The I-4/Selmon Expressway Connector is having an impact in the east Tampa industrial submarket before the first rigs roll on the mile-long toll road.
Meridian Development Group of Clearwater bought a three-building warehouse portfolio totaling 196,636 square feet for $5 million and plans to pump $600,000 into the 11-acre space over the next two months.
“The southern part of the eastside industrial submarket has never performed as well as north of Adamo Drive,” said Steve Kossoff, Meridian’s managing director. “The connector levels the playing field and will start doing as well.”
The $400 million connector is scheduled to open by the end of the year, taking some 9,000 to 11,000 trucks per day, most doing business at the Port of Tampa, off the narrow streets of Ybor City and east Tampa.
Formerly known as 41 Industrial Center, the newly named Meridian Eastside is located two miles south of the Expressway on U.S. 41, where trucks can turn east toward Interstate 75 or jog west to pickup the connector to the port or Interstate 4.
The warehouses are less than three miles west of the port on Causeway Boulevard.
Kossoff said Meridian is renovating the exterior of the 40-year-old warehouses, adding parking spaces and modernizing interior offices.
“The property was very rundown and that was killing occupancy,” he said.
About 30 percent of the space is vacant and existing tenants are paying around $2 per square foot. Kossoff said price would gradually rise to a market rate of about $4 per square foot.
Owner 41 Industrial Property Group LP had listed the portfolio at $6.9 million.
“They ultimately came to realize what the property was worth,” Kossoff said.
The acquisition is the first for Meridian since 2007. The company portfolio totals about 2 million square feet in Hillsborough, Pinellas and Sarasota counties.
Kossoff said Meridian plans to sell the warehouses in three to five years, aiming for about a 20 percent return to the private equity firms that put up the capital.
“The music has started again,” he said. “We are looking to sell and acquire more properties.”