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Business Observer Friday, Feb. 7, 2020 1 week ago

Developer, after 15 year-wait, plans $20M mixed-use project

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Kevin Walsh aims to seize on an entertainment industry trend: esports.
by: Mark Gordon Managing Editor

Some 15 years ago, Kevin Walsh sought to strike development gold with a planned family entertainment center on 7 acres next to the bowling alley he owns in south Fort Myers, Gator Lanes. Known as a FEC, his idea, back in 2005, was to generate spillover revenue with non-bowling entertainment options, such as laser tag and arcades.

‘We chickened out when the economy turned south. We turned down the loan and stopped everything.’ Kevin Walsh, Gator Lanes

Walsh had Lee County approvals and permits in hand. A bank had already begun to process a $5 million loan. Then days before the groundbreaking, with the pending recession barreling down, Walsh canceled the project. “We chickened out when the economy turned south,” Walsh says. “We turned down the loan and stopped everything.”

Walsh, after 15 years — and at least $1 million in carrying costs, taxes and other fees — is now ready to do something with the site, at the southeast corner of Plantation Road and Six Mile Cypress Parkway. And although entertainment remains the core, the mixed-use project has shifted significantly to stay ahead of today’s trends in fun and amusement – mainly esports, or people playing video games on TV in a series of competitions. “I want to create an alternative revenue stream,” Walsh says. “And esports is where everything is going.”

Beyond trend-spotting, Walsh’s project aims to capitalize on an always-in real estate rule: location. That Plantation-Six Mile Cypress corner he owns, which he bought for $1.3 million in 2004, is a hotspot. It’s south of the CenturyLink Sports Complex, spring training home of the Minnesota Twins. It’s also across the street from Hope Preserve, another mixed-use project that includes the headquarters for Hope Hospice, a hotel and an assisted living facility.

Noting original site approvals remain intact, Walsh’s plans include a 120-room hotel, a 20-lane bowling alley (he hopes to sell Gator Lanes for a different use) and a four-story 50,000-square-foot multipurpose building, which would include space for conventions, events, concerts and, in particular, esports, with ground-floor retail. Even longer-term, Walsh would like to include space for gambling, predicting in another 10 years Florida will deregulate some forms of gaming.

Walsh plans to sell 2 acres fronting the property and build his project on the remaining five acres. Owners behind the Hope project, he says, recently sold two acres there for about $2.1 million. Walsh also hopes to sell Gator Lanes, to someone who can use it for another purpose, and lease back the space until the new project is ready. He intends to use the proceeds from those sales to finance the esports-focused development.

Walsh estimates the project will cost will be between $15 million and $20 million. One reason he’s amped to do it soon is timing — the reverse kind from when he killed the development in 2005. Now Fort Myers is booming, the economy is rolling, and, notably, financing, he says, is “really, really good.” Walsh says he’s been getting offers for $10 million loans at 4%.

On esports, meanwhile, there’s evidence, market-based and anecdotally, Walsh is onto something. The industry, for one, will surpass $1 billion in total value in 2019, according to a report from research firm Newzoo. That’s up 26.7% from 2018. By 2022, according to another report, from Statista, the industry will be worth nearly $1.8 billion.

At least one national retail real estate entity, Simon, is investing in esports, with the Mall of Georgia in Buford, north of Atlanta. Simon plans to redevelop a space there into a two-level, 13,000-square-foot esports and gaming destination, including broadcast and streaming production, PCs and gaming consoles for daily use and food and drink options.

Central Florida, meanwhile, through the Greater Orlando Sports Commission, GO Sports, has hosted a number of esports events, from Call of Duty tournaments to Pokémon Go contests. The commission also created a taskforce of some 20 area CEOs to corral more esports business. “It’s a lot like the youth travel sports boom in the 9'0s,” Go Sports President and CEO Jason Siegel says. “It’s certainly trending in a way we think is sustainable.”

On a more local level, Naples-based Beasley Media Group, a $257 million radio station company, has made multiple esports investments. Most recently, the firm acquired the Houston Outlaws, an esports team in the Overwatch League, an international esports organization made up of 20 city-based teams across Asia, Europe and North America. “Gen Z and Gen Y are really into this,” Beasley Broadcast CEO Caroline Beasley said in a late 2019 interview, after the Outlaws acquisition. “They watch esports the way our generations used to watch basketball or traditional sports.”

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