It's time for St. Pete Beach to grow up
By Eric Snider
Tampa Bay Business Journal
Published: May 15, 2015

The bulldozers aren't circling just yet, but St. Pete Beach looks to be in line for a new wave of development, marked by more hotel rooms, revitalized retail and perhaps even a different skyline.

"I think the community is poised to blossom in the next 24 to 36 months,” says Tampa-based Lou Plasencia, a prominent hotel industry consultant who is widely regarded as the oracle of Bay area hospitality real estate.

Why such a sunny outlook?

On March 25, St. Pete Beach ratified a state-required comprehensive plan, allowing the community to emerge from more than 10 years of lawsuits, internecine feuds and widespread acrimony. The often ugly dispute essentially pitted those in favor of aggressive development against those who wanted to maintain sleepy St. Pete Beach - or, at the very least, insisted on a sensible approach to development.

After an intensive period of negotiations in the first part of this year, the once-warring factions appear to have reached an enduring compromise.

As a result, hotels in the newly designated Large Resort District (LRD) - a one-mile stretch along the west side of Gulf Boulevard - are now allowed a maximum height of 116 feet, or roughly 11 floors, and a density of 75 units per acre, which more that doubles the previous 35.

That has paved the way for operators to reconsider expanding their facilities or, perhaps, tearing them down and building anew. It also could lure big-money players into the market, experts say.

Beyond the obvious jobs and economic confidence new development would bring to St. Pete Beach, the city, which boasts some of the best beaches in the world, can fully emerge from dark times, sparking commerce and new business development for surrounding communities, too.

Prior to the accord, with the city's master plan burdened by years of near-constant court challenges, the resort operators simply could not take the risk of upgrading their assets. Besides, given the shroud of uncertainty, no right-thinking lender would've provided the financing.

"We were absolutely in a holding pattern,” says Mayor Maria Lowe. "We went through more than a decade of virtually no development or redevelopment. I'm confident that the stagnation has lifted.”

The properties in the LRD include The TradeWinds Island Resorts, Dolphin Beach Resort, Sirata Beach Resort, Postcard Inn and others - and while none have filed plans with the city, most industry watchers feel it's just a matter of time before they put their expansion hard hats on.

It has to happen. Although beleaguered St. Pete Beach has fared quite well in the Florida tourism boom that sailed in with the economic recovery, it can't tempt fate much longer.

"St. Pete Beach is on its way to being a considerably outdated destination,” says Keith Overton, president of the TradeWinds. "Most of the buildings were built in the '60s, and at some point the product must be modernized or you become a second-tier market.”

That notion comes into even starker relief when you look a few miles north to Clearwater Beach, which took the high-density, high-rise approach. Whichever way one defines sensible beach development, there's no arguing that the shore community in Clearwater has become the hub of Pinellas County's biggest industry: tourism. As one insider who asked not to be named put it: "Clearwater Beach has been eating St. Pete Beach's lunch for a long time now.”

In fiscal year 2014, Clearwater/Clearwater Beach generated nearly twice the bed tax revenue of St. Pete Beach.

Split personality

To be fair, not all of St. Pete Beach is fatigued. From the pink majesty of the Loews Don Cesar Hotel, southward through the Pass-A-Grille historic district, the community is in pretty fine shape.

The acute problem area is on the north side, in the depleted downtown. Corey Avenue, the de facto Main Street, runs about three quarters of a mile, from the Gulf to the Intracoastal Waterway. A strip club and porn store are among the businesses that greet visitors coming across the Corey Causeway.

Several acres of vacant land occupy Corey Avenue's eastern edge - waterfront land that sits there because it made no sense for owners to develop it amid the court challenges. Dotted throughout downtown are empty lots and buildings, as well as the rows of pods at Beach Mini Storage, probably not what comes to mind for prime beach property.

"There's no brand identity on St. Pete Beach,” says Lowe, who is one year into her three-year term. She's been widely credited with helping break the impasse over the master plan.

The mayor is adamant that the downtown district presents the best opportunity for developers in the near term.

Mike Connor, principal of Safety Harbor-based Paradise Ventures, which specializes in retail real estate, sees the potential as well. Despite the blight, he's in discussions with some beach-friendly national brands interested in setting up shop downtown.

"I liked the [St. Pete Beach] market before; I like it even better now,” Connor said. "What we needed to know is what the community wanted, what it will support. And if you like the direction - let's do some deals. The demographics are good, and if the city works out the permitting side, retailers want to be there.”

Proceeding with caution

Years of strife have left people understandably wary about rushing to invest in St. Pete Beach's rebirth. Hotel operators are skittish about the comprehensive plan's staying power. Could lawsuits surface again?

Attorney Ken Weiss, who spearheaded the legal challenges to the comprehensive plan and led the settlement negotiations, is cautiously optimistic. So far, he sees the new city commission led by Lowe - which ousted longtime City Manager Mike Bonfield and replaced him with Wayne Saunders - as being far more trustworthy than its predecessor.

"Providing the city follows the terms of the settlement agreement, which I expect it will, there should be no further litigation by the citizens,” Weiss says. The city has launched a number of studies involving traffic, parking, density and the sewer system to see if the new comprehensive plan is viable.

"The fact that they're actually doing the studies is progress,” Weiss says. "The previous administration never did. They just told the state planning entities that they did.”

Overton of the TradeWinds says his ownership group has not set any plans in motion, but their property is a prime example of what St. Pete Beach resorts have become, and probably should not remain. The 796-room facility was cobbled together through acquisitions of several adjacent mom ‘n' pop properties, rendering it a campus of sorts. Its tallest building is eight stories.

The TradeWinds bought the Coral Reef and demolished it this year. The company rebranded what was once the Sandpiper Suites into Guy Harvey Outpost, which opened in 2012. All these moving parts have produced a St. Pete Beach-style oddity: Nestled between the Outpost and the rest of the TradeWinds property is the separately-owned Alden Suites resort. The TradeWinds website spins the gap as "Only 200 Flip Flops Away.”

While transforming the TradeWinds is necessary, how to go about it is complicated.

"We've got to figure the best way to develop the space into a competitive asset as opposed to dumping a big box of units on a piece of land,” Overton explains. "You still have to drive resort appeal.

When land development was under challenge in the court system, we didn't really put that much thought into [redevelopment], so I would guess for the rest of this year and even into 2016, we'll be putting a lot of thought into how to best develop our sites. But whoever goes to first file the permit and start building will have a big impact on the shape of St. Pete Beach.”

Eric Snider is a reporter for the Tampa Bay Business Journal.