprint has shrunk across all industries. Tech has done it, law offices, accounting offices, they’ve all done it; they just don’t need to have a lease or a formal office.  You can start in your living room. At some point you’re going to want to work with other people and that’s where co-working and executive office suites come in. Tech companies are not going to consume the same amount of office space they traditionally did.

EO:      We are actually sitting in a co-working space today. Do you want to talk about that a little bit?

KE:      We are sitting in Tampa’s newest co-working space, a space started by Tampa Web Ventures, or Tampa Bay WaVE. They have approximately 40 small tech companies that are all members of this organization. It’s a peer group, a support group of people that are all building web ventures together. They meet on a monthly basis and support each other and share ideas, war stories and their advice on how to do certain things. They were able find a landlord willing to give them some space to take their companies to the next level. So as part of that, there would have been some co-working involved. The organization is not just made up of companies, there are individuals as well: web designers, web developers, freelancers etc., that will be using this space to come in, rent a desk for a day, sit on a couch to enjoy free Wi-Fi and some coffee and just add to the critical mass that this type of space caters for, without having to go to a Panera or somewhere like that. And it’s not just about a place to sit, it’s about sharing ideas and collaborating and, as we’ve seen with co-working, a lot of good ideas, products and companies have spawned from that creative critical mass.

EO:      So essentially, just to summarize, for those landlords out there wondering what to do with their space, not every space is going to be ideally suited for co-working, but co-working definitely suits that type of creative 1099 individual that needs to collaborate with somebody. It could be a win-win situation for both landlords and the individual entrepreneur alike. So if I’m hearing you properly, that’s the direction things are headed in.

KE:      Well the market has adjusted down, so really, if the market is a lot of solo entrepreneurs, whether they are tech employees or attorneys, the market has shifted regardless. This has happened across the country and around the world. It has certainly happened in Tampa, where we are heavily dependent on the service industry, tourism, and construction – that market has shifted significantly, so a lot of those people working for big companies, or for medium size companies are very different to solo entrepreneurs because entrepreneurs are not going to be looking for traditional office space, leases, and the traditional footprint. So really my advice to your clients is to adjust down to the market because that is the growth curve going forward.

EO:      Ken, appreciate having you today, appreciate your input. I know you’re out there every day trying to help the cause of the entrepreneur and we appreciate your time today.

KE:      Happy to be here. Thanks.

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Attendees: Eric Odum with Martin Gramatica and Terry Hunt

Date: October 24, 2011

Subject: The Market Minute

EO: Good Afternoon! Welcome to Market Minute. I’m Eric Odum, I’m the principal broker for Net Lease Commercial Advisory, and today we have two very special guests with us, and I’d like to just go ahead and roll right into it.. Terry Hunt, Terry is a local developer; I think you’ve been in the market for about 30 years now developing primarily industrial buildings, is that correct?

TH: That is correct.

EO: Great to have you here.  I really appreciate it. And of course the next person probably doesn’t need much of an introduction….. Martin Gramatica, the former place kicker for the Tampa Bay Buccaneers. Really happy to have you here today.

MG: Glad to be here.

EO: How long has it been since you stopped playing?

MG: Two and a half years now.

EO: Two and a half years. And so since then, what have you been up to?

MG: Well I started a green energy efficient, pre-fabricated construction company with both of my brothers, so that has kept us pretty busy. Bill and Santiago are both working with me.

EO: Bill and Santiago both working with you…..so the three amigos are together in business.

MG: Amigos every now and then.

EO: Terry you were working on this project with the Gramatica brothers.  How did you get together on this?

TH: Well, probably three years ago now, Deborah Tamargo, a long time Commercial Realtor friend, brought those people to see me.  The humor around our office is that Deborah brought them in to buy a building from me and two weeks later, I throw away $18,000 worth of prints that were ready to go for permitting.  We redesigned the office where I’m right now, my  new corporate office, and two warehouses that we were ready to break ground on and adopted his [Martin’s] product for the exterior of the building.  We never looked back. It was the best $18,000 I’ve ever thrown away.

EO: Just to get it straight, you were ready to go, and you had previous plans and you met Martin.  The product you saw as beneficial for you, so you basically trashed the entitlement work you’d already done on it and started from scratch.

TH: That’s it exactly right, and it gave us an opportunity to be a little bit different.  I think in the economic world that we’re in, somebody, a developer, a realtor, anybody in the real estate business wants to have something a little bit different and this product that Martin brought to the table, I’ve seen where it would give us an opportunity to be different.  It’s really worked for us. We are different.

EO: You guys brought some samples here, Martin do you want to explain a little bit about what this is?

MG: Sure, the core is closed cell polystyrene and it’s skinned with two fiber cement boards. The 100% main benefit of it is the energy efficiency.  With Terry’s wall we have an R32.  We have an 8” wall, R32, where a block wall would give you an R value of 1. So, right there increases it tremendously.

EO: Explain R values, what exactly does that mean?

MG: That’s the insulation value of the product, so from an R1 to an R32 on the same thickness of panel.

EO: So it’s almost like a Styrofoam almost…

MG: That’s basically what it is. What we tell people is, you are building an igloo cooler on the shell of your building.

EO: But the exterior of it is a very hard substance, a very hard material.

MG: That is the fiber cement board; most people know like a Hardie Board.  We use Nichiha,  which is the same standards; it’s just a little greener. By using (Nichiha), you have the hard skins on the outside, and the foam in the inside. There are some competitors they put the cement in the middle of the foam and have the foam on the outside, so that makes it a softer product. This way, you never get to the foam. Termites won’t eat it, because they won’t eat the foam, they won’t eat the glue that we use, and they definitely won’t eat the fiber cement. We used all steel track in Terry’s building, so obviously they won’t touch any of that. So basically, Terry’s got a 100% termite proof building on the shell and obviously energy efficient.

EO So, let’s talk about strength a little bit, because it’s important in the state of Florida.  You’ve got the hurricane situation.  How does this substance hold up with  hurricanes, for example?

MG: We had the whole product tested for Miami-Dade, and also for Florida product approval number. The standard system that we sell starts out at 130 mph from there you can engineer it to about 200 mph. So anywhere in the range; we have a house going on the water right now that’s 170. And it’s the same panel you can use for a 100sq. ft shelter that we sent to Haiti, to 10,000sq. ft. like Terry’s buildings, or even his corporate office.

EO: How does that compare with a concrete block?

MG: On the price or the energy efficiency?

EO: No, on strength?

MG: Oh, on strength, we are stacking strength 5 times stronger than block, and then on the projectile where they shoot the 2×4, we are the only company that has passed the Miami-Dade standard with a fiber cement board, where they shoot the 2×4.  Some have passed it with metal skins, but the difference with that is, the metal skin tends to sweat. It’s kind of like a coke can, where the fiber cement does not sweat so it won’t peel your stucco off.

EO: Well, Terry, the building we’re shooting this video in is made out of this material, correct?

TH: 100%.

EO: Tell me a little bit about the building. This is the thing that struck me, how many sq. feet again?

TH: In our Corporate Office?

EO: Corporate office.

TH: 2,000 sq. ft.

EO: 2,000 sq. ft and the dollars and cents of it. The most expensive energy bill you’ve had was in the summer like most of us, right?

TH: Absolutely.

EO: And what was that on a 2,000 sq. ft. structure?

TH: We’ve never had a bill over $165.

EO: In the winter it’s running?

TH: Well, the unique thing in the winter time it’s running in the $70-$80 range, and we never turned the heat on….only one time this winter. The refrigerator and computer towers throw enough heat out.  The lowest temperature it ever got in here was 68 degrees.

EO: Over the course of time, over a year, it sounds like it comes out to about $100 average over a year, right?

TH: Well, everything’s relevant to that, but I think the number would be about a 50% savings from what your energy bill is. My house bills are considerably more than this, and obviously not made out of this product. I’ve got 5 or 6 times that much with my house and I’m paying $300 and $400 (per month) on that particular bill right now.

EO: That would make sense. Commercially the average in Tampa is about $1.50/sq. ft. annually for electric costs, and you guys just on this building are running in the neighborhood of about .75 to $1.00/sq.ft. So that would be about right then.

TH: I hired an engineer when we did one of these commercial buildings and made him use all of Martin’s specs for the product and the A/C system was cut more than 50%. They wanted 11 ½ tons if it was conventionally done and they did it for 6 tons. They wanted to build it with 5 (tons), but I had them bump it just to be conservative.

EO: Now what is the product called?

MG: SIPS – Structural Insulated Panel Systems.

EO: Your development here is the United Business Park off of Hillsborough, and you’ve actually already constructed warehouse facility out of the SIPS product. Correct?

TH: We’ve constructed two 10,000 sq. ft buildings, and the ability to finish this product off in a warehouse atmosphere is very unique. You don’t have to put anything on it – you finish it like drywall – I’ll show you. You’ll think it’s drywall but it’s actually this panel, taped and mudded and for a warehouse look, it’s very, very pretty.

