One of Westshore's largest office complexes is on the market
By Ashley Gurbal Kritzer
Tampa Bay Business Journal
Published: Jul 17, 2023

Meridian Center, one of the largest office complexes in Tampa's Westshore business district, is for sale.

Highwoods Properties Inc., one of the region's largest corporate landlords, has engaged CBRE Group Inc. to market Meridian Center for sale, according to real estate sources who asked not to be named because of the sensitivity of the deal.

A spokesperson for CBRE declined to comment. A representative for North Carolina-based Highwoods did not respond to a request for comment.

The three-building Meridian Center — best known for its visibility from Interstate 275 — totals 591,000 square feet, comprising over 4% of the 13.3-million-square-foot office market in Westshore. A team of brokers from CBRE began marketing the property in mid-June, sources said, and it's not known when they intend to call for offers.

Meridian Center, which was built in phases between 1985 and 1989, has looming lease expirations that will leave the property 60% occupied in the near future, sources said. And while the price Highwoods is said to be seeking — less than $160 per square foot, or less than $100 million — is a bad look for Tampa's office market, commercial real estate observers say the potential sale is more nuanced than that.

Office properties, particularly aging ones like Meridian Center, are struggling nationwide in the face of remote and hybrid work. Hybrid work has set off a flight to quality, meaning that some companies are downsizing and paying the same amount of rent for less space in a nicer building with better amenities. That dynamic has put pressure on publicly traded real estate investment trusts like Highwoods to unload anything less than a trophy property, lest their stock prices plummet.

In May, Highwoods sold One Independence Park, the former headquarters of ConnectWise, for $168 per square foot. But while Meridian Center is facing a major vacancy, the three-building One Independence Park is fully leased to Wipro and HealthPlan Services Inc.

A three-minute drive from Meridian Center is a property that illustrates what aging office complexes are competing against — a property in which Highwoods is a joint venture partner: Midtown Tampa, a mixed-use development where the office space is fully leased and more is under construction.

Highwoods partnered with Midtown master developer Bromley Cos. to build Midtown West, which landed the corporate headquarters of Tampa-based Kforce Inc. in 2021. Kforce has a fraction of the office space it had in Ybor City, its previous headquarters site, and has an "office occasional" philosophy that brings employees to the office for intentional, in-person collaboration.

Highwoods and Bromley are under construction on Midtown East, a tower that landed the headquarters of Tampa Electric Co. and Peoples Gas. Beyond modern office space, Midtown's amenities include restaurants, a coffee shop, retailers, Whole Foods Market Inc. and a dual-flag hotel, all within a safe, comfortable walking distance.

At Meridian Center, Highwoods' marketing materials say it has Highwoods-branded fitness and conference centers, a cafe and an express mail dropbox. To lure people back to the office, decision-makers are looking to more dynamic environments like Midtown, Water Street Tampa and The Heights.

The problem for Tampa Bay's office market is that properties like Meridian Center greatly outnumber properties like Midtown. The region's entire office market — including central business districts in Tampa and St. Petersburg, Westshore, and the Hillsborough and Pinellas suburbs — totals 44.5 million square feet, 23.9 million of which is considered Class A, according to CBRE.

The multitenant office buildings that opened in Midtown, Water Street and The Heights between 2021 and 2022 total less than 1 million square feet, and all are fully leased or approaching fully leased. Those buildings' success would normally prompt more developers to seek out similar projects, but with interest and insurance rates rising — and a lack of confidence in the office market nationwide —office construction financing is nearly impossible to secure. As a result, Tampa Bay will have two disparate office markets for the foreseeable future.