Only about half of the 125 units comprising City Marketplace are currently in use. But tenants say the complex is alive.
PALM COAST — Sure, about 70 units totaling about 80,000 square feet of commercial space may be currently vacant at City Marketplace, on Cypress Point Parkway behind Walmart. But for some tenants, that just means there’s room to grow.
According to Bhagwan Asnani, City Marketplace owner, his complex is healthy. Rental income is steadily increasing, he says; there’s more foot traffic than ever; tenant quality is rising. Yes, he admits, on average he’ll lose about one occupant every two months; but in the same timeframe, he’ll gain two or three more — almost solely by word of mouth.
Asnani is currently in the second stage of negotiations with 12 potential tenants, and he expects three or four will commit soon. Usually one-fifth of those with whom he enters talks signs the dotted line.
It’s nature of business, Mayor Jon Netts says. With any complex, companies won’t move in until others are there to draw traffic.
But he believes that cycle has ended, and it’s not just because of the city’s presence.
“Initially there was an impact,” Netts says of Palm Coast’s City Hall and its 104 employees, which took up residence in City Marketplace three years ago. “… (But) I think the discovery phase has passed ... City Marketplace is really beginning to stand on its own.”
J.J. Graham, of Hollingsworth Art Gallery, agrees.
Recently expanding his storefront to four units, Graham has seven in-house studios he leases for woodwork, sculpture, painting and a kids’ art gallery — all of which were claimed within the first week they were advertised. That tells him Palm Coast’s cultural need is even greater than he imagined.
“It’s like walking up to a blank canvas,” he says of the vacancies. “A lot of exciting things can happen.”
But the picture isn’t all rosy.
Tangled in foreclosure rumors, ownership disputes and legal proceedings with BB&T Bank, City Marketplace was scheduled to be auctioned March 21, according to a legal notice. But Asnani delayed the proceedings.
In a statement to the editor, he said, “Currently, City Marketplace is not in foreclosure. It is in a ‘reorganization stage under Chapter 11 of the bankruptcy code,’ where the creditors and the debtor try to work out a plan.”
The construction of a new City Hall has also been a hot topic, leaving many residents asking why Palm Coast doesn’t buy the structure from Asnani instead of building another “Taj Mahal” in the future.
“They could expand at will, make money through the rents and not have to move the city offices to a new location,” wrote resident Scott Lamont, in a letter to the editor.
But according to Netts, all that would do is convert lease payments into mortgage payments.
In the current setup, the city occupies a large portion of the first and third floors of one of the four Marketplace buildings, creating what second-floor occupant J.J. Graham calls a “Hollingsworth sandwich.” Any time visitors come to see third-floor workers, an upstairs employee must come and retrieve them. The building wasn’t made for government work, Netts explains, and even after major renovations would still be inherently time-, traffic- and energy-inefficient.
“Why would you buy it?” he asked. “It doesn’t make sense.”
Palm Coast will have a stand-alone City Hall, according to Netts, adding: “There is no question in my mind.” But given current city needs, it won’t have one any time soon.
“I’m not coming from a fear-based mentality,” says Graham, who is for the city pulling out of Marketplace to expand. “I think this town needs to take chances, to grow, and kind of have that brave spirit.”
Dominic’s Deli owner Pete Tavolachi feels the same, although he’ll miss the extra business he gets from workers next door.
“There’s forward movement that needs to take place,” he says. “If (the city) expects to attract (major) industrial business … they need to show something a little better than what we have here.”
Plus, he added, Dominic’s was never modeled on the presence of City Hall to be successful. “I’m grateful for all of (the city employees) coming in. (But) am I relying on them for business? No.”
For Asnani, the breakdown is simple: Activity breeds activity. There’s still plenty of room for growth, but from that perspective he believes Marketplace is on the right track.
In two years, he foresees most of the second floor of buildings B and C, the area surrounding Graham’s gallery, becoming a city cultural center. Currently, the corner houses art galleries, dance studios and a ju-jitsu dojo.
“People are going to start associating this place with art,” Graham said. “… Soho wasn’t built overnight.”
In the meantime, Asnani has been promoting weekend events at the Marketplace, as well as considering the possibility of adding a courtyard.
As far as City Hall is concerned, Netts would love to be forced out by outside business demand.
“I think (Asnani) got caught up in the same economic crunch as so many others,” he says. But in donating retention pond fountains and being one of the majority contributors to Heroes Park, Netts added, he has been a good neighbor to Palm Coast.
“So many people looked at the growth curb that Palm Coast experienced … and they built for an anticipated growth that tapered off, “ Netts said. “Lesson learned.”