EO: Terrific. Now in terms of LEED, that’s the buzz word in construction right now, and that seems to be the standard. Are you guys LEED certified?

MG: Our product is, yes.  We get everything from within 500 miles. So in order to get a LEED certified building, the best and quickest way to get to that point system that you need to get to is by doing a SIPS shell.

EO: So I think we have a pretty good idea now of what the base of the product is and how it’s working. Why don’t we go outside and take a look a little bit further on what you are working on.

EO: So, here we are in a SIPS building, and I think it’s probably been a month the first time since I came out here and it was – this is an air conditioned space – but the first time I walked in here it was not air conditioned.  To me it was notable, because it was hotter than Hades outside, and you walked into the warehouse and it still felt like it was night, because it trapped the (cool) air inside. Why don’t you tell us a little bit about this space, Terry…. what’s in it and how the SIPS is working here.

TH: Well, we built this building for Keith Rucker, and Keith owns Quality Power, a very large power lawnmower dealer, probably the largest in the Southeastern US. And the reason he’s here is because of the SIPS product.  We gave him an energy efficient building, and when I was giving you those numbers before, that’s the engineer that was in this building that did it. The product finishes off like drywall, as I told you before, and it’s just a very easy, friendly product to work with. You can do anything you can do with drywall and all this bottom stuff is just adhered to the SIPS product. There’s no furring, there’s nothing. It’s just the steel system of merchandising, all this is tacked right on to the SIPS product.

EO: It actually looks like drywall. If you came in here and didn’t know any better, it looks like drywall.

TH: You could tell somebody its drywall.

EO: And if you’re working on a residential property, I would assume there are benefits to that because you’re not having to put your cinder block, and then put a frame, and then put drywall. There’s probably some cost savings there I would think.

MG: Cost savings because we run the electrical chase through the foam and then you just pop out your boxes, so instead of having a 12” wall by the time you are done with block, furring and drywall, you have a 4” wall so you increase square footage on the house too…..not only the savings, but the square footage and obviously the R value.

EO: Let’s talk a little bit about the user. Why does a user care that this is an energy efficient facility. Talk about not only from the tenant’s side but from the owner’s side, as well.

TH: Well, number one as I told you earlier, the air conditioning here was taking 11 ½ tons. That’s two systems. Now we have one system that’s 6 tons in here doing it.  So from the maintenance side, you’re at least 50% less maintenance and they run 50% less time, so your energy bill is down and your maintenance bill is down because they’re not running all that  time. There are times that air conditioners just won’t come on. It’ll maintain that temperature for long periods of time. So, from an owner standpoint, Keith is on a lease/purchase program and we give 20% of his rent back in a 5 year period so he can purchase the building.  The SBA has programs that work well. Your banks will acknowledge that, so the energy savings alone will make a huge difference in his budget over a 5 year period.

EO: So typically what are you finding payback periods on this type of a structure for the owner, from the owners side? I think after you’re running the air a lesser amount and you’re using less electricity…. it’s costing a little more actually to build, right?

MG: No, that’s where the misconception is. People equate it as a hybrid car, where you pay a lot more for a hybrid car. Here you are paying even cheaper than you would with block. Equally performing, we’re about 10% cheaper, plus you have the energy savings.

EO: So, right from day one you’re essentially saving.

TH: From day one, there is no payback period and the simplicity of this product.  My concrete block guy is 60 years old…been doing it his whole adult life…looks at me and asks why would anybody build out of concrete block? That’s the man in business for concrete block.

MG: The other advantage is you can make it look beautiful. You see Terry’s buildings; more people have the thinking that just because it’s SIPS, the building is made out of foam, that it has to look a certain way. You look at Terry’s buildings you would never know they are made out of SIPS. So that’s another advantage you can finish them any way you want. That’s another huge advantage.

EO: Well guys I really appreciate you spending the time with me today, and I was told to ask you one last question. Who’s going to win the Superbowl this year?

MG: I always got to cheer for the Bucs, so I’m going to cheer for them, I’m not sure if we’re there yet, but I’m going to cheer for them.

EO: Alright guys, thank you very much!!

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Attendees: Eric Odum with Ken Stoltenberg, Mercury Advisors

Date: May 31, 2011

Subject: The Commercial Real Estate Market Minute – Grand Central and Current Events in Tampa’s Channelside

EO: Welcome to today’s Market Minute. I’m Eric Odum, I’m the principal broker for Net

Channside - Grand Central @ Kennedy

KS: Good to be here, Eric.

EO: For those that don’t know, Ken developed Grand Central which is in the Channelside District. You can’t miss it – brightly colored building as you’re driving down Kennedy Blvd.  into downtown.  It’s really an eye catcher.

KS: You need a vision exam if you miss it; let’s put it that way.

EO: Let’s talk about it because you had a unique path in sales and marketing of the building, because I think originally it was meant for sale…

KS: Correct.

EO: And then the market hit a little bit of a challenge, a little bit of a road bump, and you guys seem to be the first in the market to adjust. You adjusted pretty quickly to that situation. How did you handle that?

KS: We were closing into 2007.  We did very well in the East Building, which closed in the early part of the year, February.  In the West Building, we did not do nearly as well because that was closing in July/August.  At that point, the mortgage market was pretty much in full disintegration mode and a lot of people just couldn’t get loans. So, we saw this coming and didn’t really think it was going to be something that was just going to be a couple quarter event.  So, as soon as we closed the last unit, we hung out the “for rent” signs and into the rental business we went.  My partner and I have built apartment complexes, leased them and managed them for years, so that wasn’t something that we were unaccustomed to.

EO: So you were comfortable with the apartment complex situation and it was pretty natural for you to go from a sales situation over to an apartment situation.

KS: Absolutely.

EO: It’s interesting, because I know that you seem to be the first one to pull the trigger on that strategy.  Everybody that knows the market in Downtown Tampa knows there’s a lot of residential tower/condo development that was going on after you, but a lot of them seemed very late to the game to try to convert over to rentals. Do you think that’s a fair assessment?

KS: Yes, I would tell you that a few of them wanted to convert to rentals, but their lending institutions did not let them do it.  How we solved that problem was, we didn’t ask.

EO: You begged for forgiveness?

KS: Yes.

EO: Well, the end result, you are 98% occupied right now?

KS: That is correct.

EO: We were talking a little bit earlier about it.  You managed to sell about 50% of the entire amount of the residential space, and then 48% of it you turned into rentals.  So, you are pretty much a full house now.

KS: Well, obviously we are going to start up our sales program, and we do have a lot of leases rolling over the next three months, which will give us the inventory we need to go forward on our sales program.

EO: Let’s talk about that a little bit.  You said you are going to try to switch over now to go back into selling some of these units.

KS: Yes, it’s back to the future.

EO: How is that going to work? Was there a re-pricing of the model, or is it at the price it was before? How is that working?
KS: Well we were able to restructure things at the end of last year financial with the entire project, which is going to allow us to sell units at today’s prices, which are obviously significantly below where they were in 2005/2006.

EO: It’s a pretty cool place to live, and I suppose your target market is young professionals looking for an urban environment, is that fair?

KS: Actually, that’s part of the market, but the demographic actually skews a little bit older than people think.  It’s not a bunch of twenty-something’s running around here.  It’s much more people in their 30’s 40’s and 50’s.

EO: So, if somebody wanted to move in here, (i.e., Young Lawyer), what is his/her first option to come in here in terms of price point?

KS: Our pricing is very attractive. It’s starting in the $120’s which is really the lowest price point that has been seen in this market for luxury high rise living in an urban setting. All of our residences are priced between $120k and the high $300’s, with the majority being under $200,000.  So, it’s very affordable for your average, working downtown, pulling down $50,000 to $100,000 per year. You can afford to live here and pretty much have run of the roost.

EO: What do you think in terms of time frame for you to be completely out, in terms of being able to sell out the rest of the space?

KS: Well, obviously we don’t know what is going to drive that.  But, we think that within 18 months to 24 months, we should be through the inventory here, and we’ll see what the future holds.

EO: This is a mixed use complex for those that don’t know, not just residential. Residential makes up about 75% of the floor space, no?

KS: A little bit less than that. We have about 70,000 sq. feet of office space and about 108,000 sq. feet of retail space. So, it truly is Tampa’s only mixed use urban project. Some other high rises have a couple stores down on the first level. We have a 70,000 sq. foot office building on the second floor of the building and a full shopping center on the first floor. Now my background is originally retail. When I got out of college I went to work for Leo Eisenberg and at the time we were the largest Wal-Mart developer in the country.  So, I learned a thing or two about what retailers need, and that was some of the things we incorporated in this complex, which is proving to make the retail successful. The single biggest aspect is building enough parking; the city regulations did not require me to build but 3 per 1,000 for retail and 1 per 1,000 for office dwelling. Well…that dog simply won’t hunt. So, we have 900 parking spaces dedicated to the retail and the office.  Part of the reason we put structured the parking this way is office is busy when the retail is not. So, we double use that parking.  We effectively have a parking ratio for the retail on evenings and weekends of about 8:1, and since Wal-Mart only requires 7:1…. I figure we were probably safe there.

