Diversifying the Portfolio

Opus South is Focusing Less on Residential, More on Other Sectors

By Natalie Keith

With many speculative investors fleeing the Southeast, residential construction has slowed considerably over the past year.

And the trend should continue through 2007, says Jerry Shaw, senior vice president of real estate for Opus South, the Tampa-based developer/contractor.

Although the slowdown in the residential sector can be seen throughout the Southeast, it is particularly apparent in Florida. "Florida has been such a big part of our business," Shaw says. "Florida has gone up so much faster in terms of demand and appreciation than other areas of the Southeast. It could not be sustained at the levels we've seen."

Shaw says Opus' future will likely bring a more balanced development scenario-with a mixture of multifamily, retail, office, industrial and government projects in the works. "Our goal is to build a highly diversified portfolio," he adds. "Each of these sectors ebbs and flows with market demands, so our objective is to be responsive and opportunistic as opportunities emerge."

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As the company moves forward, few have doubts that Opus South will have an impact in the Southeast. The company is one of five regional U.S. operating units of the Minneapolis-based Opus Group. Headquartered in Tampa, Opus South has additional offices in Atlanta, Boca Raton, Naples, Orlando and Pensacola, Fla.

Since starting operations in Tampa in 1981, the company has developed more than 25 million sq ft of office, industrial, retail, multifamily, government and institutional space.

But the company is more than just a developer.

In 2006, Opus South ranked 69th on Southeast Construction's Top Contractor list with a reported $102.3 million in construction revenue for 2005. The company is somewhat unique in that it serves as both a developer and general contractor. "Opus South is one of many unique developer/contractors who focus on design-build in the area," says Steve Cona Jr., president and CEO of the Florida Gulf Coast Chapter of Associated Builders and Contractors.

In recent years, residential projects such as Meridian at One North Ocean, a $56 million condominium project in Boca Raton; and Park Plaza, a $125 million, 30-story condominium tower in St. Petersburg, have been mainstays of Opus South. In mid-December, Opus was nearing completion of both projects.

In future years, the company predicts the office sector will comprise a larger portion of its development and construction business.

"We're definitely seeing resurgence in office space," Shaw says. "The economy has been in good shape and there is pent-up demand."

He adds that Opus South plans to focus on geographic areas where it has regional offices, and the company recently hired two new people to assist in these efforts.

In December, Richard Clarke was hired as vice president of the company's Fort Myers office with the mission of expanding the company's presence in southwest Florida. In November, Eric Deckinger was named vice president with responsibility for the company's regional office in Boca Raton. Deckinger will expand the company's development activities throughout southeast Florida, with an initial focus on office, retail and industrial projects from the Keys to Miami through the Treasure Coast.

However, the company will use these offices to branch out into other areas throughout the Southeast, such as Atlanta and Charlotte. "We see some key opportunities emerging in the greater Atlanta market, Central Florida, the Florida Panhandle, as well as the Carolinas and Tennessee," Shaw says.

Future projects are more likely to be office or industrial projects. For example, the Atlanta industrial market has been hot in recent years. This is evidenced by Opus South's development of the 260,000-sq-ft Hartman Business Center II on 23 acres in Austell, Ga. The project is part of a five-building master planned industrial park.

"Atlanta has been a very strong market," Shaw says.

One market where the company may delve heavier is the governmental sector. The company is looking to follow up on the success it has experienced with the 587,000-sq-ft Social Security Administration building it is constructing in Birmingham, Ala. The building, located on the edge of the historic civil rights district, will replace the existing Social Security Administration building that housed the agency since the early 1970s.

Opus signed a 20-year lease agreement with the U.S. General Services Administration to design and construct the facility with completion slated for late this year.

The eight-story building will house approximately 2,200 employees and will include regional payment and training centers for the SSA, a child care center, credit union, full-service cafeteria, fitness center and auditorium.

Shaw says other similar projects could be in the offing.

"Within the Southeast, we're looking at three more opportunities to build similar facilities," he adds. "It's a good fit for us because we've done a lot of office buildings, and the design-build approach is well-received within the governmental sector."

Despite the softening of the residential market, Shaw still sees opportunities for residential development in downtown infill areas. An example of this type of project is the 92-unit, $125 million condominium project under construction at 400 Beach Drive in St. Petersburg.

The 590,000-sq-ft, 28-story tower will contain retail and restaurant space on the ground floor. The project broke ground in June 2005 with completion expected in December.

"With the changing demographics of the baby boomers and others, people want to live in downtown areas," Shaw says. "The challenge with these types of projects, however, is making them affordable with the high cost of land and the high cost of construction."