City ponders future of Northwood Centre after snagging it at auction for $6.8 million

The city of Tallahassee came out on top of an auction to buy the run-down Northwood Centre with a final bid of $6.8 million.

As of Wednesday afternoon, the 34.51-acre site, which includes five additional buildings in the vicinity, was publicly owned. Now the work begins of figuring out what to do with the 1960s-era mall that has had many iterations in its lifetime.

It’s a chance to revitalize the North Monroe corridor, said Mayor John Dailey, who brought the unanimously approved proposal to join the auction to the City Commission during last week’s meeting.

“The citizens of Tallahassee got an incredible deal from a business standpoint,” he said.

Dailey was giddy about winning the auction, hooting and hollering in front of City Hall before formally announcing the sale.

“This is an exciting day in Tallahassee,” he cheered.

Dailey floated a number of redevelopment ideas including affordable housing, workforce development and a possible performing arts center.

“The sky is the limit. This commission is dedicated to this town and having transformational change and we’re starting on North Monroe Street,” he said. “It is zoned appropriately for us to be able to do a lot of amazing things.”

The property, wedged between Tharpe and North Monroe Street, has faced environmental problems from mold and bat guano in recent years that forced thousands of state workers to relocate.

The development's Miami-based lender foreclosed in January on the previous owner, Northwood Associates, which owed nearly $60 million in back payments, fees and other debts. After the foreclosure, the holding company controlled by LNR Partners LLC paid $100 and was given title to the property in March.

Northwood Associates, which also is being sued by dozens of state workers in connection with the hazardous environmental problems in main office complex, bought the property for nearly $50 million in 2007.

The combined 2018 total market value for the six parcels was $8,896,230 as calculated by the Leon County Property Appraiser’s Office.

In purchasing the land and the buildings, Tallahassee’s government is effectively the landlord for Hooters Restaurant, El Jalisco Mexican restaurant, Milano Pizzeria, the Tallahassee Ballet, Anytime Fitness and a Thai café. The property is currently 12% occupied.

City Commissioner Curtis Richardson said the sale price was “reasonable” considering its size and location. For now, he said it was time to celebrate before the hard work begins.

“I think we got a good deal. The possibilities are unlimited for that amount of land right there in the heart of the city,” he said.

The city has made investments in sidewalks and infrastructure in the area that Richardson believes will augment the newly acquired property. What to do next will take extensive input.

“We’ll be looking for the community for input as to what the community would like to see what we put there,” he said. “But we control it, which is important.”

City Manager Reese Goad, who participated in the auction, said bidding continued Wednesday, leading up to the 12:18 p.m. closing. Tuesday night, the bid stood at $3.5 million. It nearly doubled on the last day. The list of bidders was confidential.

Goad said the money for the property came from project funding that had not yet been put to use.

“We were able to identify funds in several projects that we could free up,” he said. “Basically working capital that we could use to acquire the property.”

After signing the purchase sale agreement, the city will wire 10% of the price with the final balance due within about a month.

The Northwood Centre is a contender in the city’s hunt for a new location for its 600-person police department. This year it had $6.5 million allocated to purchase land for the Tallahassee Police Department’s Public Safety Campus.

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Commissioners in February backed away from a 12-acre South Monroe shopping plaza that was selected.

For just $300,000 more, it acquired nearly three times as much land, but commissioners remained steadfast that extensive community input would go into determining what to do with Northwood Centre.

'One of the best buys in real estate in Tallahassee for a long time'

Property brokers outside the auction say the city got a sweet deal. The mold and bat guano issues were minor compared to the price of constructing a new building, said Brad Parker of TLG Commercial Real Estate.

At roughly $12 a square foot, paring down the decrepit parts of the structure makes sense.

“You can gut it to the bones and come back and still be half price of what a new building would make,” said Parker, who is also one of several brokers who are vendors with the city. “You’re talking about a little mold and a little bit of bat guano.”

Depending on how the city decides to redevelop the property, competition could be intense. Even prior to the auction, prospective ideas for redeveloping Northwood were swirling.

Tallahassee may have just purchased a plot of land that could become a shining example of redevelopment, Parker said. Property of that size within the city limits is rare.

“I’ll give it to them,” he said. “I would equate that to one of the best buys in real estate in Tallahassee for a long time.”

Contact Karl Etters at ketters@tallahassee.com or @KarlEtters on Twitter