What was once the area’s premier retail destination is springing back to life, but not as a place to shop. Under the direction of new owners, Royal Palm Square in Fort Myers is being reinvented and rebranded as a premier office center: Royal Palm Square Office Park.
Located on Colonial Boulevard between McGregor Boulevard and Summerlin Road, the 144,000+sf center had languished for years prior to its acquisition in October by developer Royal Palm Companies (RPC). Since then, RPC has been working to revitalize the landmark center that has begun to show glimmers of its previous glory. In addition to cleaning up and repairing the property, the company is refreshing and re-landscaping the center’s courtyards.
Soon, the iconic fountains are expected to be flowing again into sparkling ponds stocked with colorful koi. Office users are taking notice. In the six months since renovations began, occupancy has risen from just over 50% to more than 70%, including signed tenants who are in the process of relocating there. Others, such as existing tenant Yoga Bird Studio, are so encouraged by the center’s rejuvenation that they’re expanding. Studio owner Anna Withrow recently signed a lease for adjoining space, doubling her studio’s square footage from 1,800sf to 3,600sf.
“People love it here. There’s a lot of positive nostalgia with the center because people remember how it used to be,” says Withrow. “I think they’re really happy to see it coming back to life.” In addition to long-time anchors Broadway Palm Dinner Theatre, the Austrian-German Restaurant and Catch 22 Live Music and Sports Bar, established tenants include Larson Educational Services/Real Estate School, the U.S. Geological Survey (USGS) and Internal Medicine Associates (IMA). Larson has renewed its lease, as has the USGS, a 10-year tenant that just signed a lease for an additional 10 years. IMA’s corporate headquarters occupies 5,400sf of space there and is poised to expand into the second floor of the center’s west wing.
Newer tenants include Rawlings Real Estate, a beauty salon, an advertising agency, a cosmetology school, a life insurance company, a body-wrap business and a dance studio, among others. Also, A Bite of Everything café and coffee shop recently opened for breakfast and lunch. In June, Gary Green State Farm Insurance will move into 2,000sf. The resultant surge in leasing activity has spurred interest from prospective tenants as well. “We’ve been very pleasantly surprised,” says Steven Goldfarb, president of RPC’s west coast division.
An Eye for Opportunity Despite the similar names, Royal Palm Companies did not develop Royal Palm Square and has only a few standalone, commercial retail projects in its portfolio. Since its establishment in Fort Lauderdale in the early 1970s, the company has focused on developing condominiums and rental apartments, which it also manages.
In 1997, RPC expanded to Southwest Florida, where it developed Villagio (a mixed-use property with 514 multi-family units in Estero, adjacent to Coconut Point Mall), the 200-unit Gardens at Bonita condominium community in Bonita Springs, and a handful of high-end, single-family homes, also in Bonita. It is now in the process of building Estero Oaks, a mixed-use development of 280 luxury residential apartments and support-related retail at the corner of Three Oaks Parkway and Estero Parkway in south Lee County. The first phase is slated for completion in mid-2016.
Although Royal Palm Square is atypical of an RPC property, so was the two-year process of acquiring it. Goldfarb explained that when the recession brought development and construction to a standstill in 2008, RPC began buying bank notes on commercial REO properties, including Royal Palm Square. But when the bank holding Royal Palm Square’s note failed, RPC saw a unique opportunity and aggressively bid to get the title.
“That’s not characteristic of what we do, but we saw the potential for that shopping center and believed we could turn the page on its history,” says Goldfarb. A Troubled Past Royal Palm Square has always offered convenient and plentiful parking, mature foliage, and proximity to residential neighborhoods and major roadways. That hasn’t changed. However, by the time RPC took over, the property looked nothing like the lavish retail destination it once was. When it debuted in 1982, the center’s innovative, open-air design was a welcome departure from the enclosed malls of the day. Shoppers were drawn to the mix of upscale retail shops and restaurants built around the center’s beautifully landscaped courtyards, complete with fountains and meandering ponds. After business hours, it served as an enchanting backdrop for countless parties, weddings and special events.
However, by the early 1990s, growth was rapidly shifting away from Colonial Boulevard and tenants were lured south. Increased retail competition and the construction of the Mid-Point Bridge overpass accelerated the tenant exodus. “The developer didn’t adapt to the changing market quickly enough,” Goldfarb says. “You have to be flexible and if you’re a developer, you can’t keep doing things like you used to.”
Unable to attract new tenants, the center deteriorated. By the time RPC acquired it, the oncestunning common areas were in total disarray, including the fountains, which were “a big muddy, smelly mess,” says Goldfarb. “But we knew what we were getting into when we took over in October,” as well as how to fix it. Since finalizing the purchase, RPC has worked non-stop to rehabilitate the center, physically and financially. The Turnaround Goldfarb says that much of RPC’s initial work was a matter of “performing CPR,” such as repairing and replacing air-conditioning systems and cleaning up the common areas. The company also began refreshing and redesigning tenant spaces, many of which had sat vacant since their retail days. “A space that was designed to sell shoes and clothes won’t work as an office,” he says, adding that older offices are also obsolete. These days, no one needs significant square footage for desks and computers, bookcases and file cabinets.
