Three's Company: Shopping Centers Share Pain

BayWalk had oodles of potential when it debuted in 2000, just like its Tampa contemporaries Centro Ybor and Channelside Bay Plaza.

But today, with BayWalk mired in foreclosure proceedings, longtime tenants such as Domenic D'Angelo of Gratzzi Ristorante can rattle off a series of unfortunate events that have added insult to the injury of chronic economic struggles.

First there were demonstrations by the International People's Democratic Uhuru Movement, which claimed security at BayWalk targeted black youth, and anti-war protesters. Then, a band's speaker fell and critically injured a 3-year-old boy in the BayWalk courtyard. Finally, at Christmas time a year ago, a young man was shot in the leg three blocks from BayWalk.

D'Angelo said he has had to lay off workers to cope with declining business at BayWalk.

"I still believe with the right management this place can come back," D'Angelo said. "I'm risking the rest of my life with this place."

Insiders say BayWalk, Centro Ybor and Channelside struggle for different reasons, but similarities are clear, too.

Each opened in 2000 or 2001 when urban, open-air, entertainment-focused shopping centers were in demand. Nationwide, these "entertainment centers" often had financial backing from cities that were hoping to revitalize struggling downtown districts, said Robert Bach, chief economist for the Grubb & Ellis real estate firm.

Locally, St. Petersburg paid nearly $13 million to build BayWalk's parking garage, and Tampa guaranteed a $9 million loan to help construct Centro Ybor. Tampa has been paying about $770,000 a year on that loan, because the original developers said they were unable to repay it. At Channelside, the Tampa Port Authority owns the ground that the center sits on and leases it to the plaza's owner, Ashkenazy Acquisition Corp.

The projects show fleeting success, at best, in the Bay area. But developers and commercial real estate officials insist similar projects have worked well elsewhere.

Tenants and the owners of the three local centers are rethinking what went right and wrong and how they can bring the projects to their full potential.

Among problems they cited:

•Too little retail. In each of the three local projects, the center's only anchor is a movie theater complex. A theater alone can't keep the rest of the complex healthy, said David Harvey, a partner at Chicago-based M&J Wilkow, which bought Centro Ybor two years ago for about $13 million and is considering making an offer on BayWalk.

"Do you go try to buy a pair of sunglasses when you go to a movie?" Harvey asked.

Urban entertainment centers that are successful, such as Faneuil Hall in Boston and Harborplace in Baltimore, have many more stores to keep drawing customers, Harvey said. Plus, an oversupply of theaters in the Tampa area has hurt the Muvico complex at Centro Ybor, he said.

M&J Wilkow is clearing out 10 of Muvico's 20 theaters at Centro Ybor and making room for loft-style office space. He's hoping architects, graphic designers and other creative professionals will want offices in a hip Ybor City location.

•Safety concerns. Tenants say the complexes are safe, but concerns about loitering youths, muggings and the occasional shooting prevail. Michael Whalen, president and chief executive of Fort Lauderdale-based Muvico, faults local governments in Tampa and St. Petersburg for failing to keep the peace.

Whalen said the Ybor Muvico is marginally profitable despite underperforming for years because the original developers cut him a deal on rent. This year, about 215,000 people will visit the theater. When it opened, 500,000 visitors were projected annually.

"If you do word association with Centro Ybor you're going to get 'unsafe,'" Whalen said.

At BayWalk, Muvico initially was a big success, with about 1.1 million visitors per year. That has dropped to about 600,000, he said.

"You walk to the parking garage and you've got protesters to the left of you, protesters to the right of you," Whalen said. "You've got kids everywhere hanging out."

Some tenants say that BayWalk is a victim of its early success. As the plaza became a town square early this decade, it also became a prime spot for community activists to rally, they say.

•Poor parking. While each complex has a parking garage, people in certain cities appear unwilling to pay to park, especially when parking is free at suburban shopping centers.

Cincinnati tried something similar to the Bay area's entertainment centers several years ago with an open-air entertainment complex called Newport on the Levee. Like Centro Ybor, the project was built by Columbus, Ohio-based Steiner + Associates, which partnered with the Sembler Co. of St. Petersburg to build Centro Ybor. A Steiner representative could not be reached for comment.

Some restaurants and the comedy club at Newport on the Levee appear to do well, said Andrew Sellet, a senior retail associate with the Cincinnati affiliate of real estate firm Colliers International. However, stores at the center have not fared as well and the owner is trying to convert some retail spaces to office spaces. Like at Centro Ybor, architects and creative professionals are targets, Sellet said.

"You have to pay to park," Sellet said. "They're willing to pay to go eat, but they don't want to pay to go shopping."

Fred Bullard, who built BayWalk with the Sembler Co., now controls BayWalk on his own and appears willing to hand over the complex to his lender, Wells Fargo. The balance due on the mortgage is about $14.5 million. Bullard said he's willing to continue owning and operating BayWalk, but only if Wells Fargo lets him put in some new tenants and gives him some relief in the mortgage terms.

Wells Fargo rejected his attempts to renegotiate, he said. A foreclosure attorney for Wells Fargo has said he won't comment on the foreclosure case.

Bullard said BayWalk was very successful for the first few years and can be successful again, but he never expected it to make a lot of money because of high costs in downtown St. Petersburg. BayWalk cost about $40 million to develop.

With lessons learned, some tenants at the three complexes are tweaking their business models. At Channelside, the company behind Splitsville, Tina Tapas, Stumps Supper Club and Howl at the Moon has marketed heavily to fans visiting for basketball tournaments and college bowl games as their prime downtown destination.

Last week, its restaurants were Ground Zero for fans of the Iowa Hawkeyes and South Carolina Gamecocks, the teams in Tampa's Outback Bowl, said Guy Revelle of Millennium Management Group.

Meanwhile, Howard Edelman, the owner of Channelside's movie complex, admits he's struggled, but said he is committed to Channelside Cinemas & Imax. Edelman hopes downtown Tampa's condo market will rebound, and his theater will be in prime position to serve downtown residents.

To bring in extra money, Edelman has persuaded Verizon to sponsor his Imax screen, and he is devoting one of his regular screens to hosting private parties. He has renamed the screen the Dolce Vita dinner and movie lounge, built a bar in the front of the theater to serve cocktails, and is marketing heavily to host corporate events, film festivals and private parties.

Edelman is moving to the Tampa area from Long Island, N.Y., to keep a closer eye on his theaters.

"We need to make this work," he said.