Interview: Tyler Kovarik, Vice

Tyler Kovarik

Vice President – Florida Operations Schaefer Construction

What supported your decision to make Tampa Bay the first area to target outside of Kentucky?

We’ve worked in Florida for nearly 20 years, sometimes as a general contractor and sometimes as a contract manager for existing clients. We pride ourselves on the fact that we have 86% returning-client business; however, it was getting to the point where servicing those clients in this area was becoming too large to manage.

We work statewide, and at the time, we had projects from Jacksonville to Fort Lauderdale and everything in between the East and West Coast. When we researched Florida, Tampa Bay seemed to be a promising up-andcoming area for future growth. It was also a great cultural fit for us and a good central location for our Florida operations.

Are there specific geographic areas with an increased demand in the Tampa Bay region?

Schaefer has projects throughout Florida in the senior living and commercial markets. While there is a lot of demand in the Tampa Bay area, we are also seeing it expand to the areas surrounding it. That seems to be where a lot of the new construction of healthcare facilities and other new construction of commercial projects are being developed. This development will help serve the needs of individuals who are moving to Florida and better service the communities in and around the Tampa Bay region.

What technologies are most in demand in regard to sustainability?

The construction industry has adapted well. Several aspects of green building and LEED that were huge 12 years ago are now naturally incorporated into projects. Many new developments will be powered by solar. While solar continues to have storage problems, there has been a great deal of advancement in that technology. Solar will continue to be a big thing, specifically in Florida and Tampa Bay.

Tampa was among the fastest-growing multifamily markets in the United States when the COVID-19 pandemic began.

in the event of natural disasters, the city would stop accepting rezoning applications for multifamily developments. As of April 2021, this ordinance was working its way through the approval stages at city council.

Whatever obstacles the future may hold, there are already some impressive residential structures going up. The Alabama-based developer Daniel Corp is building an $80 million, 19-story high rise in the Channel District that will consist of 324 housing units, a mix of studio, one, and two-bedroom apartments. Brasfield & Gorrie is the general contractor, and it is slated to be completed by fall 2022. At Orange Station in St Petersburg, J2 Developers and DDA Development are putting up a mixed-use complex in the DTSP Edge District, featuring 56 condominiums, 30 workforce apartments, as well as office and retail space.

Commercial & industrial The Tampa Bay region is seeing a surge in commercial construction. Industrial, hospitals, infrastructure and tourism projects are all in the works. The fears that the pandemic would slow down office construction appear to have been unfounded, at least in Tampa. What the pandemic has caused is a precipitous rise in the use of e-commerce, something reflected in the growing importance of logistical sites around the city.

On the much-discussed office front, Colliers’ 21Q1 Report said that rather than abandon their offices, many tenants have taken the pandemic as an opportunity to renegotiate lease provisions, with many staying in their current space, providing cause for optimism. Still, net absorption in the first quarter of the year was negative compared to the year before (-618,382 square feet) due to more sublease space hitting the market as well as an increase in new office completions last year (442,147 square feet). The report said that in 1Q21, there was 520,200 square feet of office space under construction in the Tampa Bay region, well below the 962,347 square feet under construction in the same quarter a year prior. Inventory totaled 70,026,796 square feet in the first quarter.

Industrial, however, shows no sign of slowing down. In fact, in its Industrial Report for 4Q20, Colliers reported 5.8 million square feet of industrial space was delivered in 2020. It was the highest number of new deliveries on record, the report said, citing the accelerated growth of e-commerce as a result of the pandemic that spurred industrial demand. “Sales volume surpassed $1 billion in transactions for industrial and flex product, second only to 2019 levels when the market transacted over $1.1 billion in volume,” the report stated. Most of the new

Brian Sudduth

President – Miller Construction Company

The main gateway for technology into the industrial market is e-commerce. We’re building facilities right now that have miles of conveyors that run hundreds of feet per minute. We see distribution companies relying on unmanned forklifts and robots. When you start having all those components, many of the buildings that we’ve traditionally built can facilitate them, but they can be better facilitated if it’s planned upfront. I really believe the biggest development we’ve seen in the community is how these companies are moving, how they’re sorting and handling their products internally when the goals are next-day or same-day delivery. The last-mile distribution for that is also driving an increase in technology because user interfaces have changed shopping. The industrial growth has been big here in South Florida for the last five or six years, with the widening of the Panama Canal and the expansion of the Port of Miami as well as Port Everglades.

product was added in East Side Tampa and the Lakeland area of Polk County.

