What would you build?

An interesting question arrived from a reader in our mail bag yesterday about what to build on a vacant commercial lot in Cape Coral.

First off, the commercial market in Southwest Florida and particularly Cape Coral remains very hot. Commercial vacancy rates are in the low single digits in Cape Coral. Commercial zoning represents less than 10% of the Cape’s developable land, creating significant shortages throughout the entire city. Nearly 60 percent of all Cape Coral workers have to leave each day to go to work, clogging the bridges during the commuting hours.

With regards to the mail bag question, “What would you build on a vacant 1.5 acre commercial lot on Cape Coral Parkway near Chiquita Boulevard?” One of my colleagues recently met with Cape Coral Economic Development Director, Mike Jackson and asked the same question about a similar lot. The feedback from Mr. Jackson was overwhelmingly in favor of either general or medical office space.

I am in complete agreement that Cape Coral needs more office space. I would welcome any feedback from any readers on this question. If you have an opinion on this please click on comments at the bottom of this post. It is painless!

Growing demand for class A space in Cape Coral

While Cape Coral doesn’t need anymore real estate offices or title companies, there is a significant under supply of class A office space. Cape Coral needs modern corporate office buildings like those lining Summerlin Boulevard in Ft. Myers.

McGarvey Development of Bonita Springs is constructing a seven office building project in Cape Coral. The location for this project is just west of Hancock Bridge Parkway and Pine Island Road. The buildings with a total of 175,000 square feet will be arranged in a campus setting surrounding a lake.

Other notable McGarvey Development projects include Westlinks on Daniels Parkway near Gateway; the Mid Metro Business Center on Metro Parkway and the Riverview Corporate Center in Bonita.

Cape Coral will certainly benefit from projects such as McGarvey’s. The volume of vehicles commute over the bridges and out of the Cape each day is staggering. Diversifying the base of taxable property from its residential dependence is another important benefit. Class A buildings on Cape Coral Parkway replacing some of the early buildings would go a long way towards beautifying Cape Coral and improving first impressions of the city.

Office space under way, but more still desired [News-Press]

Effects of Hurricane Charley still felt

Thurston Martin, an agent with Coldwell Banker Commercial Sunstar Realty, has been operating in the Charlotte County market since 1990 — the past eight years as a commercial real estate agent.

Q: Could you explain how Hurricane Charley disrupted the Charlotte County commercial real estate market?

A: It reduced retail, professional office and industrial space by 30 percent, and about 50 percent of that is still missing. That’s created a situation where demand is still greater than supply, which has led to higher lease rates and prices per square foot.

Charley’s effects linger in Charlotte [Herald-Tribune]

Cape Coral’s booming commercial intersection

Formerly thought of as too far away from bridges, too rural and practically useless as home sites, the area around a Pine Island Road intersection is rumbling with construction.

With Cape Coral rapidly filling up from an influx of a reported 10,000 new residents a year, one of the last large areas of vacant land near the crossroads of Pine Island Road and Burnt Store Road has become very attractive as home sites and commercial developments spring up. A Publix store is scheduled to open in two weeks.

Future arrives at intersection [News-Press]

First time buyers are entering commercial market

Many real estate executives say they have recently seen a significant uptick in the number of first-time buyers who are entering the commercial market. Many buy small apartment buildings or retailing centers or mixed-use properties that combine apartments with a few stores, real estate professionals say.

Some executives say the influx has been large enough to prompt them to try to track these types of buyers more diligently, as well as to reconsider their marketing efforts. “I call it the democratization of commercial real estate – everyone wants to participate, and access to capital is wonderful,” said Gary Gabriel, executive director of the metropolitan area capital markets group at Cushman & Wakefield.

A Rush to Commercial Property [NY Times]

Shopping center coming to Burnt Store area

If there is an area in SW Florida in need of shopping amenities, Burnt Store would top the list.

This area just over the Lee County border in the in the southern end of Charlotte County is rapidly growing collection of residential developments. At present time, the area is utterly devoid of any retail establishments.
Charlotte Development Corporation is planning a 120,000 square-foot shopping center with a major grocer tenant for Burnt Store Road.

The Burnt Store Improvement Initiative recently issued a report about development in the area.

Retail rush in Charlotte [Herald-Tribune]

Low vacancy rates for class A space

Throughout Lee County, finding suitable class A office space is a growing challenge for companies moving to or expanding in the area.

The CB Richard Ellis semi-annual inventory for Lee County shows a drop in vacancy rates from 18.8 percent in 2003 to 10.2 percent in January of 2005. These latest figures should spur on new construction as developers are generally interested in building spec office space when vacancy rates drop below 10 percent.

Downtown Ft. Myers is a particularly tight market recently made more challenging by the County’s purchase of the SunTrust Bank Building, eliminating this space as commercial rental property.

Cape Coral, with its near zero commercial vacancy rate, presents an even bigger challenge for companies seeking space. With a population that recently exceeded 138,000, the Cape will have increasing needs for commercial space. The underlying problem is that only 8 percent of the cape is zoned for commercial and industrial use. This commercial zoning shortage dates back to the early development strategy of Gulf American Corporation.

Locations in Ft. Myers west of I-75 near RSW, including Metco Parkway and the newly opened Treeline Avenue are ripe for significant new commercial development.

Office Supplies [Gulfshore Business Online]

New parks expand tax base, jobs.

Cape Coral has a big problem: not enough of the rapidly growing city is zoned industrial to maintain a healthy economy. The daily traffic patterns during rush hour on the two bridges are a good indication of this ever growing problem.

It is very clear to see when riding around the Cape that the pace of commercial development is not keeping up with the feverish pace of residential construction. I often wonder where all the new residents filling up homes throughout the Cape are going to work.

Commercial real estate broker Greg Eagle said he has the answer: the new 363-acre Indian Oaks & Hancock Creek Commerce Park he has assembled off Pine Island Road from two old developments that never got off the ground.

Besides broadening the property tax base so homeowners don’t have to bear as much of the burden, the projects will provide more jobs for people in the city by attracting companies from out of town, said Mike Jackson, Economic Development Director for Cape Coral.

Cape plays industrial catch-up [News-Press]

Interest rate increases expected

Orlando-based economist Hank Fishkind told a conference of Southwest Florida real estate agents Thursday that by the end of this year rapid increases in the price of investment properties will be a thing of the past.

“We’ll be lucky” if the worst that happens is a slowing down in commercial real estate appreciation, said Fishkind, drawing gasps from the audience at the fifth annual Southwest Florida Real Estate Outlook Conference presented by Florida CCIM Chapter at Harborside Event Center in Fort Myers.

Hank Fishkind Presentation [Fishkind & Associates]
Slowdown predicted for commercial property [News-Press]

Lee County’s office market has struggled over the last few years. But as 2004 winds down, market data is showing some positive signs. “Lee County’s office market continues to improve with strong transaction volume and velocity,” explains Randal Mercer of CB Richard Ellis, who recently completed his 2004 office market study. The study looks at Class A and B space with 15,000 or more square feet, multi-tenant, non-governmental, non-condominium properties.

Office space market on its way back [News-Press]