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Tribune to sell Sentinel property, ends redevelopment effort with Stiles

Tribune to sell Sentinel property, ends redevelopment effort with Stiles
An aerial view of Tribune Real Estate Holdings' 18.69 acres spread across two blocks on N. Orange Avenue, with Concord Street running through the middle. The southern block (left side of photo) had been the target of Phase 1 redevelopment. (Filing with City of Orlando)

After working for nearly half of 2015 on redevelopment plans for the Orlando Sentinel property downtown, Fort Lauderdale-based developer Stiles Corporation has not been retained for the project by Tribune Media. Planning for the property stopped by November, and the 18.69 acres are now designated for sale, sources with direct knowledge of the relationship have told GrowthSpotter.

Officials from Tribune and Stiles declined to comment on Thursday, and the sources cited above have requested anonymity, based on confidentiality agreements signed regarding the Orlando property.

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The claim is in line with comments made by lead executives of Tribune Media during the company's Third Quarter 2015 earnings call on Nov. 10, as well as the abrupt end in November to dialogue between local representatives of Tribune and Stiles and city staff, based on more than 100 public emails and documents which GrowthSpotter was provided this week via public records request.

The Orlando Sentinel, owned by Tribune Publishing, has a 10-year lease on the space it occupies on the 18.69 acres spread across two blocks on N. Orange Avenue, a contract that would have to be bought out. It's a wholly separate entity from land owner Tribune Real Estate Holdings, itself a subsidiary of Tribune Media out of Chicago.

"It's an exceptional piece of property, truly a turning point property for downtown Orlando in terms of its mixed-use development potential," said John Crossman, president of Crossman and Company, regarding attention the 18.69 acres will draw on the open market.

"Historically, the negative comment on that site has been potential water contamination from the (printing press) ink," he continued. "A buyer must address that."

GrowthSpotter first reported on Aug. 18 that Stiles Corp. had a Letter of Intent (LOI) to develop the 7.7-acre south block owned by Tribune Real Estate on N. Orange Avenue between E. Concord and Amelia streets, which includes a large parking lot now used by Orlando Sentinel staff and three small office buildings.

MONETIZING REAL ESTATE
Lead executives with Tribune Media said during a Third Quarter 2015 earnings call in November that the company recently decided to accelerate the monetization of its real estate portfolio.

"We've already begun the sales process for two more key properties, Tribune Tower in Chicago and Times Mirror Square in Los Angeles, (which) has become highly competitive," said Peter Liguori, president, CEO and director of Tribune Media, on Nov. 10. "We expect to broaden the sales activity to numerous other properties to take advantage of robust market conditions."

Newspaper owners across the nation have sold real estate assets in recent years as property in downtown areas becomes more valuable, and the industry shifts away from its reliance on print products, and the need for large spaces to print them.

In July 2015, Tampa Media Group, owner of The Tampa Tribune, sold its 4.4-acre riverfront office building for $17.75 million to a South Florida developer who plans new apartments.

Malaysian casino group Genting paid $236 million in for the Miami Herald's 14 acres in Biscayne Bay in May 2011. Plans to develop the property into a casino have yet to materialize.

REDEVELOPMENT PURSUED
Representatives of Stiles and Tribune discussed plans in July 2015 with City of Orlando staff for a 30,000-square-foot grocery store on the Orlando Sentinel south parking lot, but appeared to abandon that idea after planners said side streets couldn't accommodate delivery truck traffic.

A partial view of Tribune Real Estate's south block, looking northward, with N. Orange Avenue on the left side. The property is mainly parking lot used by employees of the Orlando Sentinel.
A partial view of Tribune Real Estate's south block, looking northward, with N. Orange Avenue on the left side. The property is mainly parking lot used by employees of the Orlando Sentinel. (Bob Moser)

Tribune Real Estate's northern block between Colonial Drive and Concord Street (10.99 acres), where the newspaper office and printing press are based, weren't part of the Phase 1 plans.

On July 13, Mellissa Moore, assistant with Stiles' development team, asked Orlando planning staff to help confirm water and electric service availability to the southern block of Tribune property. She specifically proposed at the time a 30,000-square-foot grocery store, another 30,000 square feet of commercial and 30,000 square feet of multi-family residential.

Planning staff held an informal meeting on July 22 with Brooks Stickler, engineer with Kimley-Horn who represented Tribune, and David Siegel, president of commercial development for Stiles, to discuss the proposed uses.

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In an interview Wednesday, Mark Cechman, chief planner with Orlando's Planning Division, recalled that the main obstacle for a grocery store on the property would be how large delivery trucks would move in and out onto E. Amelia and E. Concord streets.

"We said it would be a tremendous challenge (to accommodate a grocery store) because of the size of those trucks," and the small side streets, he said.

No specific development plan for the south block (Phase 1) was filed by Stiles and Tribune since then, Cechman said.

