Ciminelli recently acquired the Rubin Center, a 30-acre office park at 13100-13191 56th Court, Clearwater, for $16.4 million. Now renamed Waterside Business Center, it’s home to about 20 tenants, mostly professional and hospitality firms. Ciminelli had managed the property for the past four years, handling leasing operations on behalf of former owner and developer Les Rubin.
“We’ve always liked the property,” says Tom McGeachy, one of the firm’s three principals. The others are Hunter Swearingen and Founder Paul Ciminelli, who spends most of his time in New York. “We had talked with Les since the beginning and said, ‘You know, if you ever sell, let us take a shot at it.’ We thought it would be something we’d be interested in owning.”
For good reason. The 270,000-square-foot property has been a key cog in the growth of Ciminelli’s Florida division, which has seen revenue rise by 25% from 2015 to 2016, 17% from 2016 to 2017 and 23% from 2017 to 2018. The privately held firm, which declines to disclose specific revenue figures, projects 15% growth in 2019.
Ciminelli was so keen on the property that McGeachy, 59, and Swearingen, 52, never gave Rubin a chance to put it on the market, arranging a private sale that closed Aug. 29. Despite the center being 94% occupied with just two available spaces for lease, Rubin, they say, was motivated to sell because of his age and desire to slow down.
“He’s been a prolific developer over the past three, four decades,” McGeachy says.
McGeachy and Swearingen say it has been a while since Ciminelli made a move to buy in Florida, where the firm manages some 7 million square feet of commercial property — with a total value of between $700 million and $900 million — and has 53 employees. Despite the unprecedented economic expansion and real estate boom of the past decade that has some investors and analysts scanning the horizon for signs of a slowdown, the firm remains high on Florida and thinks it’s the right time to buy not just the Rubin property but also potentially others statewide.
“We’re very bullish on the Tampa Bay area and Florida in general,” Swearingen says. “So hopefully, this will be the first of several acquisitions.”
Yet becoming financially leveraged in a property carries significantly more risk than merely managing it. Having been on the sidelines for much of the commercial property boom of the 2010s, how will Ciminelli guarantee a good return on its investment?
Sunshine State Strategy
For starters, the company believes it has the right property at the right time and, crucially, following the No. 1 real estate axiom, in the right place. “It’s a great property in a great location,” McGeachy says, adding that the strength of the market means Waterside Business Center could be a property to hold or flip for a profit.
“This could be a long-term play or the market could just totally skyrocket on this thing, and we might have to look at disposition two, three or four years in,” he adds. “We just don’t know.”
Ciminelli’s New York division has been more focused on property development in recent years, which leaves McGeachy and Swearingen to target management, leasing and now acquisition opportunities in Florida. In addition to the Tampa Bay region, the company’s portfolio also includes properties in Fort Lauderdale, Orlando, Jacksonville and Tallahassee. The principals say they will likely be more active in the Sunshine State in the years to come and see little threat of an economic downturn that would derail the firm’s growth.
“You look at Florida on a larger, macro scale, and obviously, it’s a very fast-growing state with a very diversified economy,” Swearingen says. “I don’t see that slowing down anytime soon, that’s for sure. And I think a lot of people who are much more entrenched in the metrics of the state, as a whole, would tend to agree with that.”
Other factors are at play. Nationwide, McGeachy says, “Demand is still outstripping supply, and the last downturn is still fresh in a lot of people’s minds. That’s keeping everybody mindful when it comes to projects. And lenders are doing a great job of slowing down or even tabling projects that might have questionable underwriting.”
If a downturn were to occur, Ciminelli thinks Florida’s real estate market would remain in good shape. “I can’t think of another state I’d rather be in, quite frankly,” Swearingen says. “Florida would be poised to weather it well. We feel pretty good about the future here.”
McGeachy and Swearingen say Ciminelli has succeeded in Florida for nearly two decades by employing property professionals who have gone above and beyond in their careers to earn qualifications and designations. The company boasts eight certified commercial investment members, five certified property managers, seven real property administrators, two system maintenance technicians, one facilities management administrator and two members of the Society of Industrial and Office Realtors.
Ciminelli Real Estate Services manages multiple properties in the Tampa Bay region. Broken down by geography, the list includes:
- Clearwater: seven properties
- Largo: two properties
- Oldsmar: one property
- Pinellas Park: one property
- St. Petersburg: seven properties
- Tampa: 26 properties
Four of its staff members carry the licensed community association manager designation, and two are specialists in Leadership in Energy and Environmental Design. In addition, 14 members of its staff are licensed Florida real estate sales associates, and seven are licensed brokers or broker associates.
Ciminelli has worked hard to cultivate a highly skilled and qualified staff because Florida, with strong economic fundamentals underlying the property market, is one of the toughest real estate battlegrounds in the country.
“There’s some exceptionally good commercial estate folks down here,” Swearingen says, “which is good and bad. It keeps you sharp. It keeps you on your toes and constantly trying to improve because, if not, these folks will be more than happy to take market share from you.”
Swearingen adds that succession planning plays a role in the firm’s hiring process. Although both principals are in their 50s and plan to continue to work for the foreseeable future, they aim to hire people whom they would like to see stay with the firm for 20 years or more.
“We have a great group of young managers, leasing folks and accountants who are coming up through the ranks,” he says. “We’re very mindful of that as an entire organization. Succession planning is discussed annually among the partners. Ciminelli plans to be here for a very long time, and that takes a lot of forward-thinking. And so we hire being mindful of that growth.”
Although Waterside Business Center’s 94% occupancy mark is solid, even with just two available lots, Ciminelli is determined to boost that figure to 100%. The company plans to invest $500,000 in improvements to the property, which will include a new exterior paint scheme, updated signage and landscaping enhancements, with the goal of enticing two more high-quality, long-term tenants.
One of the available spaces is about 8,000 square feet; the other is 4,000 square feet.
“We’re actively marketing and have multiple prospects,” McGeachy says. “We have a very specific strategy for the property. It’s in good condition, but we want to give it a refurbished, more upscale presentation.”
Because the market is so strong right now, Ciminelli believes the time is right to make upgrades to the property that will not only boost its curb appeal in the short term but also lead to greater return on investment in the years to come.
“There’s big potential for rent growth and net operating income growth,” McGeachy says.