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Friday, Apr 18, 2014

Universal center vacancy leaves hole in St. Pete core

Published:
ST. PETERSBURG -

It’s not the first time this prime downtown office space has sat empty.

State officials haven’t announced their plans for Universal Health Care’s 131,000-square-foot office on Central Avenue, located a block from the waterfront in a building that might appear to be just a parking garage.

Hundreds of employees lost their jobs last week as the troubled insurer went into state receivership while federal agents raided the office during an investigation into health care fraud.

Now the six-story building — office/retail space topped with multiple levels of parking — again is vacant, just as it was in years following its construction in 1990, when it was part of a failed $200 million redevelopment project.

If Universal’s former office goes back onto the real estate market anytime soon, it will be the largest available commercial space downtown and one of only a handful of similarly sized vacant buildings in the county.

City officials hope another large employer will view it as an opportunity.

“When you lose an employer of that size downtown, that’s never good. But now we get about the business of getting someone else,” said Dave Goodwin, the city’s economic development director.

While St. Petersburg’s thriving downtown has become attractive to companies, the immediate demand could be slow as the city center already has about 500,000 square feet available in smaller spaces.

The Universal property would increase the city’s commercial real estate vacancy by 26 percent.

The downtown office and commercial real estate market now has a vacancy rate of 11.5 percent, according to the Pinellas County Economic Development office.

“There’s been some increased activity in office (real estate), but not enough to absorb 130,000 square feet,” said Paula Smith, a Realtor with Commercial Asset Partners Realty.

Universal first moved into 35,000 square-feet of the building at 100 Central Avenue in 2008.

Two years later, it bought the entire 131,000 square feet for $9 million to accommodate its growing insurance business, which offered health plans to about 140,000 people in 19 states.

The company bought a condominium in Signature Place on Beach Drive that same year for about a half-million dollars.

Major financial problems began to surface within the company after those purchases, with regulators last year questioning whether Universal had sufficient money to pay for its policy claims.

A judge last month ruled the company was insolvent and appointed Florida’s Department of Financial Services to take control, liquidating its assets to pay member claims and creditor debts.

The department would be responsible for selling Universal’s office space.

But it’s too early in the receivership process to give any specific plans, spokesperson Alexis Lambert said.

That space could be sold to a large single company such as Progress Energy, which occupied the building before Universal, or it could be divided into smaller sections for sale or lease, said Mike Meidel, director of Pinellas County’s Economic Development office.

Another option would be to return the space to its original intent: retail.

That didn’t work out in the 1990s, when city officials and developers anticipated major department stores in the building to anchor an extensive downtown redevelopment project called Bay Plaza.

Developers struggled to find tenants for the space and eventually a new project, BayWalk, was built a couple blocks to the north with a movie theatre, shops and restaurants.

Meidel said the Universal building’s large lobby and spacious floor plan, which was designed for big retail, would be a good fit for a large IT or finance company that wants to put all its employees on one floor rather than divide them among multiple floors in an office tower.

The only other office space available in the county that’s larger than 100,000 square feet is in suburban environments such as the Gateway area of northern St. Petersburg.

“It’s kind of the best of both worlds in the sense that it’s the kind of space people are looking for while at the same time being right there in the heart of things,” Meidel said.

A positive sign for the building’s future might be the numerous residential housing developments in the works this year, marking a trend of more professionals looking to live and work in vibrant urban settings.

But for now, there’s an empty spot in the heart of downtown, which will be felt not only by the laid-off workers but also by the surrounding restaurants and the other businesses that they frequented during the work week.

“Anytime you have that activity, the restaurants are going to feel it,” Meidel said. “The lunch hour crowd will be down.”


jboatwright@tampatrib.com

(727) 215-1277

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