“Space requirements have changed.” Consequently, RPC is reconfiguring interior spaces “back to squares and rectangles” that can be built out to a tenant’s specifications. Repairs and preliminary refurbishments are also being done to help tenants visualize how they’d utilize the space. “No one wants to see a run-down office for their place of business,” he says. “They want to see the storage, where they’ll put their desks, where the bathroom is, and what and who is around them.”
Christine Rawlings was so impressed with what she saw that she relocated her family’s 35-year-old real estate firm, Rawlings Realty, from College Parkway to Royal Palm Square in April. Having been at the previous location for 19 years, it was something of a risk. “Moving a family business from a landmark location was a huge, huge decision for us. We loved where we were, but we wanted to renovate and upgrade,” says Rawlings, the firm’s manager and CEO. The company also wanted to “rightsize” to about half of the almost 5,000sf it had been occupying and negotiate more favorable lease terms. Royal Palm Square fit the bill. “We love that (RPC) is investing in the center and was taking the time to pre-renovate the space to make it ready for tenants,” she says. According to Rawlings, all of the firm’s 50± agents embraced the idea of a fresh start at a place that is “special to so many. Every one of them has been on board with it. We like the idea of being in an office park and with the Alliance of the Arts and the YMCA right there, it’s just where we wanted to be.”
Rawlings signed a three-year lease for approx. 2,300sf, with the possibility of expanding upstairs if needed. “We believe this location is not only going to be a great place to network with other businesses, it will also allow us to get more involved in our community.” In the near future, the firm hopes to start sponsoring special events at the center and the Alliance, and would like to explore partnership possibilities with the YMCA.
Meanwhile, RPC is always looking for businesses that would complement the burgeoning tenant mix. “Our (local) economy is real estate, service-related, education and, increasingly, fitness,” says Goldfarb. “And if you look at the office market, that’s who has rented.” Thus far, a majority of inquiries at Royal Palm Square have come from businesses seeking offices in the 1,400-2,200sf range, although units are available from 800sf up to 5,700sf. RPC also keeps an inventory of 800-900sf spaces that have been renovated and are move-in ready.
In repositioning the center, Goldfarb says he tries to think like the business owners he wants to attract. “It’s like putting together a jigsaw puzzle. You have to understand the businesses that are going in, what their needs are and how to meet them,” he says. “You also have to consider the neighboring businesses and their interests so that it’s a win-win.” Target tenants include title companies, attorneys, architects, engineers and other professionals. Furthermore, health care specialists, such as a chiropractor or physical therapist, would be a good fit for the center. “I’d like to add a fitness center to the mix,” Goldfarb adds, noting that the 5,700sf space could easily accommodate one. He says that while the space could be subdivided, it would also work well for an organic food market, an indoor farmer’s market, a microbrewery, an event planner or a catering business. Flexible, Reasonable Terms For most tenants, the key question is cost. “They want to know what the price includes and how quickly they can move in,” says Goldfarb. “When people relocate, you need to design a lease that makes sense for them. There has to be a compelling reason for them to move.” Goldfarb says that one of the reasons Royal Palm Square has been so well received is RPC’s flexible approach and all-inclusive pricing. Lease prices vary from $8-$15psf, which typically includes CAM and property taxes. Most are in the $10-$12 range, although it depends on the tenant, unit size and location, extent of tenant improvements and terms. “We design leases specifically for the tenants going in,” he says.
“It’s not one size fits all.” Besides making leases easy to understand, Goldfarb says he’s able to structure them quickly and deliver space expeditiously. For example, in early April, two business owners told him they needed to move in on May 1st. “We had their spaces ready without any problem,” he says. “We can meet tight deadlines and turn space very quickly.” At the same time, tenants are carefully vetted to ensure that their business will prosper at the center. “If they’re prudent, they know what they can afford,” says Goldfarb. “What’s the point of renting to someone only to have them fail in six months? We don’t want to do that.” A Long-Term View RPC has come a long way at Royal Palm Square compared to when it started there six months ago. A new logo and fresh signage are in the works, and repairs to the center’s lighting are being made. Additional improvements are planned to be rolled out over the next several months.
Meanwhile, Goldfarb and his staff continue working diligently to cultivate and restore the confidence of the center’s existing tenants. “At first it was very hard to win their trust,” he says. “They’d heard empty promises for years before we took over, but now I think we’ve turned that corner.” Goldfarb adds that RPC’s in-house construction, maintenance and management staff are being proactive about maintenance and have implemented procedures to address any issues that arise. “There’s a remarkable difference between what the center was and what it is now. When you walk around it now, it doesn’t look worn and tired anymore. People can tell when something’s being maintained.”
Goldfarb’s goal is for the center to be 90% leased by the end of this year. However, until it is fully occupied, Goldfarb says he’ll continue his “full-court press” to lease up the property, even as investors make offers to buy it. At this point, RPC isn’t interested in selling. “The decisions we’re making are within a five- to 10-year window,” says Goldfarb. “We’re very happy to have gotten Royal Palm Square and we’d like to hold onto it. We’re investing to add value to the center and make it a financial success. What’s wrong with that?”
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