Clearwater wants residents downtown. This study shows why that's not happening.
“It’s our biggest challenge,” one city official said.

By Kirby Wilson
Tampa Bay Times
Published: Nov 20, 2019

CLEARWATER ― The city's downtown housing market is listless. Officials have known this for decades.

But now, a city-commissioned study by HR and A Advisers suggests the lack of a downtown market could complicate Imagine Clearwater, the city's $64 million redevelopment of the downtown waterfront.

Developers would have to charge well above $2 per square foot for high-rise apartment complexes in order to be profitable, the study shows. Downtown Clearwater's market currently includes a total of zero buildings charging rents that high.

Real estate investors also prefer to own the land, the study found, which would only be possible on two key city-owned parcels if voters ultimately approve a sale.

"As a developer, that would scare the bejesus out of me,” said Ken Stoltenberg in an interview. He's one of the owners of Tampa's Mercury Advisors, which HR and A consulted for its study.

Stoltenberg said if he were looking to invest downtown, the Church of Scientology's growing real estate footprint would also "weigh into the equation, and not from a positive standpoint.”

The 73-page study, which was submitted to city staff last month, shows how downtown revitalization is something of a circular problem.

Downtown Tampa and St. Petersburg have proven to be fertile markets because, in the last decade, residents have flocked to their commercial centers. That's allowed developers to charge rents well north of $2 per square foot in lucrative apartment high-rises ― which has in turn led developers to build more high-rises for even more residents.

Clearwater has largely been left out of that positive feedback loop, the study showed. Multifamily rents in the city are just 60 to 70 percent of those of its neighbors. And average downtown Clearwater retail rents are half of Tampa's and St. Petersburg's at best.

With Imagine Clearwater, city officials hope hefty investments in a sparkling new park surrounded by mixed-use retail and housing developments will bring life back to the long-moribund downtown.

"It's our biggest challenge,” said Michael Delk, the assistant city manager in charge of Imagine Clearwater planning. "I think we know that the downtown marketplace is anemic.”

Clearwater wanted to have the study done so it could solicit downtown developers with a clear-eyed view of the market. For months, the plan was to do the study, then put out a request for proposals for the city-owned former Harborview site on the corner of Cleveland Street and Osceola Avenue.

In an interview, Cary Hirschstein, an HR and A partner who worked on the economic analysis, said the city should solicit ideas from the development community for three city-owned sites before putting the sites out to bid.