UPDATED: January 18, 2017 3:41 PM — An affiliate of Orlando-based digital marketing firm Launch That paid $15.5 million last week to fast-track its growth, buying a five-story office building in Downtown Orlando where it can expand, while repositioning the property as a hub for small tech companies.
Located at 1 S. Orange Ave., on the southeast corner with E. Central Boulevard, the 103-year-old "Yowell-Duckworth" building boasts about 80,000 square feet of rentable space. Originally home to Orlando's first department store and movie theater, its ground floor retail tenants now include Pita Pit, Baba's Mediterranean Cafe, Tier Nightclub and more.
The deed was signed on Jan. 12, and recorded Wednesday morning in Orange County.
With about 95 employees today, Launch That's rapid growth in recent years has been limited by the roughly 15,000 square feet of office condo space it owns and rents in the south tower of downtown's The Plaza building.
Aaron Gray, senior vice president with JLL in Orlando, met Launch That director Brian Wilson about two and a half years ago through his work in repositioning the Church Street Exchange building as a hub for tech startups.
Wilson and Gray began searching then for a larger space downtown for Launch That. Those efforts were ramped up in First Quarter 2016, as the company's expansion was further limited by its current condo space.
"We exhausted our search for everything that was on the market, but nothing really checked all the boxes that they wanted to hit. Given the fact that Orlando is a young city, these tech companies want to be in creative spaces but in buildings with character, not in the typical Class A corporate office environment," Gray told GrowthSpotter on Wednesday morning. "I began looking at off-market opportunities in (Q1 2016). We approached Hank Katzen, owner of (1 S. Orange Ave.), and developed a repositioning strategy for the building."
That repositioning would simply continue the work Katzen, owner of MarKay Management, had already started of turning the building into a hub for small tech companies. Catalyst co-working space, digital healthcare service provider The Garage and broadcasting startup ShoFlo.tv are now tenants there.
"As we started looking into the building, you start to realize the potential of large open floor plates with high ceilings, and cool original elements like brick walls and wood floors that date back more than 100 years," said Brian Wilson, a board of directors member at Launch That. "That aesthetic works well for young companies."
About 20,000 square feet of the building's office space is currently vacant, for which the new owner will retain JLL's Gray to market.
Launch That is expected to occupy roughly 18,000 square feet over one and a half floors, and begin relocating to 1 S. Orange in the third quarter, Wilson said.
The company is in the early stages of planning extensive capital improvements to the building, talking with the city's sustainability department and Orlando Utilities Commission about how to invest in modern HVAC, electrical and other systems that can be updated with sustainable features, Wilson said.
"We're still working through how to accomplish that in an occupied building," he said. "We're excited to work with Chris Castro (Orlando's director of sustainability)," adding that early calculations show solar panels on the building's roof would add value.
"Working closely with the tech community I've seen there is a lack of supply of creative office space in Downtown Orlando," Gray said. "So it's been exciting to work with Brian and his partners in the acquisition of this building because ... their vision for this building will create additional supply, and another home for tech companies in downtown until Creative Village delivers supply for those users in late 2019 at the earliest."
The buyer sourced a $9.6 million loan from SunTrust Bank to finance the acquisition.
"SunTrust has been our lending partner for several years, and really worked hard to help us develop a strategy to acquire this asset," Wilson said.
Katzen's affiliate selling the building was represented by Jeffrey Bloom of NAI Realvest.