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Business Observer Friday, Oct. 29, 2004 18 years ago

North Port's Transformation

Residential growth has finally reached the critical mass to attract large-scale commercial development.

North Port's Transformation

Residential growth has finally reached the critical mass to attract large-scale commercial development.

By Sean Roth

Real Estate Editor

Itis indisputable: North Port is a residential dynamo well on its way to becoming Sarasota Countyis largest city.

Between 2000 and 2003, North Portis population increased from 22,500 to nearly 40,000. In 2003, the city issued more residential buildings permits (1,790) than any other region in Sarasota County o more even than the unincorporated area of the county, according to The Construction Guide. And between October of last year and September of this year, the city issued 3,088 new single-family home permits valued at $389.6 million.

The cityis growth has been one-sided. New permits for commercial, mobile homes and multifamily housing projects number in the low double digits (17, 3 and 15 respectively) with a scant total value of $18 million o less than 1/20th of the total residential value. Bob Tunis, North Portis economic development manager, estimates that 80% of all businesses in North Port are homebuilding related.

Itis Tunisi job to diversify that economy and encourage commercial and industrial development in the city. It hasnit been easy these past three years, but months like this one must soothe the pain.

North Port looks to be entering a commercial boom. Based on permit filings and approvals, construction on about a-million-and-a-half square feet of new retail and office space is set to start in the next six months. That is more than has been built in North Portis 45-year history.

Nearly a month ago, the North Port City Commission approved the final site and development plan for a Home Depot and Wal-Mart Supercenter development at the intersection of Sumter Boulevard and Tamiami Trail. The development also will feature at least two outparcels and will likely provide North Port its first national sit-down franchise restaurant.

At the same time, Safety Harbor-based Paradise Development has filed a site plan to develop a 15,000-square-foot Walgreens Drug Store and three outparcels across from an existing Publix Super Market near the intersection of Price and Sumter boulevards, not far from where the city is building a 95,000-square-foot, two-building City Center complex. Tunis expects construction to begin within the next six months.

Benderson Development Co. Inc. recently filed two site plans detailing its first two pieces in the 1,600-acre Panacea property, which is now being called The Woodlands, located on the east side of Toledo Blade Boulevard and Interstate 75. One site plan calls for a four-building office park, while the second plan focuses on two large retail buildings (147,500-square-foot and a 211,000-square-foot) surrounded by eight outparcels. The Woodlands, which Benderson Development owns in a partnership with homebuilder Pat Neal, is also designated for 2,540 homes and at least three new schools.

Meanwhile, Edward Ullmann, and Berta Walker, are expected to start a $50 million renovation/expansion of the Original Fountain of Youth Spa & Wellness Village at Warm Mineral Springs, at 12200 San Servando Ave., in the next few months. The update to the about 80-acre spa has already been approved by the city commission. Aside from renovating the existing day spa, plans call for adding 270 residential units, a new medical treatment and rehabilitation center called the Fountain of Youth Institute of Natural Healing, a 30,000-square-foot conference and banquet facility, 21,000 square feet of retail space and a new 22,000-square-foot Welcome Center and spa. The expansion, expected to last from three to five years, should increase employment at the facility from 22 to about 300 people.

In addition, the city is expected to receive a new 85-bed hospital, possibly to be located on Toledo Blade and Price boulevards, that will be surrounded by office and retail components. The hospital has been delayed because of a legal challenge between two potential medical operators: Health Management Associates and Universal Health Systems.

At Ortiz Boulevard and U.S. 41, South Florida developers are looking at plans to develop a grocery store and strip center.

Another development in the wings is the Thomas Ranch property near the Venice border. It is slated to include 15,000 new homes, a large office park and additional commercial space. Earlier this month, the landowner, Fourth Quarter Properties LLC, started the planning process with the city for two new village-style developments at Thomas ranch, each of which would include about 2,000 homes. The city commission has approved the ranch as an independent tax district, giving it the authority to fund its own infrastructure.

iThey are in the process of completing negotiations to get North Port city utilities in the ranch,i Tunis says.

The city also has annexed the 9,600-acre Glawson-Carlton Ranch, at the northeast corner of I-75 and Toledo Boulevard, making North Port the third largest city in Florida, with roughly 105 square miles.

One of the companies at the center of the new commercial boom is Sarasotais Frank Menke Organization LLC. Menkeis company is the property owner behind the Home Depot/Wal-Mart development and is part owner in land on the hospital property.

Menke, who is now focusing his development in North Port, got his start in the city through a relationship with Cape Coralis Dennis Fullenkamp, of Dennis J. Fullenkamp Realty Inc.