EO: And you have the gym you put downstairs, and they seem to be knocking it out of the park.

KS: Yes, they were our first retail tenant. They opened in June, 2009; they have now expanded three times.  We’re about to expand them a fourth time, and the brothers who are the proprietors of that establishment are originally from California. They had five or six gyms in LA for a period of over 10 years, so they really know what they’re doing, and create a great atmosphere.  I would stick my neck out and say its Tampa premier fitness facility.

EO: You’ve also got the Pour House that’s downstairs as well.

KS: Yes, that’s a beer and wine bar that has over 40 craft beers on tap that are local micro-brewery’s that you won’t find anywhere else. They also have a nice wine selection, and it’s proved really popular.  Their sales are strong.  We put in just over a year ago, a whole courtyard in between the two buildings that has shade elements, pavers, umbrellas, and all the tenants that occupy space in that area, get a certain portion of the courtyard to use.  Last year, we wet zoned the entire property.  We ended up going downtown.  We got the liquor license thing.  We have done that for the entire property.  It really works out well, because it’s kind of a turn key situation for somebody who wants to open up a restaurant.   One of the things that (you have to make sure you have zoning, parking, and go through the whole process to get a liquor license…) is already done here. The only thing you really need to do as a potential proprietor is get your plans drawn up, send them into permitting and we’re ready to go.

The other thing that we have done, since this project was approved in 2005 is (this is a very significant economic factor for any business, but especially for restaurant businesses), we’re grandfathered in to the old impact fees.  We paid them all for the entire property.  The last restaurant that we put in – would they have had to pay the impact fee – was almost $8,000, and that’s already been paid…..was grandfathered in.  So it is pretty substantial.

EO: Well, it sounds like you’re just missing the grocery component to it, and there’s really no reason at that point for anybody to even leave the complex. You can work out, go drink a beer; you can go get grocery, dry cleaning…

KS: Well that would be great, and I have been working with a number of supermarkets for about two years now.  The biggest challenge that we’ve had, is not the location.  We’ve had three major chains that are here in Florida come look at the site. From a logistical standpoint and design standpoint, everything works. There’s enough parking.  There is room for transformers.  There is room for loading docks, all those kinds of things that you would normally see. We put all that in not knowing exactly who we were going to get. Obviously, if we would have had a little more input from a potential user that would have been helpful.  But, we’ve had three folks look at it and as a physical plant, everything checks out just fine. The biggest issue is just the overall economy of the area.  Retailers at that level are really watching the eggs they already have in their basket and making sure their existing stores are performing, and keeping their sales where they are, or increasing them a little bit.  Any type of new business development for those types of companies has been greatly curtailed in the past 36 months, so we ran into that (the economic pull back). That’s been the biggest issue.  I don’t have any doubt we will get a grocer. It’s just a question of when.

EO: What’s the straw that essentially breaks the proverbial camels back to instigate the grocer to start a new store?

KS: Well, I think the market is there. If you look at the channel district downtown at Harbor Island there are over 10,000 households and that seems to be the number that everybody looks at. So we’re about that point. I think what it’s going to take is maybe a couple more projects that are on the horizon, so somebody can say, “Hey, you know not only are we at the point, but we know we are going to be exceeding that within a period of 18 to 24 months.”

EO: You mention that there’s another project that’s coming into Channelside District, correct?

KS: Yes, the Related Companies from Miami have bought the old Sembler piece that’s about 2 blocks south of here and they plan to build 360 apartments.

EO: So you’re going to have additional 360 apartments coming in. What else is happening in the Channelside District that might be of interest to folks, coming down the pipeline?

KS: When we developed the property we donated about 6,000 sq. ft to Stageworks Theatre.  They are Tampa’s oldest professional theatre group.  They’ve been around for 23 years now and we donated space in the West building for a new theatre. They are going to open August 4^th which is their first show. The construction is underway. We were able to help them secure a loan with the Bank of Tampa to get the rest of the build out done. Total project cost is about $1.2m and it’s going to be a first rate theatre. They are going to have over 180 shows a year. They also have a youth outreach program where they help underprivileged children, which is a really neat thing. They also offer the space for a conference or an event and you wanted a stadium seating venue, for a presentation, you could rent that space out.

EO: I should be careful saying this, because you’ll have every philanthropic organization pounding on your door, but you have always been very generous to the local arts scene, not only with Stageworks, but also with the Gasparilla Film Festival.  You donated office space to them.  I know that the Arts Community has been grateful for what you have done.

KS: With the theatre, or any type of Arts contribution, you can’t put a dollar figure on it – as far as how it enhances your project – but one thing I do know, is they’re going to have 180 shows a year, and they are also going to have an outreach program.  They will also open it up during the daytime for various business groups.

EO: It’s not all altruistic, there’s some business motivation there too.

KS: Those folks are going to want to go to a show, going to want to get a meal before or a drink afterwards, or cup of coffee or something like that. Anytime you can add eyeballs and footsteps to a retail project, that’s what you want to do. And this very effectively does that on more than 50% of the days of the year.

EO: That’s awesome. Well is there anything else you’d like to add about what’s happening in Channelside? I think there are apartments coming in?

KS: Yes, and the city has started construction down on Washington Street, building the first community park which is about 25,000 – 30,000 square feet.  That’s going to be a great addition. I believe it’s going to be done in October. The city has also now started the streetscape improvements on Washington St. They’re about halfway done right now and that will be done in October. That will really give folks – being in the development business, you want to everything done yesterday.  We have had the CRA, which is the Community Reinvestment Area since 2004 now, and this is really the first big project where the city’s gotten in there in and said they were going to put in the streetscape, the landscaping, and the lighting per comprehensive planning.  So when people come down here, they won’t see a bunch of dumpy warehouses with telephone poles hanging all over the place, and that type of thing. They‘re going to see a modern landscaped streetscape, so they can really get a sense of, “OK…Now I get an idea of what this place is going to look like!” These buildings have been up for almost 4 years now, and when people come down here they see a bunch of  beautiful buildings, and the rest looks like Beirut, and that is extremely unfortunate. Obviously we have a new sheriff at the rodeo, and we’re certainly hopeful that the Mayor is going to look at what’s going on down here, and whatever’s getting done gets done quicker, and gets more of it done.

EO: Is there anything else you’d like to leave us with today in terms of what’s happening downtown and maybe you’d like to let us know how if somebody’s interested in residential condo, how they could find out information?

KS: The easiest thing to do is go to our website which is www.notthesuburbs.com, and that will take you right to the website.  We have all of the units, all the floor plans.  You can print everything out in pdf.  We are getting on Facebook and Twitter, so you can check us out there.  If you want to learn more about the project, you can certainly do that, and its going to be interesting next year. There’s going to be a lot of pretty cool things happening. For some reason, I can’t put my finger on it, we’ve got more activity for the retail and the office, than we have had in three years. We just signed a lease with St. Leo University, about 16,000 square feet; they are locating their administrative offices, as well as 5,000 square feet of classroom space. That’s going to bring more people.  Obviously, the gym is very excited about that because of potential new members. I think the Channel District in the next several years is really going to be on the rebound again.

EO: Well good luck on the grocery store. I hope that you guys get something, I’m pulling for you because I live over in Harbor Island – you’d be the closest store to us over there. Hopefully that works out for you and good luck in moving along with your plans on the rest of the residential properties.  I hope all goes well for you over the next year.

KS: Absolutely.  Thank you.

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Attendees:        Eric Odum & Bob McDonough, City of Tampa Urban Development Manager

Date:                December 29, 2010

EO: My name is Eric Odum, I’m the principal broker at Net Lease Commercial Advisory, and welcome to the Market Minute. Today we have with us, Bob McDonough, who is the Urban Development Manager for the City of Tampa, correct?

BM: Correct, Downtown & Channel District.

EO: Downtown & the Channel District. Well, thanks so much for doing this today, Bob.

BM: Certainly.

EO: I want to talk a little bit today about some of the changes that are going on downtown….how they affect business, the commercial real estate market downtown and how all these things are coming together to help move us in a different direction or hopefully to advance us. Most noticeably, when people come downtown I hear, because I lease property all over the area, there are three things that have always been an obstacle for people coming down, one is the traffic and the traffic flow seems to be very confusing. Two, is the ticketing situation, seems to be a pretty aggressive. People are afraid they are going to get a fine, and then three, the coin meters have been a challenge.  People don’t, ….this is 2010, and people don’t walk around with pockets of coin anymore, so it’s been more of deterrence for people who really want to come downtown.  Noticeably, there’s been some changes that have been going on with regards to, …well, let’s focus first on the parking. What are some of the changes are in regards to that.