BOLD PLANS
The developer's inquiries refocused in August, with 80,000 square feet of commercial/dining and 650 multi-family units discussed for the property.

That number of apartments would have been twice as many as most other downtown apartment complexes today, and double the amount proposed for Phase 1 in Tribune's broad master plan submitted for the property in Fall 2014.

On Aug. 3, Stickler of Kimley-Horn and Siegel of Stiles emailed city planners to confirm if Orlando's Downtown Area-Wide DRI (Development of Regional Impact) had the capacity to include a Phase 1 project with that commercial/dining square footage and multi-family unit count on Tribune's south block. The developer wanted to confirm that density would be locked into the DRI for their use.

City planner Paul Lewis said the DRI Matrix could accommodate that new development, but capacity is provided to projects on a first-come, first-served basis. Redevelopment plans for Tribune property can only be recorded into the DRI when specific parcel master plans for each phase of it are approved by Orlando's Planning Board and City Council.

Downtown's DRI through 2027 is flexible enough to allow for land-use conversions that can be made at any time by planning officials, Lewis said. So Tribune and Stiles shouldn't worry about changes to the DRI restricting their near-term plans for Phase 1 redevelopment on the south block, or Phase 2 on the north block in the long-term.

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MARKET INTEREST
Developer Craig Ustler, whose Ustler Development has led redevelopment of the North Quarter neighborhood just north of the Tribune property, said Thursday the land would be highly attractive to developers, based on downtown Orlando's growing popularity.

But the size of the property (18.69 acres), if acquired in full, would require a developer to have a clear, multi-phased development program in place, with new apartments favored first because of their proven returns over office and retail, he said.

"To buy in bulk, any developer will be programming a long development timeline there," Ustler said. "But an investor buyer could see this as an opportunity to build off the master plan work already done by Tribune (in 2014), and could create added value by moving the development plan forward, then subdivide the property and sell off in pieces."

A partial view of the northern block of Tribune Media-owned property on N. Orange Avenue. The Orlando Sentinel newspaper offices and printing press occupy the block on the left side of the photo.
A partial view of the northern block of Tribune Media-owned property on N. Orange Avenue. The Orlando Sentinel newspaper offices and printing press occupy the block on the left side of the photo. (Bob Moser)

No price for the property could be confirmed. Current property sales downtown are running near $2 million per acre, putting Tribune's total property value near $40 million, said Trevor Hall, director and land specialist at Colliers International in Orlando.

"It will be very interesting to see what could be developed there," he said. "The North Quarter neighborhood is vibrant; office vacancies downtown are 11 percent so that demand isn't there, retail demand is sketchy. Market will determine the value, and 18 acres is a lot of land."

Any potential buyer must first learn about the state of former ground contamination under the Sentinel printing press area, Hall said. For years, the press was cleaned with chlorinated solvents which were flushed into the city's sewer.

A leaky sewer pipe in the south side of Colonial Drive led to a plume of underground contamination in the past. That cleanup is believed to be resolved, but ongoing liability could lead to a discount in property price, Hall said.

WASTEWATER IMPACT
Tribune and Stiles also wanted to be in agreement with city staff over the impact of new development on local sewers. That exchange can offer insight to other development groups that may now pursue the property.

From late August through mid-November 2015, Kimley-Horn staff talked with Orlando's Wastewater Division about the impact of redevelopment on Tribune's south block on the nearest lift station, which pumps sewage or wastewater from a lower to higher elevation.

In September, Kimley-Horn produced a "Sentinel Sanitary Sewer Capacity Analysis." Tribune's Phase 1 redevelopment would impact Lift Station 2 downtown, specifically a section of pipe along N. Orange Avenue, running north from Colonial Drive to an 18-inch pipe at Garland Avenue.

Kimley-Horn argued that existing sanitation lines along Orange Avenue and Magnolia Avenue have the capacity to serve increased use from a Phase 1 development on Tribune's south block.

Wastewater Division staff agreed, but said the impact would be acceptable only after the city completes a capital improvement project to install a new 18-inch cross connection pipe on W. Marks Street, between Orange and Garland avenues. The project will also replace a section of existing 18-inch gravity sewer along Garland Avenue north of Marks Street, and clean other pipes in the area.

Orlando's Public Works Division confirmed Wednesday that contractor bids are currently being evaluated for this work. A notice to proceed should be issued within 60 to 90 days, with the contract time to run 176 days after that notice.

As of now, Wastewater Division staff aren't aware of other major development projects in the Lift Station 2 basin that would lead to overcapacity concerns.

-- Reporter Laura Kinsler contributed to this story

Have a tip about Central Florida development? Contact me at bmoser@growthspotter.com, (407) 420-5685 or @bobmoser333. Follow GrowthSpotter on Facebook, Twitter and LinkedIn.

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