- This is a production of WEDU PBS, Tampa, St. Petersburg, Sarasota.

(uplifting music) - Growth brings opportunities.

It also brings challenges.

Since the year 2000, the Tampa Bay Metro market population grew from 2.4 to nearly 3.4 million people in two dozen years.

That 40% growth rate is twice the national average.

If you are an entrepreneur in Tampa Bay's robust growth market, how would you capitalize on that opportunity?

You're about to meet a Tampa Bay commercial real estate developer whose family has successfully navigated real estate's ups and downs for generations.

Next on the Suncoast Business Forum.

- [Narrator] Suncoast Business Forum, brought to you by the financial services firm of Raymond James, offering personalized wealth management advice and banking and capital markets expertise, all with a commitment to putting clients' financial wellbeing first.

More information is available at raymondjames.com.

(uplifting music) - In 2024, the New York Times wrote, "Tampa is emerging as a cool place to live."

Travel and Leisure Magazine called Tampa Florida's new "it" city.

They're just discovering what Feldman Equity CEO Larry Feldman has known for many years.

Since 2009, he and his partners have been buying and redeveloping more than 2 million square feet of commercial office real estate in Tampa Bay.

While office building owners in other cities are facing challenges, Larry Feldman sees opportunities.

Larry, welcome to the Suncoast Business Forum.

- Thank you, Geoff.

- Good to have you.

- Thank you.

- Across the nation, national publications, national media are discovering Tampa Bay.

What is happening all of a sudden that's led to this?

- It's an interesting question.

When I first got here in 2009, Tampa was devastated by the real estate recession.

Now my background is office buildings, and I started buying at that time because things were so cheap.

But from a business standpoint, Tampa at that time was known as a big, what we refer to as back office, meaning generally it was a place for call centers, processing insurance claims, where you'd have a gigantic floor plate of people in cubicles doing worker bee business, not the so-called front office that you see in New York.

And during that period of time, post '09, places like Miami and Palm Beach started to perk up and started getting in migration of northeast companies that were relocating.

And then post covid now in Tampa Bay, we are beginning to see whole companies moving in.

So for example, we now have, from an office building perspective, the king and queen have relocated to Tampa.

The queen is Kathy Wood, bringing her Ark Investments into downtown St. Pete.

She's considered the queen of tech investing.

And then Geoff Gundlach, who is the bond king, brought his DoubleLine Capital into downtown Tampa.

So these are the new trends now.

We're starting to get more of a front office type user coming to Tampa that we've never seen before.

- You and your company have invested in Florida for quite a few years, but it was in '09 you selected the Tampa Bay area.

Why Tampa Bay versus all the other markets in Florida?

- Yeah.

Well, the truth, Geoff, was that things were so damn cheap that I had to buy them.

I mean, that's really the truth.

There was a second thing that happened to me, which is I went down into downtown St. Petersburg on an occasion and I saw what was going on there, and I had lunch on Beach Drive, and I had this epiphany that I was almost like feeling like I was in Europe, which is what the Beach Drive vibe is.

And now we're seeing that also coming to downtown Tampa.

Those are the changes that have occurred since I've been here.

But it was the thing that attracted me first was the vibrancy of downtown St. Petersburg.

- Your family started in real estate generations ago, a hundred years ago with your grandfather.

Tell us about the arc of your family's involvement in real estate.

- Well, it's a pretty deep arc because my great, great uncle was a bootlegger.

(men laughing) And my grandfather, who was a plumber, actually worked for my great, great uncle as a bootlegger for a period of time.

Then he became a legitimate plumber.

The reason that my great, great uncle who was the bootlegger hired him was that he was, he knew about plumbing.

So then he became a legitimate plumber, and over the years he built up a plumbing business and then gradually started building enclosures around plumbing, little small buildings that were specialty plumbing centers, so to speak.

And then in the early 1950s, they were, my dad and his brothers were called up to Washington, and they were working on a project in Geneva, New York, which was an Air force base.

And the project was to get this Air Force base ready for the impending Korean War.

And instead of two buildings and some plumbing work, they were to now get a contract for 150 buildings.

