Five questions with industrial property manager about Sarasota-Manatee real estate

From the Sarasota Herald-Tribune

Earlier this year, a more than 900,000-square-foot industrial property in Sarasota changed property managers to Chicago-based Hiffman National.

Hiffman National took over management of the industrial property at 6100 McIntosh Road, as well as all property owned by Agellan Commercial REIT in the sunbelt in May.

The Sarasota property, according to Hiffman, “comprises 907,000 square feet of dry and refrigerated (both freezer and cooler capacity) warehouse space. Built in 1982, it remains one of the largest multi-tenant bulk distribution buildings in the state of Florida.”

Bob Assoian, executive vice president and executive managing director for Hiffman National, recently met with the Herald-Tribune to talk about what’s happening in Sarasota-Manatee’s industrial real estate market and about managing one of the largest industrial buildings in the local area.

First, tell me a little about Hiffman National, its experience in property management, and why you believe it was selected for this portfolio and this Sarasota property?  

Based in Chicago, Hiffman National is a national commercial property firm that represents industrial, office, retail and medical office properties in 27 states. We started managing property for Agellan in Chicago in 2014, and that relationship led to new assignments, first in Ohio and Kentucky and now in Florida.

Because the Sarasota asset, 6100 Macintosh Road, is one of Agellan’s most significant investments in the U.S., the firm wanted the best local property management team with national support and resources. Agellan appreciates that Hiffman National has boots on the ground in Sarasota combined with executive oversight from various members of the national leadership team. As a Toronto-based REIT, Agellan relies on us to go beyond the day-to-day management and provide it with asset strategies to maximize the future value of its investments. By offering that perspective, we act as more of a “consultative” resource.

What’s happening today in the Sarasota industrial real estate market?   

The activity in Sarasota mirrors the country’s “frothy” industrial market. According to Costar, asking rates have been trending upward for a few years now, and Sarasota did over 6,000 lease deals totaling 22 million square feet in 2021, with the average deal size around 3,700 square feet and average amount of vacant time on the market of only eight months. Even in a tight market, tenants have a growing list of what they want from their workplace and what type of landlord and property management they are committing to. They have a choice, and an absentee owner or poor property management can detract from tenants’ enjoyment of even the newest facility and potentially damage a business’s image and reputation.

When taking over a new property, what are the most important things to do?  

When assuming management of an asset, Hiffman National utilizes a comprehensive transition checklist as part of our onboarding that has been expertly crafted based on thousands of property takeovers over the past decade. Some key aspects of that process are outlined below:

• Evaluate each existing lease, which allows us to understand the current tenant base obligations quicker.
• Obtain copies of the existing property budget and financial reporting from the former operator or owner.
• Introduce the new management team to the tenants they will be servicing.
• Conduct a site walkthrough to understand property conditions and report them to ownership.

If these activities can be done quickly, efficiently, and successfully, the potential for tenant retention is greatly enhanced.

What’s the vacancy rate at the property? 

The property is fully leased to United Natural Foods (UNFI), MyUS.com, and Albert’s Organics.

What are the long-term plans for the property?  

This asset has been and will continue to be a long-term hold for ownership, which has owned it since December 2016. A capital improvement plan is in the works that includes a new roof, parking lot repairs, fresh exterior paint and updated signage. Ownership also is looking at the feasibility of developing adjacent land to take advantage of the current favorable industrial market conditions. Hiffman National has been asked by ownership not only to tap its Project Services team for the capital improvement plan but also to be part of the development team on the initial feasibility of the adjacent vacant land.