[Scott Keeler | Times]

ST. PETERSBURG - Despite a real-estate downturn and fears of a recession, the city had another record year for value of construction permitted.

But this surge could be short-lived.

The city permitted $635-million in construction in fiscal 2007, including aspects of the new All Children's Hospital, Ovation and Signature condominium towers, office buildings in Carillon and shopping areas around town.

Since nearly half of that figure came from a now-declining residential market with few large projects on the horizon, it's unlikely the city can top this figure next year.

"I feel very good about where the city is going in the next few years," said Mayor Rick Baker. Still, the housing market may dampen the future, he said, and "it's going to take some time for the residential market to recover."

Baker said a year ago it didn't look like the city would continue the steady increase of the past four years. Each year's construction total has been greater since the $130-million jump from 2003 to 2004's total of $382-million. The following year the total increased to $412-million, followed by $563-million in 2006.

But in the first quarter of 2008, the city has permitted less than $50-million in new construction.

The city tallies the total based on the value of each construction permit issued. A large project usually has many permits issued over several years. For instance, the $420-million All Children's project had its first permits issued in 2006 and won't see its last until 2009. Last year, All Children's, the largest construction project in Florida, accounted for $187-million of the city's total.

Baker attributes the city's success to a diversified economy. St. Petersburg Area Chamber of Commerce chief executive John Long agrees and says that diversity creates a virtuous cycle of positive feeling unique to the city.

"If you look at this city, visually it would not strike you as being in a severe downturn," said Long. "And perceptions really build reality."

Ongoing projects like Signature and Ovation, and the prospect of a new baseball stadium and the growth it could spur, suggest the city is immune to larger negative forces. But construction records can be lagging indicators.

"Last year was the completion of a pretty healthy pipeline," said Craig Sher, executive chairman at developer Sembler, who conceded that 2008, 2009 and 2010 will be down.

Sher said Sembler tracks the trends, and while St. Petersburg might be doing well relative to Florida, the state is doing poorly relative to other parts of the country.

The retailers that buy or rent property from Sembler are not seeing the Florida sales growth they want, Sher said, so commercial construction will, as is typical, follow residential downward.

Still, there are potential bright spots. Baker points to the Grand Bohemian as an indicator. Originally put forth as having 166 hotel rooms and 82 condos, the downtown project has redesigned twice to replace condos with hotel rooms. The mix now is 292 hotel rooms and 22 condos.

"The adjustments they've made are to the benefit of the city," Baker said, adding that other hotel projects are being proposed downtown. "I think why we see so much interest in hotels is because of all the events we have."

Other adjustments are in the works as well. Miles Development Partners, which built condos at 1010 Central and the Sage, was to construct another condo building at 1701 Central Ave., but is instead planning to construct apartments.

Another project, at 16th Street across from Tropicana Field, may become apartments after Grady Pridgen sold it to an Ohio developer.

There is also the Arts, a condo project straddling Central at Eighth Street. Projects away from downtown include a Porter Development mixed-use deal at 66th Street and 18th Avenue N, as well as a new Home Depot on 34th Street S and a new Wal-Mart at 34th Street and First Avenue N.

Baker points to the Job Corps site in the Dome Industrial Park as a harbinger of growth in the Midtown area.

"Once construction begins there, that industrial park is going to take off," including the city-refurbished Manhattan Casino, Baker said.

Sher said a lack of available land prevented speculative overbuilding.

What land is available is expensive enough, city officials say, that as conditions change, developers retool rather than leave the land fallow. But at this point, no one's taking any leaps of faith.

"The word would be cautious for all us developers in 2008," said Sher.

Paul Swider can be reached at pswider@sptimes.com or 892-2271.