And the government told them that they would commandeer train loads of lumber, train loads of materials from other manufacturers around the country just to build up that project and they became major general contractors, and then into the 60s built things like the Chicago O'Hare Airport, and then became, in the 1970s and into the 1980s pure developers where they had the construction capability, but brought it into buildings that they built for their own account that they would own and manage later on.

- They were doing this, most of it, in a competitive New York City marketplace.

- Correct and originally started as developers when they morphed from general contractor to developers, they were a New York City based company.

- In 2010, when you came to the Tampa Bay Market, the skyline had been fairly static for some time, St. Pete was beginning to have some residential high rise.

Tampa skyline had barely changed in decades.

If you look from 2010 to today, the skylines are dramatically different.

- [Larry] Right.

- What have you seen that's changed that?

- The major, major component in terms of real estate and the downtown was the new construction initially of apartment buildings, oddly enough.

Now you say, why would that have changed everything?

Well, so it's not a well-known fact outside of the real estate world that apartment buildings are mainly inhabited by younger people, because younger people cannot afford to buy a $3 million condo in downtown St. Petersburg.

Younger people just starting out without kids, they gravitate to apartments.

So as these apartment buildings started to build up, post '09, post crash, it brought with them a whole youth movement into the downtowns.

And that brought restaurants that started opening up around that youth.

And then the older people started saying, "Hey, you know, there's some decent restaurants here in "downtown, like downtown St.

Petersburg."

Now we've got like literally 120 restaurants.

I can't keep track of it.

I live there and I've only been to a small percentage of the restaurants.

That makes the feeling of living there really livable.

But it also, from my perspective as an office building owner, it's the ideal scene for the lunch business hour for the millennials that need to be hired by these are the sort of the left brain intellectual, really well educated millennials that now are working for tech companies in places like downtown St. Pete and downtown Tampa.

- The COVID-19 pandemic, communications technology changes, generational attitudes towards the work environment really have changed the commercial office market.

- [Larry] Absolutely.

- How has it changed particularly in this marketplace?

- Yeah.

When Covid first started, and it started to really accelerate into March of 2020, it was a terrifying time to be in the office building business.

I was cuddled up in the fetal position in terror because we didn't even know if tenants would pay rent.

And it was just a terrible time to be in the business.

Little by little things began to recover slowly, very slowly, I would say, before people started coming back to the office.

And now rolling the videotape forward, since Covid, there's a tremendous push by employers to get the employees back in the office, but the job market is still somewhat tight, and employers don't have the leverage to put a gun to their heads and force them back.

So the employers are stepping up their game to go to the best-in-class buildings to lure their employees back to the office.

And part of that is what I call the living roomification of the office.

So post Covid, what we're doing now, as an example, is our own office that we just moved into, our own office in the middle of the office has what we call a tenant cafe, which is really, it resembles like a high-end condo.

We have a beautiful kitchen island with bright lighting and a beautiful kitchen countertop.

We have a big open kitchen, and it's actually part of the middle of the space.

And people congregate around sitting on bar stools around this kitchen island, and dogs are allowed to run freely through the office, and it actually feels a little bit like home.

So we also have lunch courtesy of the company for everybody every day.

That's now a standard routine.

And we make the office beautiful.

We really have upped our game.

And then throughout the building we have, in numerous buildings, we have one or more restaurants in the building.

We have very high-end fitness centers, the kind of fitness center that you'd pay real money to be a member of, not just a a treadmill and a TV, but a real beautiful first class fitness center.

We have conference centers that are capable of seating as many as 100 people, well, let's say 60 to 100 people.

And the reason for that is that with Covid, post COVID, people go what we call hybrid, where they have a certain percentage of the office coming in, certain percentage of the office working from home, you're probably familiar with that.

But when they want everybody together for a big meeting, they need a big conference room.

So we build that for them with video conferencing.

- Investing in commercial office space has its challenges.

And in many major cities in the United States, we are seeing the owners of office buildings with enormous vacancy rates, concerns about default on loans, mortgages, on these properties.

How does this market, the Tampa Bay Metro market, compare to other major cities?