Opportunity Zones Opportunity Zones were a program approved by Congress in 2017 that aim to increase private investment and development in economically distressed communities through the use of tax incentives. The hope is that, by harnessing the strength of private capital, impoverished neighborhoods will become revitalized. This program has not been without controversy (it was a part of then President Trump’s controversial Tax Cuts and Jobs Act of 2017) and many detractors claim that investors are using it as a way to avoid taxes and expensive housing without benefit to the existing community.

Whatever their benefits or detractions, the Tampa Bay region has taken to Opportunity Zones with great avidity. Hillsborough County can count several of them, especially around Tampa International Airport, Ybor City, Palm River, Port of Tampa, and the University of South Florida. Cushman & Wakefield, the Chicago-based real estate firm, analyzed 45 markets and determined that Tampa Bay was the fourth best in the country as a destination to invest in Opportunity Zones. The Sun Belt generally led the charge, with its business-friendly tax environment and growing population.

An example of this program at work would be the development on Hank Ballard Street. The Central Park Village housing project was demolished in 2007 and the whole area lay unused for years until it became an Opportunity Zone. Now, cranes dot the skyscape and there are 500 market-rate apartments under construction.

Infrastructure With a growing population and plenty of construction, there is concern that the Tampa Bay region is not meeting its evolving needs. There are many questions surrounding the feasibility of the status quo. As well, past experience — from failed transit proposals to stalled highway initiatives — does not provide for optimism. Recently, the Biden administration gave the entire state of Florida a “C” on its infrastructure report card, released for every state in the run-up to its $2.3 trillion spending plan. According to the report card, commute times for Floridians have risen by 11.6% since 2011, 408 bridges and over 3,564 miles of highway are in bad condition, 16% of trains are past useful life, non-white households are 3.5 times more likely to use public transportation, and drinking water infrastructure will require $21.9 billion in extra funding over the next two decades.

“Infrastructure is a big deal in Tampa,” Conn Crabtree, business unit leader for Tampa at Batson-Cook. “We’re looking to attract young talent and new corporate headquarters but it’s hard to do that with a quality of life that involves commutes of 45 minutes to one hour for everybody. There are a lot of infrastructure projects going on right now. If you look at Tampa and St. Pete,

we have three routes to get across the bay. which are at capacity. Continuing to link the different communities and expanding even beyond that by linking Tampa to Orlando, and having those two markets feed more off each other, would benefit both areas tremendously.”

One area on which Floridians are beginning to agree of the existential threat is climate change. The state is particularly susceptible to hurricanes and rising sea levels. In what has huge implications for infrastructure, the coming years will require bold action to protect against natural events. In Tampa, for instance, in response to the growing intensity of seasonal storms, there is a growing effort to move power lines underground. All of the major providers in the area — TECO, Duke Energy, Lakeland Electric, and Withlacoochee River Electric Cooperative — are working on this with varying degrees of progress.

Looking ahead By all accounts, the Tampa Bay region is primed for continued growth in the near term and the construction sector is expected to be busy, despite the ongoing challenges. “If someone says anything negative about the construction outlook in Tampa Bay, they’re probably doing something wrong. It is true that there’s a shortage of materials, people and quality subcontractors, but if you have deep roots in the area and maintain quality subcontractor relationships, you can complete your job on schedule. It’s all about the relationships and trust level you’ve built with folks you’ve worked with for 25plus years. They will bend over backwards to help you,” said Robert Healy, president of iConstructors.

According to Cushman & Wakefield, Tampa Bay is the nation’s fourth-best market for Opportunity Zone investment