Tenancy Removal by Landlord
In commercial real estate it’s not an entirely uncommon scenario for a landlord to reserve the right to remove or relocate a tenant prior to the expiration of their lease agreement. There are a number of different ways to end a tenancy and how they are spelled out in the agreement depends on the parties involved in the lease. After all, this sets out the rules both the landlord and tenant agree to follow in their rental relationship. In the case of negotiating a lease agreement for a former Amtrak station owned by the City of Pensacola, this right becomes a critical detail. Amtrak reserves the right to restore passenger rail service and return the property to its original use as a train station, in perpetuity. This scenario lends itself to a case study that will hopefully result in solutions for transforming not only a vacant building, but a neighborhood as well.
The History of Amtrak in Pensacola
Amtrak’s Sunset Limited route once offered passenger rail service from Los Angeles to Jacksonville and included an Amtrak station in Pensacola. When the highly destructive and costly Hurricane Katrina made landfall in 2005 it destroyed the tracks along the gulf coast. As a result of the hurricane, Pensacola was one of thirteen Amtrak stations in Florida that was taken out of service. Rail service was eventually restored to New Orleans, however that is now the end of the Sunset Limited route. Pensacola’s iconic red brick Amtrak Station has been siting vacant for 10 years.
Potential Uses for Amtrak Station
There has been plenty of interest in this beautiful building since Amtrak vacated the property. Local chefs have envisioned a restaurant, others, a perfect location for a bustling office with retail shops, the list goes on. Walking distance to great restaurants and views of Pensacola Bay. I hate to say it, but this place has it, location, location, location.
The City of Pensacola has had the property on the market for some time, promoting the building as 4,535 square feet of “super cool” space. Having had the opportunity to tour the building with prospective tenants, I absolutely agree. So what’s the catch?
The City is the property owner and the Letter of Intent (LOI) process is pretty straight forward, that is, until you get to the clause that says Amtrak maintains the right to restore service and return the building to its original use as a train station. This right remains in place with Amtrak in perpetuity. If a business were to occupy the building and Amtrak returned, what would happen? Amtrak may provide some assistance in making the tenant “whole” again and they may assist in the relocation of your business; however, further details behind that language are often vague and not reassuring to a prospective tenant. We don’t know what it means to be made “whole” again. That’s a pretty big question mark considering the improvements that need to take place in a building that has sat dormant for ten years. The area is now largely home to a transient population and collects trash and graffiti on a regular basis.
Will the Amtrak Service Return?
The local rhetoric has mostly been that Amtrak is never returning. Never. And the list of reasons why is lengthy. However, in the October 1, 2015 publication, THE HILL “Advocates hope to restore Amtrak service lost since Katrina,” there seems to be momentum to restore the Amtrak rail service.
According to the article, advocates for restoring the Sunset service are promoting the recently approved senate transportation bill that would fund a feasibility study for repairing the former Sunset Limited route. They go on to state that “Advocates of restoring the dormant Gulf Coast Amtrak service are hoping to win support for the language in the House when lawmakers return to Washington in September”.
Benefits to the Surrounding Area
Putting this property back in use, whether it goes back to being a train station or perhaps some other general use, would serve the surrounding neighbors and businesses quite well. Would we have a bustling rail station if the service returned? The idea is exciting, and of course dependent on several factors, including arrival and departure times. Arrivals and departures in the wee hours of the morning to collect a weary traveler may not be so romantic after all. Unless you can go across the street to Baglesheads for a hot cup of coffee and hot bagels it won’t offer up that romantic scene one thinks of when you greet your guests at the train station. One way or another, bringing this property back to life, whether as a train station, a restaurant, or a retail location, would have a positive impact on the community.
The Future has a “?”
Additionally, the senate bill “created a $100 million fund for states to access for services which were annulled or under threat of discontinuance,” and this will also add to the momentum. Proponents say passenger rail is integral to our transportation infrastructure and economy, opponents say the opposite. We can at least agree that this is valuable real estate that is highly underutilized.
We Need Momentum for a Solution
The recent activity of the advocates hoping to restore rail service to the gulf coast area is certainly creating new momentum for restoring rail service. However, it still doesn’t change the fact that we need to find a solution for utilizing these vacant train stations. Ten years of dormancy for a “super cool” iconic building is unnecessary. The City, as well as the U.S. Department of Transportation’s, authority to end a tenancy prior to the end of a lease agreement is a critical roadblock for reuse. If you have dealt with a similar scenario I would welcome your comments on how you achieved success.
About Cynthia Cannon, AICP – Cynthia is based in Pensacola, Florida and joined SVN | SouthLand Commercial in 2015. She has spent more than 20 years as a certified land use planner, in both the public and private sectors. She is now leveraging her skill set to specialize in retail and government related real estate. If you would like to contact her, you can call her at 850-610-8339, or email her at [email protected]