- We're in much, much better shape than most office markets in the country.

Our vacancy factor is single digits in downtown St. Petersburg.

It's probably, in downtown Tampa, 12, 13% versus 25, 30% in certain major cities.

And the reason for that is, obviously the in migration and job growth that we have is offsetting some of the contraction that is occurring through hybrid.

But the other aspect of it is that our downtowns are not ridden with crime.

We don't have the homeless problem.

And then more importantly, our commute times to our downtown are fraction of what they are in the major metropolitan markets.

If you think about New York or San Francisco where it's very common to have an hour and a half commuting time, it's very hard to get those people to come back to the office.

It's a lot easier here in Florida where we have shorter commuting times.

- Let's talk about your formative years where you grew up, your family, and the early days.

- Sure.

I grew up in a little town on Long Island called Lawrence Long Island, just outside of New York, suburban New York.

And as a kid, I was encouraged to be an entrepreneur.

So I had a major lemonade stand on the golf course starting at nine years old.

My brother and I were in business starting at nine years old, which we actually were fairly successful.

And what really spurred it on is I broke my leg and I had a big cast, and I think the golfers felt bad for me, so they had to buy drinks as they were going by.

And then we had fishing golf balls out of a pond, which were 25 cents each.

We were able to sell them.

And I had a live tropical fish business into my teens, and then an import export business into my 20s.

So I was an entrepreneur really starting from about nine years old forward.

And my dad really encouraged that from very young.

- After high school, you went to college at Wyndham College in Vermont.

Tell us about that.

- Well, I majored in sex, drugs, and rock and roll.

(Larry laughing) It was the 70s and liberal arts college in Vermont near ski areas.

And I didn't really get serious.

I was a terrible student.

I did finally get serious in my junior year, there were two Harvard MBA guys who were doing this for nothing.

They just wanted to teach.

And they did a case study marketing program.

And I all of a sudden fell in love with actually attending class and really working at it.

And then as time went on, I began to educate, you know, really get serious about education.

But I wasn't for most of high school or even my first two years in college.

- You joined the family business in the early 1980s.

Since that time, it's grown substantially, but it had grown very substantially in the 60 years prior to, since your grandfather founded the business.

How did things change when you came on board?

- It was an interesting time to be in the business as I started in the early 1980s, the economy had really collapsed from the 70s so it was really a tough time to be in the real estate business.

Rates were still very high.

They were starting to come down in the early 80s, but it was a tough time.

So there were times, even when I was involved early, my dad was doing workouts with lenders, which, if you survive those periods in our business, we call them workouts, then you can really go on to do anything on the positive side.

It's really when things are bad, you really begin to learn how to survive.

And so I started in a really bad time when the company was in trouble, and I learned, you know, what not to do going forward.

And I think it really did help starting at the bottom, so to speak.

- What would be the kind of thing you'd have to do to workout commercial real estate?

- Well, in some cases it would be to owe the bank too much money.

We opened, my first major project was building 40 story tower in New York and the day the building opened, it cost 140 million to build.

The day the building opened, it was appraised at 90 million.

(Larry laughing) So we owed the bank like 110 or something like that.

And we were fortunate enough where the banks, we owed them too much money, so they didn't wanna foreclose.

And we hung on, we worked like crazy to fill the building.

And it was one of the, actually, one of the, believe it or not, as horrendous as that was, it was every single day when the building opened, we were only 6% leased.

94% vacant.

It was 42,000 every day that went by that was the interest carrier, the real estate taxes, and that was in 1989, 1990 dollars.

And so you could lose your mind in that situation.

So like, every time I would go to sleep, that was $9,000.

You know, if I went to the bathroom, depending on, well, I won't go into detail, but you get the idea.

It was really harrowing, but it was actually the most fun time I had in the business because we had all kinds of crazy ideas on how to market the building to do things that were different to get the building leased.

And we persevered through that because A, we owed the banks too much money, but B, they saw we were working our butt off.

We leased up the building and then in 1997, that building became the cornerstone of an IPO that we did to take the company public.

So it was quite a journey, you know, where we didn't know if we'd survive from day to day to going public on the New York Stock Exchange in 1997.