BM: Yeah, we’ve taken a quantum leap into the modern age, the city studied it for several years.  We did requests for quotations, requests for information.  We went out and spoke to other cities all across the United States about what was successful and was not successful, and we settled on a standard parking electronic meter which accepts coins as well as credit and debit cards. We had a bad model, again, we were using 1930’s …1940’s technology in our downtown which required lots of coins, and if you didn’t have the coins you got a traffic ticket. When I first moved to Tampa it was $1.00.  Currently a parking ticket is $35.00.

EO: It ruins your day.

BM: It ruins your day.  You know, the parking division at one time was 25 to 30 percent of the Parking Division’s revenue stream. It’s a bad model. We want to encourage people to come to downtown, not discourage them.

EO: And get sales tax out of it as opposed to…

BM: Well, you know what?  Actually electronic meters generate more income for you.  People are saying ‘I only had 75 cents so I put .75 in the meter.  When I’m using a debit card, I can go ahead and put in 2 hours, 3 hours, and not have to worry about it. And so, that was one of the benefits.  It also gets rid of some of the visual clutter of all those heads that were there.  It’s environmentally friendly.  We have solar collectors on it, it does not necessarily – and it’s interesting because, one of the technologies out there prints the little paper ticket.  You put it on  your dash board….Well, it does two things: one it creates more waste in the waste stream, so it’s not really environmentally friendly, and two, you have to go back to your car.  So, you parked at one end of the block. The machine is on the other end.  You get your ticket.  You have to go all the way back to your car, which if you have a lot of time that’s fine, but on a rainy day, people don’t want to do that. So, that was one of the reasons we picked the machine we did. And one of the nice benefits is, that if you park in space number 62 and you go someplace else for your meetings, …. You decide to have lunch but you really know that the time is going to run out…

EO: And you’re three blocks away…

BM: 4 blocks, 10 blocks, anywhere downtown, ….You can go to another one of the machines and add time to that space, from anywhere downtown.

EO: That’s terrific. Normally you just leave

BM: They say, “The heck with it! I’m not going to stay downtown.  I’m not going to stay for lunch. I don’t have any more coins. I’m going to leave!”  It makes it user friendly. We have…. the downtown today is not what it was 20 years ago. At 5 o’clock, the carpet was rolled up and we closed down. We have people who live here now, and because of that, to make it more attractive to live downtown, we want some more merchants and more retailers.  You have to have curbside friendly parking for those folks. That was another driver…..trying to make downtown more user friendly for the people who live here, for the people who do business here and the people who visit here.

EO: Now, for those folks that might be technologically challenged, I understand that there is going to be some sort of holiday provided (with no ticket)….. A warning system that’s given, and some instruction that’s given too, in terms of helping them through the process. So it’s not a situation where they’re going to be intimidated by the technology. …..”I’m not going to come downtown because they have those newfangled machines and I’m going to get a ticket. I just know I am!”…..So why don’t we talk a little bit about that?

BM: Well, we’ve taken a couple of steps to address that. There were handouts and flyers people put on people’s cars with simplified instructions. There are a series of guides that are walking about during this installation period. We started installing the meters around the middle of December.  We’ll finish around the middle of January.  And, during that time, there will be two things going on. We will have a series of guides where they’ll be located near these Parking machines. If people have a question or concern, the Guide can give them a quick tutorial on how to use the equipment, and secondly, if, they just say,  “You know what!?  I couldn’t figure it out,”… They get a ticket. But, the first time will be a warning ticket.

EO: So no more of those $35.00 fines, the first time.

BM: Well, the first time…The first time they get a warning and so, it behooves you then to say, “Ok, I have to pay the meter next time. I will.”  That was not the case before. The meter would click to zero and magically a meter maid would appear. You would have a $35.00 ticket. So, we’re changing the model. Right now, about 30% of the use of those meters is through coin, …..Excuse me…. through credit cards. 65% is coin, and about 35% is credit card usage. About 52% of the income generated right now is through credit cards. So it’s gaining acceptance, and again, I only have 75 cents in my pocket.  That’s all I can put in the machine, but I like to hang around and stick around downtown.  I’ve got a debit card.  I’ve got a credit card. I’ll put it in the machine.  Put 2 or 3 hours on it and enjoy myself.

EO: I’m sure it’s going to be a transitional period anyway.   I know a lot of my older clients that have been living in Tampa for their entire lives. When they come downtown, they raid the piggybank, and the first time they came down it was a little confusing. So I spoke with one of my clients, and now she’s fine. She’s says “Oh this is terrific! I don’t have to raid the piggybank anymore!” So, I think that there’s just going to be a transitional period where that debit ATM card, credit card user will probably just continue to pay.

BM: It’s a learning curve. And something that we’re going to roll out, not this year, but next year or the year after, is actually adding time to the meters using your cell phone.  Instead of having to go to the machine – you’re in a meeting. The meeting is running long – you just go ahead and punch it in the cell. The reason we didn’t initially do that is that the target audience we want to help right now for the occasional visitors to downtown, and to do a cell phone, you have to set up an account.  You have to give a deposit.  You have to put a credit card number, which unless you’re going to use a lot of times, is somewhat cumbersome.  But for the folks that are going to come downtown all the time, we’ll offer that as an opportunity later on. So it’s another leap in technology that will make it a little more user friendly for folks.

EO: Well terrific! I can assure you that the retailers that I spoke with are very happy about the situation, and I know you consulted a lot of retailers in the area trying to get the meters.

BM: They were the unhappiest about the existing situation, and I think they were probably the happiest about what’s going on. We have about 999 parking spaces downtown and they are being accommodated with this equipment.  By the end of January virtually all these parking spaces will be electronically monitored and fed through ATM.

EO: That’s awesome!

BM: Well something else, like another decision we had to make – do you take the ticket? Do you not take the ticket? Another one we looked at was using bills. Do we or do we not? There are some locales where that are very effective, but in Florida where it’s warm, and moist, the bill holds a lot of humidity and they tend to jam the machines. We didn’t want a lot of down time. We wanted something that was going to be easy to use and efficient, and so we opted out of having the bills.

EO: Well, in terms of parking, that’s not the only thing going on downtown.  That’s going to be a big, and has been a big boost to the businesses down here. I know for example the Park just opened up.  People have come to see the park, and what a phenomenal resource that is.

BM: We had 10,000 people there for Santa Fest.

EO: That is crazy!

BM: The ice skating rink set up in the park that about two weeks ago, the count was 8200 people use it, and it’s a big draw people are having a lot of fun with it.  (Note:  The season has since ended for the Rink.  The first year was a phenomenal success!)

EO: And all those people are coming and eating at the local establishments….coming in and getting more comfortable in dealing with downtown environment.

BM: Well, one of the things that we’ve done in the last three to four years is, we’ve begun to “two-way” a lot of the streets that were one-way. Now, some of these North-South, which are main arterials which feed the interstate will probably remain one way, but the East-West, which were one way,  we’ve converted to two-way again.  Visitors to downtown find it less confusing, making our downtown a friendlier place. We are right now going out with just – I think we’re going to rehire a construction manager – to begin to improve Zack Street, because that really is a main artery, pedestrian wise, for connecting the parks and the two museums to our downtown.  So, we will be widening sidewalks, narrowing traffic lanes, adding more shade structures and pieces of art, again, to make downtown a little friendlier to visitors.

EO: That’s terrific!.  So, the three things we talked about,… just to summarize, we’ve talked about people – their reservations about coming downtown with the traffic situation.  You guys are addressing that. The parking situation, in terms of the meters, the coin meters, you guys have addressed that.  And then the aggressive nature of getting ticketed…..That’s been addressed at least in near term to get people ramped up on the new system. Not to mention the park, the art, the new Art Museum,…. things are going downtown.  For people that haven’t been downtown, they really need to come down and check it out. Curtis Hixon Park is one of the most beautiful parks I’ve seen anywhere in the state of Florida.

BM: We get a lot of compliments.  What’s interesting is that you know we’re in a down economy right now, but in the near future, we’ll actually have two construction cranes. We have Metro 510, which is 120 unit work force housing project on the north end of downtown, and on the south end of downtown, the University of South Florida Health is building the CAMLS project, which is a high tech surgery training program.  They are building a 90,000 foot building and they’ll have the ground breaking on that on January 11. So into downtown…

EO: You also have the ENCORE! Project which is going in the East side of downtown

BM: We have a lot of things going on and all good news in particularly bad times.

EO: Well Bob, I really appreciate you coming out and talking to us today.  And as always, if someone needs to figure out more about the parking situation, they would contact the City of Tampa parking, or what?

BM: City website. City of Tampa website (http://www.tampagov.net/). There is an instructional on there, and if they wanted, they can print that off and bring it downtown with them. Or, call somebody from the city parking.  They’ll be happy to speak with them.

EO: Perfect, well again, we appreciate you coming out today, Bob.

BM: Thank you.

EO: Thank you.