When General Development Corp. went bankrupt in the 1990s, Fullenkamp acquired some of the companyis land assets, including large stretches of North Port.

iFrank and Dennis are friends,i says Todd Menke, Frank Menkeis son and president of the Frank Menke Organization. iTheir relationship goes back for many years.i

It took several months of suitoring, but eventually the Menkes were able to sell Wal-Mart on North Port and able to convince Home Depot officials to expand their presence. Then it was up to the three parties to get the development plan approved.

iWe are the land seller,i Todd Menke says. iWe are really land developers. We do the engineering and entitling of the property for certain uses; then we sell it. They should be closing and breaking ground later in 2005.i

Although Menke declined to name the outparcel tenants because of ongoing negotiations, he says the sites are committed to a regional bank and national restaurant chain.

iNorth Port has always been characterized as a residential community, but finally the commercial has started to catch up,i says Menke. iAnd itis catching up quickly. (The Wal-Mart/Home Depot) area is an activity zone. It had been designated in the future land-use map for commercial development for several years. This is just the tip of the iceberg.i

So whatis different in North Port now? It all comes down to rooftops.

iOnce you reach a critical mass (on the residential side) you tend to grab their attention,i Menke says. iThey look at traffic count and total population numbers. Currently our population is between 44,000 and 47,000. In a few months you may see us eclipse 50,000; that makes us relatively the same size as the city of Sarasota. Thatis even more significant when you realize that North Port only had 20,000 residents four years ago.i

Owen Ewing, a vice president of development with Paradise Development Group Inc., emphasizes that North Port also was previously facing the chicken and egg problem of retail following other retail.

iYou canit discount that Wal-Mart seal of approval,i Ewing says. iThis is just the start of a trend. This is just really a continuation of what has happened all over Sarasota County.i

North Port is known for its more growth-friendly attitude compared to Sarasota County and other cities in the two-county market. As an example, Tunis says that at its worst in March of last year, the building department took five weeks to issue building permits. Now the department consistently delivers a 10-day turnaround time.

i(The city commission) keeps all the developers on their toes,i Menke says. iBut they are certainly more pro-business, more pro-growth. They have made it a great place, and commercial development is thriving.i

While all the new development is encouraging, Tunis says there are significant holes in the commercial marketplace, most notably the lack of large economic engines. Aside from the municipal employers, no more than five North Port businesses break the 100-employee mark. Further, Tunis says North Port has too few manufacturing/export companies.

iThe boom for this whole region is based on growth with no other substantial support,i Tunis says. iPat Neal said this growth is going to continue through at least 2013, when the last of the babyboomers hits 58. Meaning we only have 10 years to diversify the economy.i

The lack of major employers forces most North Port residents to travel outside the city for employment. According to an April 2004 workforce survey, about 81% of residents of North Port commute elsewhere for work. Of those, 80% said they would take job in North Port if the opportunity were available.

North Portis commercial development faces challenges created by the cityis size and the legacy of General Development Corp. Like other early Florida developers, General Development parceled North Port up into small lots to sell to Northerners. That platting, which created about 60,000 lots, has led to piecemeal residential development outside of the cityis main utility-service core. That makes the extension of infrastructure in many areas too expensive. Extended development also impacts traffic counts, spreading out traffic flow.

Critics contend city taxes are too low to cover infrastructure costs, limiting the area where commercial and industrial development can occur. North Port Commissioner Rue Berryman says that charge may have some merit. iItis possible we should increase taxes,i Berryman says. iWe have a lot of roads that General Development built that are crumbling. Now we have lots being built in the outlying areas, and those people are complaining that the roads need repair. Probably one day or another we are gong to have to raise taxes and take out a bond to pay for these improvements.i

Commissioner Barbara Gross doesnit support a tax hike to pay for infrastructure. iAll the new developments are paying their own way,i she says. iWe just saw a utility masterplan for doing infill and extension of other regions in the city that runs through 2023. The biggie will be the roads. We will probably have to do bonding, but it shouldnit require additional taxes. And maybe we can get state and federal money as well.i

Commissioner Vanessa Carusone says district fees may be too low, but she too says most of the utility expansion can be accomplished through bonding.

Possible help for North Portis labor market problem could come from joining the Sarasota County Economic Development Corp. The corporation would pool money from all its municipal contributors and market the region to employers. The big holdup for North Port has been a requirement that each region submit $1 per capita for at least five years. Commissioners want to limit the cityis payment commitment on a year-by-year basis to ensure North Port sees a return on its money.

Top on Tunisi list for future commercial development in the city is an additional industrial park. North Port Commercial Park is down to its last five to 10 lots, and very few fully-serviced industrial lots remain in the city. Tunis says at least one company has shown interest.

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