So when we did go public, the day we closed, we had gone from near bankruptcy in the early 90s to where we had 200 million in cash in the bank, which I had to keep checking to actually make sure the balance was real 'cause I couldn't believe it.

And then we were in a position to buy buildings where where we'd be able to say to a seller, "Hey, you wanna close in two weeks?"

And we actually did that.

We closed the deal in two weeks, a 50 story skyscraper in midtown Manhattan.

- In 2008, the residential and commercial real estate markets and the rest of the economy collapsed.

You were in New York at that time.

You decided to move shortly thereafter to the Tampa Bay area.

As you look back on that period of time, what challenges and opportunities did that create for you?

- It was very humbling.

Our first building, or actually we bought a building in '09 and then in downtown, St. Petersburg, the first building I bid on, I think I was only one of two bidders, and the other bidder wasn't really qualified.

We bought for $63 million a beautiful class A building right on the waterfront across from Al Lang Stadium, right in downtown St. Petersburg called the Northern Trust Building.

People know it as the Northern Trust building.

And it was $63 per square foot.

Now, I had just been renting in Manhattan for about $63 a square foot.

And the first six months after opening the building, after purchasing the building, we hadn't shown one square foot of office space to anybody.

There was, the demand had collapsed.

So it was very humbling to own and buy at that time in 2009, 2010.

But we got through it, we leased up our buildings, and the way we did it is that we heavily reinvest in our buildings.

We call that reinventing the office building, which we started doing really before Covid, and now we're doing it on steroids, and it involves way more than just a brush and paint job where we just fix up the lobby and make things a little bit nicer.

We'll spend as much as $20 million in just capital improvements to bring an office building up to 2024 standards.

And that's what really helped us to survive through that period, because even though rents were still extremely depressed, and demand was depressed, the renovations helped us capture market share.

So we're kind of doing that same playbook post Covid now, in the 2020s, we're applying the same methodology, but as I said, on steroids now where the amenities going crazy.

- [Geoff] Your son Mac has joined you in the business.

When you came on board, you changed the direction of the company, How would you think the business might change now that the fourth generation is in the business?

- We recently sat down about a year ago or so and tried to do one of these mission statements.

Now, a lot of times these mission statements are cliches, and they're just done for the marketing brochure.

But we really said to ourselves, what is it that gets you up in the morning?

What is it that you really love to do and that you're passionate about?

And what I realized is that I am passionate about building beautiful things, and we love the idea of building beautiful things and making our tenants happy as a result.

And that became our mission statement.

So right now we're, we're in the early stages of a spectacular building in downtown St. Pete, which is a mixed use luxury condo office tower, right on the waterfront, on the site of one of the buildings that we bought back in 2010.

And it's a beautiful looking building, and that is what I want to do.

I want to just create this beauty and a legacy building that's gonna change the skyline.

It's a personal dream of mine.

And I think my son has really embraced this as well, but he'll chart his own path.

I don't know what, you know, he might do in 20 years, but he's also passionate about affordable housing and making sure that that happens.

And so he may chart his own course along those lines and I'd be delighted to see him do that.

- After more than 30 years of developing, managing, acquiring over 11 million square feet of commercial office space, real estate, valued at over $3 billion over all that period of time, what do you know now that you wish you knew then?

- The good news is, you know, I think 80, 90% of people that you meet are good and well intended.

But unfortunately, I haven't been, in the past, always as selective as I should have been, where I put money ahead of my gut instinct.

That has always been a mistake, and that is a mistake I avoid now.

And the flip side of that, that sounds like a negative.

The flip side is when I see people that I love working with, that I enjoy working with and I make money with, I build heavily on that relationship.

And I think, I know that sounds simplistic, but I think that has changed my life today.

- Larry, I'd like to thank you so much for being our guest today.

- Thank you so much.

I enjoyed it.

- Likewise.

If you'd like to see this interview again, or any of the CEO profiles on our Suncoast Business Forum archive, you can find 'em on the web at wedu.org.

Thanks for joining us for the Suncoast Business Forum.

(upbeat music)