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Attendees: Eric Odum and Brian Willis, Esq. Becker & Poliakoff

Date: October 26, 2010

Subject: Hillsborough County Transit Referendum: Additional One Cent Tax. What’s its Purpose? What Does it Mean to YOU?

EO: Good afternoon and welcome to another Market Minute, I’m Eric Odum from Net Lease Commercial Advisory, and this is the second part of two parts of the discussion of the Light Rail Initiative and the One Penny Tax. I keep saying Light Rail Initiative; it’s really not light rail initiative, but…

BW: It’s a one cent Investment.

EO: It’s a one cent Investment and its more than light rail, and we have with us Brian Willis again, and he’s an attorney with Becker & Poliakoff, and also the Citizens Advisory Board for TBARTA to talk with us today a little bit about some of the questions and concerns of the light – I keep saying light rail initiative – it is the “Investment Tax.”

BW: Yeah, the Investment Tax

EO: Ok, terrific, so the penny Investment tax, the penny Investment initiative is going to be on the November ballot, correct?

BW: Yeah.  That is correct.

EO: Ok, so you know we talked in the first component about why we need to have it, what are some of the things that are going on with the plan and why do we need it? Obviously this is the first and foremost question people ask – I have my car, I drive to work, why do I really need this thing for?

BW: Well, we talked a little bit the last time about the growth that is projected for this area….how we’re already having trouble meeting the demand with the capacity of our roads as it is. We continue to grow.  There was a slow down with the economy, but now we’re seeing population growth again. We’re running out of capacity on our roads. So, we need this …..  Our transportation is the key to moving people around and when we look at comparable cities for instance, the amount of time the people in Tampa spend in traffic delays is significantly more than what people in our competitor cities do. If you look at someplace like Charlotte, Tampa has consistently almost doubled the traffic delays every year compared to what people in Charlotte experience.

EO: It’s going to end up making us the highest taxed county in the state of Florida, so is it really worth it to make that Investment, knowing we’re going to end up having these taxes.

BW: There are a number of issues there. The one thing is taxes.  People get focused on taxes, but people continue to move to New York City. They continue to move to the places that have high taxes because they have high quality infrastructure.   I think that’s what the question really should focus on. Is this worth doing? What’s the value we get from this? More importantly, we look outside Florida, when you look at comparable Sunbelt cities it’s not going to be a – our tax will still be comparable if not lower than competing Sunbelt cities outside the state of Florida. So, I think what people want is they want value. They want a valuable infrastructure and the tax is not going to place us outside the range of what other competitive cities …

EO: Ok, so Charlotte, Atlanta – you’re telling me that they are still going to be at higher tax than…

BW: They have over 8% sales tax

EO: So what would we be at?

BW: We’d be right at 8%.  We’d be competitive if not lower than other Sunbelt cities, and some of those other Sunbelt cities and states have Income Tax as well, which we don’t have here.

EO: I think the initial rail is running to the airport first, right?

BW: The initial plan is that it would run from the airport to downtown, including the West Shore area.  The second part would be downtown up to USF, and eventually the Cross Creek area at Bruce B. Downs.

EO: So two rails, and really people running between downtown Tampa and USF.  That’s a fraction of the transportation routes that are being run by car everyday, so these people that say ‘I’m not going to use it’ – It’s a legitimate complaint, right?

BW: Well, there’s clearly going to be some people who aren’t going to use it. First off – HART’s done a study of this – 43% of traffic takes place within the corridor that’s roughly going to be served by this light rail. So, everyday, even if not every person is going to use this, you’re either taking people off the roads within the corridors people are traveling or your giving them an alternative means of transportation in that corridor. And I think, as I’ve said, you’re getting people off the roads. So, it’s not just whether you’re a user of the light rail or not, but its also helping insure that our congestion doesn’t continue to build up and slow everybody down.

EO: Well, ok, I hear you, but let’s say I live in Brandon. I’m not going near that downtown to Tampa corridor, so what’s in it for me? How would people in Brandon care about this, or people in the Northeast part of the County?

BW: Well, a portion of it, we’ve been focused (talking) on light rail, but a portion of that tax is going to go fund road improvements throughout the county. It’s also going to fund a bus system that’s going to serve bigger area, bigger portion of the county. I think the third thing to keep in mind, I know people in Lutz and Brandon, and they say, “Well I don’t want more roads in my neighborhood. I don’t want more traffic.” And what we’re building here, which is a transit system which serves the entire Tampa Bay region, is about ensuring that we don’t have more roads.  It’s about ensuring that we don’t just continue to over build our suburbs. So, I think a vote for this is a vote to help preserve the character of places like Lutz and Brandon.

EO: From a road perspective, Brandon, are they really going to see roads (and increase in transportation options) out of this. I mean is Brandon really going see…..They’re going to vote for a penny tax. Are they really going to see road (and transportation) development?

BW: There are projects across the county to fix different problems that have developed, and you can actually go – HART has a website they have developed where you can go neighborhood by neighborhood and find out what exactly is going to come to your portion of the neighborhood from this investment.

EO: That’s on the HART website?

BW: You go to HART and they have a special project page which is called the “HART alternative analysis” page, and you can type that in Google – H A R T, and you’ll get to the page and find it.

EO: Terrific. This thing is going to cost a lot of money. It seems to me like it’s really high. So let’s talk about that and whether this makes sense or not.

BW: I think people don’t realize how much money we’re spending on our road system. We’ve had some projects that haven’t been that controversial, like the I-4/Crosstown Connector, which everybody thinks is worth what we’re investing in.  That project’s been priced out at $350m to complete it.

EO: Ok, so the Crosstown Connector is like a mile of road.

BW: It’s a mile of road.

EO: It takes you from the Port of Tampa, to I-4.

BW: It’s a great project. It’s going to get a lot of road traffic out of Ybor.  It’s going to make Ybor more amicable to neighborhood development. It’s going to connect Crosstown and I-4 so that all those trucks from the Port don’t have to go through Ybor neighborhoods.

EO: What is the rail going to cost, let’s say the rail is going to run from Downtown Tampa to the Airport, what is that going to cost?

BW: Well there, they’ve got a couple different alternatives that they are considering, but you’re looking at roughly a $500-$600m price range for that portion of the rail. Another example, which is the north portion of that segment which would connect downtown to USF, that portion is coming in right under a billion dollars, about $900m. Well, the alternative to do that, if we don’t build up the rail capacity, we’re going to have to increase the capacity of the roads. So, we go from what’s an 8 lane road now to a 12 lane road. They’ve priced out that project and it’s going to cost $2.2 billion. So, for the same length of rail traffic, we’re less than half the price of what it would take to increase road capacity.

EO: So, to increase 275, you’re at $2.2 billion…. to build a rail, you’re at $900 million?

BW: That’s about right, yes.

EO: When you ask people around Hillsborough County, you hear this very frequently… “This is going to be a situation that we’re going to be funding forever.” And so, what do you say about that?

BW: Yeah, and I hear that all the time. That’s what people always say. They say we don’t want to build this if it’s not going to produce any income back. There was an editorial in the Tampa Tribune saying well they’re only going to get 8 or 9% of the revenue from the fare boxes. Well, I drove here from Clearwater today, and I didn’t pay anything. There were no tolls on my way here. So, they didn’t get any fare box revenue on my trip. I-275, Dale Mabry, Kennedy, Howard Franklin Bridges – They all don’t pay for themselves. The other part of that is we look at what we built with the rail system. People have studied the numbers, AAA, Forbes Magazine say that you’re looking at about $12,000 per household per year that gets devoted solely to car expenditures. So it’s incredibly expensive system pushing…

EO: Car expenditures meaning insurance on your car, gasoline…

BW: Car insurance, payments, gasoline, maintenance, new tires, oil changes, you know the whole thing – everything that looks into getting you where you need to go in your car. And, that cost is extraordinary. It’s pushed off to the individual users. So, sales tax is going to cost the average household about $125 per year, it’s about 1% what the household is spending on their car budget right now.

EO: Ok, well thanks again Brian. I do appreciate your time, and again, if you’re interested, you can find out more from the HART website and the Moving Hillsborough Forward website. Thanks again for joining us and for more information, can they contact you at Becker & Poliakoff.

BW: I’m at Becker & Poliakoff they can contact me. Our offices are in Clearwater. We serve the whole Tampa Bay region. Look for us on Google.

EO: Thank you, Brian!

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Attendees: Eric Odum and Brian Willis, Esq. Becker & Poliakoff

Date: September 27, 2010

Subject: Hillsborough County Transit Referendum: Additional One Cent Tax. What’s its Purpose? What does it mean to YOU!

EO: Good afternoon and welcome to the Market Minute. This is Eric Odum, I’m the broker for Net Lease Commercial Advisory. Today we have with us Brian Willis who is the attorney with Becker and Poliakoff, and also a member of the Citizens Advisory Board for TBARTA. Welcome Brian.

BW: Thanks for having me, Eric.

