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Feb 08, 2024

A $10 million renovation of The Paramount in downtown Orlando was recently completed

Orlando Business Journal

Feb. 7, 2024

By Steven Ryzewski


A Massachusetts-based firm’s $10 million repositioning of a downtown Orlando apartment tower includes an unexpected addition: office space.


Northland, a national real estate private equity firm, recently announced it has completed its six-year effort to upgrade The Paramount — a 16-story tower overlooking Lake Eola which includes a popular Publix grocery store and other retail concepts on its ground floor.


As part of the work, 10,000 square feet of mezzanine space on the second floor has been converted to office space. More than half of that space already is leased, too, as commercial interior design firm TJNG Partners Inc. has signed an eight-year lease for 5,200 square feet.


TJNG Partners currently has office space nearby at 205 E. Central Blvd.


Executives for Northland told Orlando Business Journal the repositioning project included a “gut rehab” of the leasing entrance, the fitness center and club room, the outdoor amenity area, the pool deck and entrances into the building.


Plans were in place for the work when Northland acquired the downtown building for $65.25 million in May 2017, and financing for the $10 million project was provided by Freddie Mac via a 15-year loan with 3% interest.


The decision to add 10,000 square feet of office space may seem surprising, given the troubles of office real estate in Orlando and more broadly — but Rita Tyszka, Northland’s vice president of commercial, said the group felt it was the best way to activate the space, which previously was used for storage and was not built out.


“We found that, ultimately, what we had … was very attractive to office tenants looking for non-traditional office space.”


That was the case for TJNG, said Jennifer Kennedy, president and partner for the firm, which is readying to celebrate its 30th anniversary.


Kennedy told OBJ her firm worked with Orlando-based 4Acre Commercial Real Estate and looked at several spaces before being shown The Paramount.


“It was like ‘wow, this is amazing,’ because it’s first-generation space that has never been built out,” Kennedy recalled. “It’s got amazing light and a view of Lake Eola — it gave us a creative palette to explore our own creativity for our own offices. That was probably one of the biggest draws.”


Kennedy added that her 11-person team is back in the office full-time, noting that helps with collaboration. “Working remotely isn’t as conducive to success.”


Meanwhile, Northland was represented in the lease negotiations with TJNG by Katherine Scatuorchio, director for the Orlando leasing team with Tampa-based Franklin Street. Scatuorchio also is marketing the remaining office space for lease on the mezzanine level.


Additionally, Devin Evangelinos, Northland’s vice president of asset management and capital projects, noted the firm’s intention to keep the property in its portfolio as a long-term hold and how that allowed it to thoughtfully consider whether office space was a fit for the mezzanine level.


“Given our long-term hold of this property, we had the ability to wait until the market was right to find a great office tenant for that space.”


Moreover, the building has 100% leased its available retail space and has appreciated since Northland bought it, recorded as worth more than $113 million by the Orange County Property Appraiser.


As for the office sector, The Business Journals recently reported that office leasing activity has started to pick up in recent months, though it remains far from the level it was at before the Covid-19 pandemic.


For instance, VTS Inc., a commercial real estate leasing and asset-management platform, found through its VTS Office Demand Index (or VODI) that new demand for office space was up 19.6% on a year-over-year basis between December 2022 and December 2023.


The VODI specifically tracks tenant touring activity at office properties, which VTS says is a leading indicator for future lease activity.


Max Saia, director of investor research at VTS, said there are two possible reasons for growth in office space touring activity in the second half of last year: Companies have more economic certainty than they did at the start of last year, and there was a slight reversal in remote-work trends in 2023. “We think those two things together … really started to boost demand in a more meaningful, sustainable way.”