Growing Pains & Gains

A Look at Downtown Pensacola’s Commercial Real Estate Boom

by Danny Zimmern

Downtown Pensacola’s commercial real estate market is on an upward trajectory, with growth showing no signs of slowing down. What was once a nearly nonexistent downtown has become one of Northwest Florida's most soughtafter destinations, with growing interest in commercial spaces driving further development. However, as the market continues to thrive, new challenges are emerging that investors and developers will need to consider in the upcoming year.

Expansion and Demand

The growth in downtown Pensacola has been steady over the last decade, in part due to a significant increase in residents. Just 10 years ago, the downtown population was about 600, but that number has since skyrocketed to more than 5,000. This surge has intensified demand for retail services such as restaurants, supermarkets, fitness centers and other consumer-based businesses.

Downtown’s substantial growth can also be linked to a cultural shift following the pandemic, where remote work allowed people to move to desirable places like Pensacola without the need for an on-site job. Unlike in the past when people moved to where the jobs were, businesses are now relocating to where the people are. This phenomenon has most certainly contributed to the rise in downtown residents and is encouraging companies to follow the growing population.

The transition into remote work also left behind an abundance of office space after 2020, which has since created new opportunities for businesses to establish themselves in the downtown area.

Key Developments Driving Growth

Some of the most impactful upcoming developments include The Waverly on Spring Street, a luxury residential community, and a highly anticipated downtown grocery store, which will be located on the southwest corner of Garden and Spring streets. John Buzzell, managing partner of Bearing Point Properties and developer of The Waverly, is also involved in redeveloping former New World Landing into a Hilton-branded hotel.

Another exciting addition is the upcoming Portside Pickle to be located at the Port of Pensacola. Once complete, it will feature a 40,000-square-foot indoor facility with 12 indoor pickleball courts and an outdoor space featuring cabanas, waterfront food service and eight tournament-level courts overlooking the water.

One of the most intriguing prospects is the potential sale and renovation of the Crowne Plaza Pensacola Grand Hotel. This property has been a complicated piece of Pensacola’s commercial real estate inventory, but with new development and a focus on downtown revitalization, it could be a game changer for the area’s hospitality sector.

Challenges to Overcome

As downtown Pensacola continues to grow, there are a few key challenges the city must navigate, chief among them being parking. While the zoning overlay in downtown provides a 100 percent discount on parking requirements for local businesses, the limited number of public and private parking spaces has been an issue for bringing in national brands and franchise establishments. The general rule of thumb across the country is to provide one parking spot per 250 feet of retail or restaurant space, and one parking spot per bedroom for a residential building. The availability of parking is often a determining factor for businesses looking to invest downtown, as it affects foot traffic and accessibility for both residents, visitors and the working staff.

Another challenge the city faces with an increasing population is adapting land development and zoning regulations. Recently, the city passed a new building height bonus ordinance allowing developers to surpass standard height limits if certain requirements are met, including if the project offers “superior building and site design” or affordable housing. As more residential units are built, services such as retail stores, dry cleaners and salons are expected to follow, so city planners must carefully manage zoning regulations to keep up with the demand.

What's Next for Downtown Pensacola?

Downtown Pensacola has become a vibrant area during business hours with office and retail, and continues to thrive in the evenings and on weekends with a variety of restaurants, nightclubs and arts offerings. The city will be tasked with a balancing act of maintaining Pensacola’s unique character while embracing new commercial opportunities, including the addition of corporate retailers and restaurants. So far, downtown remains a hub for locally owned businesses, but as real estate values increase, larger chains will undoubtedly pursue opening new locations along and near Palafox Street.

The appeal of downtown Pensacola as a destination for both businesses and tourism is evident in our infrastructure improvements, such as the airport’s terminal expansions and new hotels that are being built. Local investors should take notice – real estate remains a stable investment in this part of Florida, and with property values continuing to appreciate, downtown Pensacola will likely remain a hotspot for commercial real estate for many years.

About Danny Zimmern:

Danny Zimmern is the co-owner of The Zimmern Team, part of Levin Rinke Realty – the leading real estate brokerage in the greater Pensacola region. Zimmern leads Levin Rinke Realty’s commercial real estate division, formed after The Zimmern Team joined the firm in August. With almost 30 years in commercial real estate, Zimmern experience features numerous developments in downtown Pensacola and the regions, which include more than 40 U.S. General Services Administration (GSA) transactions and notable success in retail, including partnerships with more than 30 quick-service restaurants and five Publix grocery-anchored centers. His expertise spans the Gulf Coast’s resort and residential market, involving more than 300 investment condo transactions and numerous multifamily developments. Zimmern has built his commercial business through a relationship model, rather than being only transactional. If you need something in Pensacola or Northwest Florida, if Zimmern doesn’t know the answer, he knows who to call – and people take Danny’s calls. For more information about Danny Zimmern and Levin Rinke Realty, visit levinrinkerealty.com.