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Business Observer Friday, Aug. 25, 2017 1 year ago

Spec Down South

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A Baltimore developer intends to deliver one of the only new speculative industrial projects in Lee County since 2008.
by: Kevin McQuaid Commercial Real Estate Editor

The vacancy rate for bulk distribution industrial space in Lee County has been whittled down to such a degree that for the first time in a decade, developers are planning projects without substantial pre-leasing commitments in place.

Spearheading the speculative effort is the Knott Realty Group, a suburban Baltimore-based company with a long history in Southwest Florida.

Knott has acquired 27 acres near the Southwest Florida International Airport, where it plans as much as 350,000 square feet of bulk distribution space at 10400 Meridian Center Parkway, off Ben Hill Griffin Parkway, in two buildings.

The company's planned Meridian Center project will be only the second new speculative industrial development in the county in a decade, following a newly completed project by the East Group.

“The vacancy rate for industrial in that market is 2%,” says Taylor Fields, Knott's vice president of leasing. “For Class A industrial space, if you want 26,000 square feet of space in Fort Myers, there's one building. If you need 200,000 square feet, there's nothing available.”

“This site is next to the thriving airport, it's right next to Interstate 75, and the access is unbeatable,” Fields adds. “We think likely tenants are either e-commerce operators or manufacturers, and we're designing it with that in mind.”

Knott's first building in Meridian Center will measure 200,000 square feet, and feature a truck-court depth of roughly 130 feet. The site also will have parking for up to 350 vehicles.

The company plans to begin construction within the next month and complete the building — the only distribution space in Fort Myers that will offer 32-foot clear ceiling heights — next summer.

Knott will begin work on Meridian Center's second building, totaling 150,000 square feet, within the next year.

Knott acquired the Meridian Center land from Meridian Airport Park LLC, an entity controlled by Elion Partners Chairman and Managing Principal Jack Azout, of Miami, in early August for $2.1 million, according to Lee County property records.

“The size being planned is what's needed most in this market,” says Bob Johnston, a principal in the Fort Myers office of commercial real estate brokerage Lee & Associates Inc., which is marketing the space for Knott.

“It's going to be high-cube, with extra parking --¬†especially for fleet trucks and like-minded vehicles — and that's what Knott specializes in,” he adds.

“There's definitely demand there; the businesses we're seeing looking around the market are all credit tenants, all national names, and they simply can't find the amount, or the quality, of space required at present.”

Johnston adds the Meridian Center development comes as e-commerce and online shopping and delivery has permeated Southwest Florida, the result of population influx and the growth in residential development.

Though the area lacks the central statewide location of the Interstate 4 corridor between Tampa and Orlando and the gateway prestige of Miami-Dade County to the south, Lee County is considered one of the fastest-growing residential areas in the entire nation. As a result, it could be a highly valuable locale for distribution.

“The push from tenants here also is coming from so-called last-mile delivery,” he says. “Goods now are going right from the manufacturing plant to the warehouse, and as a result, a lot of our industrial customers today are logistics firms moving those goods from maker to consumer.”

Knott's confidence in Meridian Center also stems from the success it experienced with a project it completed roughly a mile away in 2006.

Its 7916 Drew Circle development in Fort Myers contains four industrial and “flex” buildings totaling 216,000 square feet. Today, the project is more than 90% occupied and has been roughly fully committed for each of the past three years, Fields says.

In all, the company has developed more than 4.2 million square feet of commercial and industrial space in its home state of Maryland, in Florida and South Carolina.

Adjacent to Meridian Center, Lee & Associates is separately marketing another 23 acres on behalf of Boca Raton-based Premier Group, land that is entitled and zoned for a hotel, office and retail space.

Knott, too, is also planning other projects in the Fort Myers area. Most notably, late last year it bought 37.6 acres in Fort Myers, at 9851 Ben C. Pratt Six Mile Cypress Parkway, for $5.2 million. The company is planning a 436-unit apartment community on the property.

“We like Fort Myers,” Fields says. “It's a vibrant community that's growing population wise, and it's near to Naples, where there's also very little new industrial or distribution space available.”

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