SARASOTA -- Meridian Development Group's purchase of an abandoned Winn-Dixie distribution center just off Clark Road had even some of the more optimistic real estate observers gaping after the sale went through in early 2006.

At 950,000 square feet, the building's size eclipsed other area warehouses like a giant among dwarfs.

Industrial tenants, or more to the point, the lack of them, were also cause for concern.

In Sarasota, businesses seeking 50,000 square feet of distribution space were coveted and prized. Tenants needing 100,000 square feet are practically unheard of in this market.

Then there was cost. Though reasonable from a per-square-foot cost, the center's bulk jacked up Meridian's building price to $30 million.

Taken together, the drawbacks could have forecast a lengthy vacancy and a pretty severe hangover for the Tampa-based developer.

"In our vocabulary, a big deal is 50,000 square feet," said Carl Wise, the president of Preferred Commercial Inc., a Sarasota commercial brokerage firm that specializes in industrial space.

"I wouldn't have bought it and I didn't have confidence in it when they bought it," Wise added. "And I wouldn't have recommended it to anyone. It took someone with experience and imagination to make it work."

Despite the obstacles, Meridian, a company formed in 2000 by former New York industrial broker Steven Kossoff, was undaunted.

Where many saw a mammoth liability and enormous risk, Kossoff saw an institutional-grade asset with potential.

Moreover, he saw a lack of similarly sized buildings in a region with steady population and employment growth.

Just as importantly, Meridian had seen all the building's problems before. In all, the company has acquired and rehabilitated more than two million square feet of industrial and warehouse space valued at more than $100 million.

To lessen its risk, Meridian teamed up with New York-based Hudson Realty Capital LLC. The duo invested about $2.5 million in new paint and landscaping, and began scouting statewide for tenants with an aggressive rental rate of less than $5 per square foot on a net basis.

Prospects learned of the distribution center's proximity to Interstate 75. They were told how 87 percent of the state's population could be reached within a day's drive of the rechristened Meridian Distribution Center.

Specialty retailer Bealls Inc. was the first to sign, taking down 200,000 square feet in May.

That same month, Connecticut-based United Natural Foods Inc. committed to leasing 400,000 square feet. As part of the deal, the nation's largest publicly held wholesale organic food distributor received $600,000 in state incentives for committing to creating 250 jobs.

Early this month, freezer and cooler storage provider Rilon Management LLC agreed to lease 80,000 square feet from Meridian.

"Our new facility sits on a major north-south corridor, providing easy access to the major markets we cater to in the region," said Bill Long, Rilon's president.

The trio of leases has brought Meridian's occupancy rate to close to 75 percent. Kossoff believes the entire center will be leased by the end of the year.

Now, market analysts like Wise are looking at the Meridian project as an unqualified success.

"I am truly, truly impressed," Wise said. "It's shown those of us that thought we knew what we knew something new. Creative energy was brought to bear with tremendous results."

For his part, Kossoff said he always believed the activity would occur -- even when the building was an empty shell of its former life.

"I never doubted it," Kossoff said. "We have a history with this type of project and we simply executed our plan and delivered. It's a great building in a great location in an area where the market fundamentals are strong.

"We knew the minute we stood on the site for the first time that it was a good piece of property," Kossoff added.

Meridian is not finished tinkering, either.

Later this year, Kossoff hopes to begin construction on a series of eight office condominium buildings. In all, that development will add 145,000 square feet to the 58-acre site.

See also...
View other articles