Palafox leads downtown’s renaissance

Joe Abston, Palafox

Restaurant owner Joe Abston’s investments in downtown eateries have boosted the area’s “hot spot” factor / Photo by Michael Spooneybarger

When restaurant entrepreneur Joe Abston opened Hopjacks on Palafox Place in 2008, he said his goal was to help revive downtown Pensacola and restore its “beating heart.”

Today, thanks to investors like Abston, and creators of new hot spots like Al Fresco, O’Riley’s Irish Pub and Picasso’s Jazz Club, along with mainstays like Seville Quarter, Jackson’s, New York Nick’s, Vinyl and Global Grill, downtown has revived in a big way.

“When Hopjacks first opened more than six years ago there were five restaurants and one bar on Palafox Place,” said Abston. “Today there are 29 restaurants and five bars.”

The lively new downtown scene is having a positive effect well beyond Palafox Place, Abston said.

“Now, because we have a vibrant downtown, I truly think people like AppRiver and IHMC (Institute for Human and Machine Cognition) can use what we have going on here to attract young talent,” he said.

“We’re not just some sleepy town on the Gulf Coast with nothing for young people to do.”

Visible signs of this downtown renaissance are easy to spot these days.

They include:

  • Quint and Rishy Studer’s $16 million, 60,000-square-foot office building under construction at the Community Maritime Park.
  • Construction of a new multimillion dollar Bank of Pensacola on the corner of Palafox and Main is well along and moving toward a grand opening later this year.
  • Beck Property Co. recently broke ground for a three-story office building on a one-acre site within the Maritime Park.
  • Three credit unions -— Gulf Winds, Members First and Pen Air — have renovated existing buildings in the downtown core, bringing scores of new jobs with them.

Downtown’s success does not stop at Palafox and Garden streets.

On Saturdays the most visible and visited venue north of Garden is Palafox Market.

From humble beginnings in spring 2008, the market in Martin Luther King Jr. Plaza has grown steadily. Operating year round, the market’s 100-plus vendors attract between 1,500 and 4,500 customers every Saturday from 8 a.m. to 2 p.m.

Besides offering customers locally grown produce, live plants, baked goods, crafts and antiques, the market is a big economic boon.

“I think the Palafox Market has had a tremendous impact on the downtown area,” said Ron Butlin, Downtown Improvement Board executive director. “I was talking to someone with the Studer Group recently, and they said the Bodacious Olive (owned by Quint and Rishy Studer) used to have its weakest day on Saturday. But now Saturday is their best day because of the crowds the Palafox Market draws to downtown.”

Justin Beck, president of Beck Property Co., sees several developing hot spots throughout the greater downtown area, and he expects over time those hot spots will spread and merge.

“I think there’s real momentum in the Belmont-DeVilliers area, and I’m seeing real interest from developers in the IHMC-Tech Park area of the city,” said Beck.

Outside the core

To anyone visiting downtown these days, it’s abundantly clear Palafox Place’s heart is beating loud and strong.

But what is the pulse-like beyond the city’s retail and entertainment core in those neighborhoods to the east, north and west?

Some would say it’s weak; there’s not much happening in either the residential or commercial sectors. Scores of commercial properties in the downtown area are in substandard condition or sit empty and for sale, and have remained that way for years. This surplus commercial floorspace has all but halted new construction in the Community Redevelopment Agency’s district, bounded on the west by A Street, on the north by Cervantes St., and on the east by 17th Avenue.

Founded in 1980, the CRA District was created by the City of Pensacola to fund public infrastructure improvements and stimulate private investment.

New construction permits over the past eight years have been scant, according to data provided by Sherry Morris, planning services director for the city.

In 2013, for example, just three permits were issued for new commercial construction in the district; two in 2012; none in 2011; one in 2010; one in 2009; seven in 2008; three in 2007 and three in 2006.

“When you keep your eyes open as you drive around, it’s obvious there’s abundance of commercial office space vacant in downtown Pensacola,” said advertising executive Ellis Bullock. “Even though we are creating a vibrant downtown, it’s more centric to a local entertainment center, and it’s not attracting the kind of commerce to go along with it.”

Bullock and others point to large tracts of land — the 19-acre ECUA property on Main Street, the 9-acre Pensacola Technology Park and the 4-acre site of the former Seville Inn — as key parcels that need to be filled for the prosperity of Palafox’s entertainment core to spread.

Bullock is trying to sell a commercial office property on Bayfront Parkway; it has been vacant for three years without an offer.

Infilling those vacant properties and rehabilitating existing commercial structures were two key issues identified in the mayor’s Urban Redevelopment Advisory Committee report issued in 2013.

Another issue holding back downtown growth is that some investors paid too much for commercial land prior to the Great Recession and are holding on, hoping the market strengthens and land prices move back to previous levels.

“I know I’ve sold and bought property for people who are speculators down along the Government Street stretch,” said John Griffing, CEO of NAI Halford, a Pensacola-based commercial land broker. “And so far they’ve been pretty disappointed with investments they’ve made. I think it’s just going to take some time for downtown commercial property prices to recover.”

Give it time, some say

Despite what many see as a sluggish local economy, some observers say downtown’s next wave of capital investment is not a matter of “if” but “when.”

“I think we’re on the cusp of seeing that recovery,” said Butlin. “Our goal at the DIB is to create an interesting place and let the market respond.”

To that end the DIB’s board has crafted a game plan called “HEAART,” an acronym for Housing, Economic Development, Aesthetics, Arts and Culture, Retail and Transportation.