EO: Absolutely. This video is going to be the first of two parts. The first part of our discussion is going to be based primarily on the initiative…..what it entails, where the routes are and what-not. The second part, there’s obviously a penny sales tax that’s involved and some controversy behind the penny tax, …..So what we’re going to try to do in the second part, is talk about some of those issues with the penny tax and also the transportation initiative to help explore how much this makes sense for our area. The penny tax is a sales tax, correct?

BW: Yes, it’s a sales tax. It would be one cent additional, right now we’re paying 7%, it would bring it up to 8%, but it’s really an investment that goes to fund improvements and rail is what everybody really associates this with. But a large portion of the funds are also going to go to fund improvements to the bus system through out the county, as well as road improvements and places that aren’t necessarily in middle of the city, but also the outside regions of the county.

EO: Now, when is this vote coming up?

BW: Vote is going to take place on the ballot in November. I think it’s November 2^nd or November 3^rd, right around there. Of course now there is early voting, so vote on it a couple weeks before hand.

EO: Ok, so let’s talk a little bit about light rail versus high speed rail. Light rail is part of this initiative, is high speed also? How does the high speed rail…

BW: Yes, it’s a frequent question that I get. High speed rail is NOT part of this initiative. It’s not part of what the one cent would go to. High speed rail is a done deal. It’s being funded by stimulus dollars.  The Federal Government is coming in (to help fund it) and that’s going to connect Tampa to Orlando at speeds over 160 mph. Light rail which is what a portion of the one cent investment would go to is going to be local. It’s going to connect…..the initial stages at least, will connect the airport, West Shore to downtown, and downtown North up to USF, beyond to the Cross Creek area, and eventually be part of this regional system that is going to be operated by TBARTA in the long run.

EO: So the high speed rail is coming, it has nothing to do with the penny tax, its coming regardless of the outcome of the penny tax vote in November. The penny tax vote in November is going to include rubber on road transportation initiatives as well as the light rail. Is that a good description?

BW: Yeah, yeah, that is absolutely correct.

EO: Ok.

BW: And it’s important to clarify how they work together. The one cent will not go to the high speed rail. They all work together because the high speed rail is going to come in and we’re going to have a transit center in downtown Tampa…..so the idea is that the downtown station for light rail will be part of this multi-modal transit station. There’s high speed rail, there’s light rail, and it’s going to be right across the street from where the Marion bus station is, so you’re going to have an integrated transit platform in North downtown. It’s going to let people come in from Orlando, from across the region, and connect.

EO: SO its going to be in-between the Marion, so its right around the old jail site, correct?….. The Northeast part downtown.

BW: Yeah, the Northeast part of downtown.

EO: By the ENCORE! Project.

BW: Just a little bit ways from the ENCORE! Project, so they’re taking advantage of that and they’re doing a mixed use walk able neighborhood that buys into these transit oriented development principles. So, that’s going to be a big part of this.

EO: Now, you’ve talked about TBARTA, you’ve talked about Hart, and I hear this name tossed around “Moving Hillsborough Forward,” what is that?

BW: ‘Moving Hillsborough Forward’ is a group that was formed by the Tampa Bay Partnership, and they are essentially, a political group that’s helping run the campaign for this one cent investment tax and I think the Tampa Bay Partnership is really important to the initiative because it shows that business recognizes the importance of this one cent investment.  What we’ve seen is that we’re losing our competitive edge to people around the country when their looking at where to locate their businesses. People at the Tampa Bay Partnership are putting the dollars to invest in this campaign so that we have this modern transit system.

EO: So, I’m hoping that there are a number of people involved in the process here that there’s some sort of greater initiatives, that there’s cooperation.  Frequently when you see a government agency, sometimes they don’t always play nice in the sandbox together, so hopefully there’s some sort of greater plan here, right?

BW: Yeah, there is. You’ve got TBARTA’s master plan that you can find on the TBARTA website, which is TBARTA.com, and that involves both this regional system which is made up of HART’s alternatives analysis study that’s going to take place and be funded by the one cent.  You’ve also got a Sarasota/Bradenton rail link that’s part of the TBARTA system.  Pinellas County is undergoing their own alternatives analysis study to look at how they could connect Clearwater to the Gateway area, to downtown St. Pete, as well as going over the bridge to link up and create an integrated system with Hillsborough County. And there are similar projects underway in Pasco with the rail line around the State Road 54/56 corridor and going North up to Citrus/Hernando counties. What we see is that there’s a lot of demand for getting people in and out of Hillsborough County, and we’re here, talking about this Hillsborough project,  we’re focused on it because we’re in Hillsborough, it is a part of a greater regional system, and not just TBARTA. It’s going to tie in the high speed rail, and then you have Sun rail in Orlando.

EO: How’s Pinellas doing?

BW: Pinellas is a couple years behind us. Hillsborough is ahead. They’ve got the funding in place to start what’s called their alternative analysis study, which is a process that Hillsborough started two years ago and is just about to complete, and that looks at the different possible rail alignments.  They set the corridor;  the corridor is Clearwater, Gateway and St. Pete. Then they look at what specific roads and what pathways within that corridor would be the most economically efficient pathways to go through. And that’s the process that’s being wrapped up in Hillsborough right now.

EO: Now, let’s talk a little bit about the real estate side of it, because most of the people watching this are going to be real estate folks or real estate investors, and they’re going to want to know ‘what’s in it for me’ and how can they take advantage of some of the opportunities that might be coming down the pipeline. You talked a little bit with me before we had this interview about a quarter of a mile ring, and half a mile ring, what is all that about?

BW: At TBARTA we’re spending a lot of our time on  land use issues, because what we’ve shown time and time again, is that transit initiatives like what we’ve got going on in Hillsborough County don’t succeed without land use changes to support the transit. And those land use changes help preserve single family(residences), the existing structure of the community, but you have changes within a quarter mile of the station, which is your core area. Then you have a ring that’s a quarter to a half mile out from the stop. The core area within a quarter mile is your core walking distance to the station. It’s designed to be high density mixed use development, so, shops, Starbucks, CVS, restaurants…

EO:      Condos

BW: Condos… absolutely…. in a dense development….. So places you can stay 24 hours and live, work and play.

EO: Typically, what does this do to property values that’s in around this inner dense core?

BW: There have been numerous studies on this and most of them find that you’re finding anywhere between four upwards of 15% increase in property values around the core. There’s a lot of demand for this type of living. It saves people money on their overall transit bill because they don’t necessarily have to have a two car household, and so people are willing to pay more to get into these areas, and businesses are willing to pay more to be there because of the presence of people and the ability to get workers to your shops.

EO: Ok. These rail lines – there’s been some discussion about the first line running up to USF and then there was some outcry that we need to be out to the airport first. Where are we now? What is the general consensus about where the first line is going to be laid?

BW: With the initial plans everybody was thinking it was just going to go from West Shore to Downtown.  There was some great public feedback, and it did a great thing because it got HART to reconsider, and now the first line includes Tampa Airport, West Shore. In fact, the airport has devoted land over that is going to allow them to accelerate their build up process. So, high speed rail we talked about earlier is going to be complete in around 2015, and they’re now looking at a time frame in 2015 to complete the Tampa Airport to Downtown leg of the transit project if the one cent passes.

EO: If the one cent passes…So, it sounds like its pretty much set then, that seems to be the most logical route and then later we’re going to continue up to USF.

BW: The idea is that you build them pretty consistently, it wouldn’t be that much later, but the idea is you do one phase at a time, first phase being the airport, second phase connecting Downtown, USF on to the Bruce B. Downs area.

EO: Terrific. Thank you again, Brian, I really appreciate your time in coming down and explaining some of this to us, it’s important that not just the folks that area associated with Net Lease Advisory know what’s going on, but also the general citizenry knows what’s happening so that we make the right decisions.

BW: Thanks for having me here.

EO: Appreciate it!

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Attendees: Eric Odum and Brenda Dohring-Hicks, CEO The Dohring Group and Listing Broker for ENCORE!

Date: July 15, 2010

Subject: Downtown Tampa: ENCORE! Project

A 40+ acre mixed use redevelopment district in Downtown Tampa. ENCORE!’s city within a city concept unites the central business district with Ybor City, Tampa Heights and other neighborhoods.

EO: Good afternoon and welcome to another Market Report from Net Lease Commercial Advisory.  I’m Eric Odum, the principal and broker for Net Least Commercial Advisory in Tampa, FL, and today we have with us Brenda Dohring-Hicks for the Dohring Group.  Welcome Brenda.

BDH: Thanks Eric.

EO: Thank you very much for joining us.  Big news recently.

BDH: Big News!

EO: We have big news that the ENCORE! Project was approved recently and commercial real estate people got very excited, and the city got very excited, but a lot of the city of Tampa didn’t know what it was. Why don’t you just start from the beginning and tell us what the ENCORE! project is.

BDH: ENCORE! Is a brand new mixed use project….probably heard about it in the news the past couple of years as it was being formulated.  We’re going to end up with somewhere in the neighborhood of about 900 residences, residential units in the project, but it’s a mixed use project.  So it has commercial uses, there’s a site for a hotel; there’s a site for an office building, a couple of other commercial sites, one that we have ear-marked for a grocer.

EO: The entire project is on the East side of Downtown Tampa, correct?

BDH: That’s a good way to describe it – it’s on the NE side of Downtown.

EO: The NE side.

BDH: Yeah, people have been looking at maps lately to see where rail is coming in.  That’s where it is.  It’s on the NE side (of Downtown).

EO: Now, your involvement in the project is what?

BDH: We’re the broker responsible with our broker partner, Bill Eshenbaugh.

EO: So, Bill Eshenbaugh, the Dirt Dog.

BDH: The Dirt Dog. So the Dohring Group

EO: Ok

BDH: And as a brokerage firm, we specialize just in urban locations.  So this is what we do.

EO: Got it.

BDH: We reached out to Bill Eshenbaugh because he’s so good at land, and let’s face it, when you’re an urban broker not many opportunities you get to do 40 acres of land in an urban location, so we brought Bill on board and the 2 of us work as brokers.  We co-broke the entire thing.  There are opportunities for other brokers, because we have two things to sell right now.

Number 1, the grocer – we really want to get that grocer in.

Number 2, there was a site that was set up for the Housing Authority for an office building for their use. They have decided to go ahead and put that one up for other commercial use, because we believe the community needs it.

EO: In getting back to the terms of the players – you’ve got Bank of America, who really heads the project. You’re the broker. Who’s the contractor on the deal?

BDH: The contractor is ZMG Construction.  They are out of the Orlando area by home-base. It’s about a 1200 person National, and now International. They just got invited to go down to do some work in Haiti.  They have formed a partnership with Malphus & Son who is a local Tampa contractor.  So, the two of them now have a partnership – ZMG-Malphus.  They are on the street as the contractor which is responsible for hiring all of the subs.

EO: Ok, so you have an external, larger contractor and a local contractor.  And, of course, you and the Dirt Dog are the brokers and the Bank of America is the organizing entity, the driving force.

BDH: Yes, there’s a partnership between Bank of America and the Housing Authority. Bank of America is the managing member of that, but it is a partnership, ok?

EO: Ok, so between the Housing Authority and Bank of America. I heard you mention about multi family. You and I have talked about this in the past. I think a lot of people will be surprised, but there’s no a lot of discussion about….well there are all these towers that don’t have any people in them.  Let’s talk about that a little bit.  Because just north of us two blocks, we have two projects that everybody thinks are completely empty. So, let’s talk about housing in the downtown core.

BDH: Ok, well now, you know, those projects came out….. thank goodness they’re here.  Skypoint 100% sold out, and well occupied.  So, it’s not just sold out to the investors and nobody is living in them.  Many of those investors if they didn’t want to be in this themselves, at least have the spaces leased…The Element was built as a condo project, but luckily was able to go rent them before they sold any.  Its occupancy level is up in the low 80’s.

EO: Low 80’s – not bad for starving.  They’ve only been less than a year on the Certificate of Occupancy.  That’s not bad at all.  A lot of people were surprised to hear that because they just assume that you’ve got vacant buildings downtown and it’s really not true.  So there’s a need for this additional multi family in the ENCORE! Project.

BDH: There’s definitely a need.  The problem in the downtown area is finding affordable housing because it comes very expensive.  As we all know, the land or lack thereof, makes it very pricey.  By this project coming on board and the partnership and because of the basis on how they were able to acquire this land, get grant funding, get very creative funding from different, from the neighborhood stabilization funding, their basis is lower.  So, because of that strength from the financing, they can provide affordable housing.  And that’s going to make them a different player than a Skypoint or an Element is going to be.  So they are going to fill the niche because there are a lot of workers in Downtown, Tampa.  Everybody isn’t an attorney. I know you might find that difficult to believe.

EO: It is hard to believe, most of my office tenants, or clients are attorneys. But, there are other people besides attorneys in Downtown Tampa.  Talk about the transportation situation a little bit.

BDH: They always looked at transportation as an important piece as we started developing this property.  Let’s face it. It has entrance and exits to the Interstate right where it is.  So if nothing else had happened, it would still be good.  The Project is close to bus routes, and its walk able.  There’s no reason – I walk from my office which is what we call down in the core, up to this project all the time.  I don’t like to do it in 95 degree weather, but nonetheless, it’s walk able.  With the high speed rail that is coming in, it’s coming in due East one block from this property.  So, with that high speed rail that comes, what we’re all looking at now is the intermodal transportation piece that will be for Hillsborough County, and connecting….. is your improved bus service, your improved taxi service, your improved walkability to have people have pedestrian access back and forth.

EO: And the agenda that’s coming down the pike with the light rail, that’s going to be on the agenda for the transportation initiative, coming up at the end of the year, correct?

BDH: Correct.

EO: So you’ve got light rail, high speed rail, the regular rubber on road transportation which is all within very short distance from this new…

BDH: Less than a block

EO: Less than a block, so it’s going to be the center of the universe really in terms of Tampa.

BDH: It’s the center. Right now it’s the terminus for the high speed rail, and so everything else is going to emit from it.  So as we walk now.  A big part of this project is the park that has always been there.  There’s a linear park that has always been there.  Affectionately referred to as the “Bro Bowl”… this was the skate park that became very, very famous.  That park is going to be completely redone, so that will remain.  It will be a really nice park.  To the North of that, we’re putting in a Middle School.  This area, when we looked at what it needed, it needed a middle school.  Elementary schools are covered; everything is good, so now we’re going to have a middle school there.  The primary boulevard coming through the project,….. you know, “encore” means ‘yes, let’s do it again, bring back more,’….. The whole project is bringing back Central Park Village, which was a very vibrant part of North Downtown in years past, so we’re bringing that back.  Ray Charles Boulevard is the primary boulevard coming through the place, and the buildings are named things like “The Ella,” “The Fitzgerald,” you know those kinds of names….. “The Trio,” …..So, it’s really going to be the first time we’re going to have what we can call,  “a city inside of a city.”  We’re not alone. There are other cities that were able, but usually it’s something like we saw develop in Channelside, where there was an old industrial sector, and so it’s close enough to the city to be called a city.  But, Channelside has a distinct personality to downtown.  This is DOWNTOWN!

EO: Absolutely.  Now let’s talk about it from the broker standpoint.  Why should brokers pay attention to this project? Is there anything for the local broker community? Is there any way for them to participate?

BDH: Participate by bringing buyers for these parcels, typically about an acre in size, to put up multi family, put up an office, to find that grocer, to find that commercial piece – the new commercial piece is very excited to us because now we don’t have to put a corporate office there. Now we can put something that could be the likes of a drug store, a branch bank, coffee, fast food. There’s a prime opportunity.  Again, bring it back to where the rail is, as well.  So, some of those uses that might not have seemed to fit before because they were on the outskirts of downtown and now are at the epicenter of where all the people are going to be.

EO: In time frame, is this going to be 10 years out, 5 years out, what’s your timeframe for sinking the shovel?

BDH: Well, we’ve already started clearing, so we’re doing the entire infrastructure, and it’s a complete self contained.  This will be a (LEED) Gold status from the infrastructure.  I don’t think that’s been (LEED Gold) from an infrastructure standpoint. So, they’ve got their own water treatment plant, etc., etc.  All of that will be in the ground.  We must, by directive of the funding that we have, have more than 300 to 350 people living in units within 15 months now.

EO: 15 months! WOW! So you’re on roller skates…

BDH: There are a lot of people crawling all over that site right now. And with that, remember, these are mixed use buildings. So, it will be ground level retail. There are anywhere in the neighborhood of about 10,000 square feet per building that will be up and ready for someone to go into with some ready population within the next 15 months.

EO: That’s awesome.  I mean it’s really good for us to see some activity.  The last couple years, commercial real estate’s been tough, and so when  you start to see some new initiatives start to roll around, you start to get the feel that maybe we’re starting to pick up a little bit…. things are starting to move forward in the right direction.

Brenda, I’d really like to thank you for being with me today to explain the ENCORE! Project and hopefully our viewers had a chance to watch and get something out of it.  And, if somebody would like to get in touch, there’s an Encore site and I believe also your website, if you’d like to give us real quick idea how people can get in touch with you about the project.

BDH: Absolutely.  There’s a couple ways to do it.  http://www.DohringGroup.com. You can get a link there, but the best place to go is http://www.EncoreTampa.com.  All the info that I might have in front of me as I’m referring and taking a look is out there.  Information on how to get in touch with us direction is absolutely the best way.

EO: Brenda, thanks again so much, I appreciate you giving me the time.

BDH: You got it.