Among HEAART’s goals to accomplish by 2016 are:

Attracting more quality retail establishments;

  • Increasing the number of affordable residential units;
  • Increasing visitation downtown;
  • Improving community awareness about the economic importance of a vibrant downtown.

One way to maintain and build that population base is provide more residential units that are priced right, and more retail establishment that will attract shoppers and downtown residents. Both Butlin and DIB board member John Peacock say they are encouraged by the gradual increase of retail stores in the downtown area.

A centerpiece of that retail growth is the recently completed renovation of the Artisan, a century-old building at the corner of Palafox and Main streets whose ground floor will house several retailers.

Another recent attraction is the $4 million expansion of Ever’man’s Natural Foods, now a full-service supermarket that downtown planners have long sought.

“I think we’re doing a lot right in the downtown area, but we get impatient time-wise just like everyone else,” Butlin said.

Butlin agrees there is an excess of vacant commercial properties in the city, but he also notes that many of the existing buildings need to be rehabilitated before they can become attractive to businesses looking to relocate to downtown.

Housing is the key.

Opinions vary on when this next new phase of downtown commercial development will begin, but there is near unanimity among local experts as to what’s needed to get it started: Affordable residential housing, and plenty of it.

First the housing, then the commercial investment will follow, the experts contend.

“People want to live downtown, but there’s really not the opportunity,” Peacock said. “There’s a lot of residential property available downtown, but very few investors, other than the Studers, are pursuing it.

“It’s really important for the DIB to work hard to continue building downtown Pensacola, because it’s vital that the city’s population doesn’t slip below 50,000 people. A lot of bad things can happen if we go below 50,000 from a state and federal funding standpoint.”

Peacock said cities below the 50,000 population base are at a disadvantage when applying for state and federal economic development grants, and grants for support of public services and capital infrastructure projects.

The Studers’ plans to build a mix of residential housing and retail space on five acres of the Pensacola News Journal site they bought in late 2013 have boosted the spirits of many believers in downtown.

“The Studers turning the PNJ property into apartments will be an amazing benefit to downtown Pensacola,” said Susan Campbell, a DIB board member.

That planned development, which is expected to begin in late 2014, plus the YMCA’s plans to build a $15 million facility on one acre of the PNJ site, have caught the attention of many would-be investors.

Abston believes the Studers’ plans will have a huge impact on downtown. He’s long been an advocate for building more housing in the downtown area.

“I’ve been talking quietly to a handful of people to try and promote this micro-housing concept for downtown,” Abston said. “I’m talking about really well-made housing units in the 400- to 500-square-foot range. I think quality housing density is what will really spur the next big phase of growth downtown.

“We need people living downtown, people who can walk to work, ride their bike to work.”

Residential developer Mike Bass said rent rates in the downtown area are at an all-time high.

“Rental units are getting snapped up,” Bass said. “Many two-and-three bedroom units are going for $2,500 a month and nobody even blinks an eye at that price.”

While a growing downtown residential population is seen as integral to attracting big-ticket capital investment, there are hurdles.

“In terms of selling properties, their values are off 40 percent of what they were before the housing collapse,” Bass said. “But rents are way above the value of properties downtown.”

Bass said there are three large-scale properties in the downtown area that he would love to develop.

“But building costs have gone up 60 percent over what they were two or three years ago,” he said. “Just the sticker shock of those costs, coupled with the price of the land and challenges of getting financing, is keeping a lot of people away from downtown.”

ECUA property

A potential lynchpin for growing downtown’s population is the 19-acre former ECUA Main Street property, across from the Community Maritime Park.

“I think what would really help downtown is if we can put the right mix on the ECUA property,” said Griffing. “What the market is telling us is that site is best suited for a multifamily component. But the most recent studies say we don’t have the market yet.

“Some developers I’ve talked to say a hotel should be in the mix, but most everyone is looking at it from a multi-family investment,” he said. “But, certainly, that property could sit there for another five years.”

Attracting major capital investment to the downtown area is a top goal of the Greater Pensacola Chamber’s Scott Luth, senior vice president for economic development.

Luth, a key figure in the recent landing of ST Aerospace at Pensacola International Airport, has turned his attention to the Pensacola Technology Park. Built with a federal grant, the Tech Park property fronting Ninth Avenue has sat vacant since August 2011.

Now it is being looked at as the possible site for a 70,000-square-foot building that would house a number of tenants.

Earlier this year the Pensacola-Escambia Development Commission, which controls the park, signed a Memorandum of Intent with Space Florida to proceed with negotiations that would lead to hiring an architect to design the building.

“We still have a good ways to go with our negotiations with Space Florida, but we definitely have an anchor tenant committed to the park, and have several letters of intent from others companies interested in locating there,” Luth said. “We’re very excited about this project.”

Space Florida would secure financing for the building and own it, Luth added.

Thinking small isn’t a bad thing

The DIB’s Campbell says it’s OK to “think small” when it comes to filling up Pensacola’s vacant commercial spaces.

Campbell says her first priority as a DIB board member is expanding downtown parking access. Then, she wants to work toward creating a cottage industry district, perhaps with some tax incentives and perhaps greatly reduced rent costs, to attract entrepreneurs, and small businesses such as microbreweries, food shops, art studios and craft makers.

“The DIB can’t fund people to open craft shops, but we can work with the state and city to create a cottage industry district in some of the under-utilized commercial and residential areas of the city.”

Many, including Beck, still see plenty of room for Palafox to grow.

“What I think will happen is that you will continue to see the Palafox core become more dense and more developed,” said Beck. “I don’t think we’re anywhere near to seeing what Palafox will look like going forward. It will always be the place to be.

“But that doesn’t mean the other areas in the city won’t eventually develop,” he added. “We’re getting there.”

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