ERIC ODUM

www.FloridaTripleNet.com

813-514-1070

BRENDA DOHRING-HICKS

www.DohringGroup.com

www.EncoreTampa.com

Need to talk to us? 813.514.1070
or email by clicking HERE!

I had the pleasure of sitting down with attorney Fernando Perez, of Perez and  Associates in Tampa, Florida this week to discuss immigration issues with real estate investors.  Mr. Perez has been practicing immigration law since 1982.  He is a regular contributor on FOX News and Univision related to immigration issues.  He is a “go-to” guy in Florida when it comes to business and commercial immigration.

I attended the recent OPP LIVE conference in London, UK this past October and was asked repeatedly about the process of acquiring a visa by those interested in managing distressed properties in Florida or buying investment properties to manage.  With the  currently weak  dollar and the depressed real estate prices  in the State of Florida, I certainly understand why there was such keen interest.

While this interview focuses on commercial real estate investment, many of the points Mr. Perez covers can be utlized for other purposes, such as buying or starting a business in the US, or a buying a beach vacation home.  The important point I took from our discussion is the US is open for business  and investment from foreign investors, but one needs to understand the visa laws and work with a professional that can help them guide the way.

Mr. Perez’ website is a  wealth of information about visa requirements.  Click here for more information.

Full Transcript

INTERVIEWER:       Eric W. Odum, Lic. Real Estate Broker,  Net Lease Commercial Advisory, Inc.

INTERVIEWEE:       Fernando Perez, ESQ.

Eric:    Hello, and welcome to another series from Net Lease Commercial Advisory.  Today we have with us Fernando Perez.  Thank you very much for joining us Fernando.

Fernando: My pleasure.

Eric: Fernando is an attorney that has been specializing in immigration law over the past 27 years.  We’re very fortunate to have him sit down with us today to talk a little bit about some of the investment and visa requirements for investments, primarily with real estate, but also in covering a wide range of other types of activities in terms of buying business and whatnot.

Fernando has been a consultant in both the State Department and Congress, and he also has a face for television.  We know he’s been on FOX news and Univision, in terms of consulting on immigration matters, and so we’re very fortunate to have him with us today.

So hopefully you will be able to get a lot out of this and it will be able to help you make some decisions.  Thanks again Fernando.

Fernando: My pleasure.

Eric: Let’s talk a little bit about the immigration visa.  Typically, what people understand is that to get into the United States when you’re buying real estate or a business, you’re going to have to put down a million dollars—invest a million dollars, and hire 10 employees.  When I go out and I speak to people, that is the common perception, is that really accurate?

Fernando: Well it depends, which is a great lawyer answer.  What happens, Eric, is that there are two separate investment visa categories under the immigration laws, and people tend to confuse the two.  Now, there is a visa category which is called the EB-5.  It’s also been referred to as the Employment-Creation Visa or the Immigrant Investor Visa.  Now, the characteristics of that are that persons from any country can qualify, but it does require in most instances, an investment of at least a million dollars in a US business, and as a result of that investment, 10 jobs for US workers have to be created.

Eric: Okay.

Fernando: Now, while we’re talking—

Eric: Which is not really ideal for a real estate investor—

Fernando: Exactly.  It’s not going to be feasible in a lot of situations.  Now, there is a new variation that I will touch on with the EB-5 before I get into the Treaty Investor category.  There is a variation of the EB-5 that is an investment in something called a regional center.  Those are areas of the United States that have been designated by the government as distressed.  Now, if somebody makes an investment in a regional center, the investment amount is reduced to $500,000 and there is no requirement that you create employment because the investment itself, which has been pre-qualified, is already structured to create employment in the local community.  So that’s the EB-5.

The other investment category, and this is the one that really is the most practical to most individuals, is what’s called the Treaty Investor Visa or the E-2.  The differences are that the E-2 is only available to nationals of countries with which the United States has a qualifying treaty.

Eric: Generally, what kind of countries are they?  How many are there, do you know?

Fernando: There’s probably, off the top of my head, over 50 or 60.

Eric: It’s a lot, close to half of—

Fernando: It’s a lot.  Most of Europe qualifies.  England, Spain, France, Italy; all those countries qualify.  Canada and Mexico qualify.

Eric: Those are the big three that are investing in the United States.  It’s the UK, Canada, and Germany.

Fernando: Columbia, Australia; they are all over the world.  So, for somebody like that who is interested in doing something like that, just basically contacting someone like me and saying, I’m from such-and-such country, is there a qualifying treaty?  And we can tell them right away, yes there is.

So, assuming there’s a qualifying treaty, the next thing—and this is the thing that’s really important—is that when you’re dealing with the E-2, there is no minimum investment required.

Eric: A big difference from the E-5, which is a million dollars to $500,000.

Fernando: Huge difference.

Eric: I mean, really, no minimum amount.

Fernando: Exactly.  And if the investment is packaged correctly, for example, I’ve had investments qualify with an investment of $7000.  Now, that’s rare and there were a lot of other factors involved, but the point that someone needs to take away from this conversation is, don’t think that you have to have a certain sum of money ready to invest to be able to qualify for the E-2.  That’s the biggest difference between the E-2 and the EB-5.

The second thing is that with the Treaty Investor category, there is no requirement that you have employees.  If the investment in the United States, is able to generate enough income to support the investor and their family, there is no requirement to have employees.

Eric: Wow.  That’s another big difference.

Fernando: Huge difference.  Let’s just use a real example.  Let’s say that you have a British family that comes over here and buys a strip center.  It’s a commercial investment because their job is that they are renting this.  That clearly qualifies for E-2 treatment.

Now, the only “employees” they may have may be independent contractors.  Maybe they hire a company to mow the lawn to keep up the landscaping and somebody else to do repairs every now and then, but they don’t really have to have any internal employees that they, themselves, are supervising.  That’s perfectly fine.  As long as that investment generates enough money to support that family in the United States, then they are good to go.

Now, when somebody comes here in E-2, the spouse can get permission to work in the United States and the children are automatically authorized to go to school.  The children don’t have to qualify for a separate student visa, the wife doesn’t have to qualify for some separate type—it’s automatic.  Obviously there is a paper process, but it’s not going to be denied.

Eric: So let’s talk a little bit about the types of investments you can do.  If I wanted to buy a residential property down the street, am I able to do that?

Fernando: Well, yes, you can do that.  There’s nothing stopping you.  This is nothing to do with investments per say, but this is something that’s also misunderstood, and unfortunately it’s also misunderstood by immigration sometimes.

If somebody is here as a visitor, which is a B1, B2—or for a lot of Brits and people from European countries, they can come in under the Visa Waiver Program, which allows them to be here for 90 days without a visa.  Persons like that, it’s perfectly legal for them to buy a residence in the United States.  They don’t need any special permit, they don’t need to change their classification to buy that residence.

So if they want to come here and, for example, buy a vacation home, and they want to rent it out for part of the year and come back and live in it part of the year, that’s perfectly fine.  They don’t need a special category for that.  On the other hand, if they want to really use this as an investment that will allow them to live in the United States on a longer term, then simply buying a residence won’t do it.

Eric: Essentially, we talked about four options for them today.  So why don’t you go ahead and quickly summarize for our audience what those four options that we discussed—actually there are a lot of different options, but why don’t we talk about those four that we discussed, again, just to summarize things for our viewers.

Fernando: In the area of investment, and particularly in investment that’s real estate related, the four options are these:

The Treaty Investor category, which, as I mentioned before, is available to nationals of countries with which we have a qualifying treaty, requires no minimum investment amount, does not require any number of employees, and does not require the day-to-day management of the investor.

Then we have the EB-5 category in it’s purest sense, which does require a million dollar investment and does require the creation of jobs for 10 US workers.  When it is a million dollar investment, it does require the active management of the investor, it does result in a green card, and it’s available to people from any country in the world.  There is no qualifying treaty that precedes that.

A subset of the EB-5 is investment in a regional center.  The similarities are that it’s available to anyone and it still results in a green card, but if you’re investing in a regional center, the investment amount is $500,000, you do not have to create any jobs, and you’re not going to be actively involved in operation of the business.

The last area that we talked about is if somebody just wants to come here and buy a vacation home that they are going to use three to six months out of the year, even if they are going to rent it the rest of the time or just leave it closed the rest of the time.  It’s perfectly legal for someone to do that while they’re in the United States and simply a visitor for business or pleasure status, which can be someone who enters with a natural B1 or B2 visa, or somebody who enters under the Visa Waiver Program without a visa.

Eric: Perfect.  So that summarizes, essentially, the four options that we have   for real estate investors to get involved in the United States.  Certainly, Fernando, as an attorney, has a considerable amount of experience in this area.  We’re very thankful he was able to join us today.  So Fernando, again, I appreciate your time, and hopefully our viewers got something out of it.  I’m sure they did.

Fernando: My Pleasure Eric.

Eric: Maybe it will help some people in the future.  Thank you very much.

Fernando: Thank you.

Eric: All right, take care.  Bye-bye.

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