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Airport Magnet
COMMERCIAL REAL ESTATE by Jean Gruss | Editor/Lee-Collier
The area around the Fort Myers airport continues to attract new development despite a general slowdown in construction. More than $1 billion of public money has boosted the area's prospects, with more to come.
If there's any place that might weather a downturn in commercial real estate in Southwest Florida, it's safe to say it'll be somewhere near the airport.
Southwest Florida International Airport is one of the few bright spots in the region's economy. So far, passenger and cargo traffic at the Fort Myers airport haven't suffered. For the year ended in November, for example, passenger traffic is up 6.4% to 7.4 million passengers compared with the same period in 2006.
Developers and commercial real estate brokers won't say the airport is completely impervious to the effects of the regional economy, but it comes pretty close. "I don't think there's any question things will level off a little bit, but if you had to pick one area, this would be it," says Jerry Bechard, president of Bechard Group, who is developing 207 acres on Treeline Boulevard near the airport called Southwest International Commerce Park.
"It's the epicenter of where the major commercial development is going to occur in the next 10 years," says Bill Price, senior vice president with McGarvey Development Co. In August, McGarvey paid $34.4 million for 105 acres near the airport to develop one of the largest office complexes in Southwest Florida.
The airport itself is jumping into development. Denver-based John Madden Co. plans to lease 100 acres from the Lee County Port Authority for an office technology park and Albany, N.Y.-based BBL Group will build a 175-room Sheraton hotel near the airport's entrance.
A host of other attractions are located near the airport too. Florida Gulf Coast University is rising from the scrub just 12 miles from the airfield. Since it opened in 1997, FGCU has grown to 9,500 students and is spending $55 million in construction in the 2007-2008 year. Meanwhile, two new regional malls totaling nearly 3 million square feet - enough to fill 52 football fields - were built in the nearby Estero community in 2006.
The principal access road to the airport, Treeline Avenue, has been widened and an interchange will be built from Interstate 75 to the airport in two years. The interstate is now being widened to six lanes and efforts are underway to add another two lanes in each direction if the counties approve tolls.
"You can't spend $1 billion in public infrastructure and not spur a tremendous amount of private-sector investment," says Gary Tasman, executive director of commercial brokerage Cushman & Wakefield in Fort Myers. Tasman is representing Meridian Corporate Business Park just south of the entrance to the airport, where there's room for about 850,000 square feet of space.
"Proximity to the airport is key," says Steve Brown Jr., vice president of John Madden Co. "One [prospective tenant] said, 'Show me where the last place to drop a FedEx is," he says.
Funding a new runway
Lee County Port Authority Executive Director Robert Ball has a challenge. The airport needs $300 million to build a second runway to keep up with the projected passenger and cargo growth.
But the high cost of that and other projects means he has to find ways to boost airport revenues. Fortunately, on the north side of the airport, the port authority owns 750 acres suitable for development and another 100 acres along the airfield that used to be home to the old passenger terminal (the new terminal on the south side of the airport opened in 2005).
The prospects for attracting a large aviation-related tenant such as an aircraft maintenance or repair facility for the 100 acres on the airfield apron currently seems remote. "That industry has been in a downturn for quite some time," says Ball. Much of the aircraft-maintenance work has been shifted to locations overseas where facilities and labor are less expensive.
What's more, airports such as Tampa International Airport have empty airside hangars that compete for business and Miami remains the dominant hub for Latin American-bound cargo and passengers. Most of the cargo at the Fort Myers airport consists of small packages such as FedEx and UPS.
Meanwhile, Ball forecasts flat passenger and cargo growth for the next few years. For the first time in two years, the airport's monthly passenger traffic in November declined 1.4% compared with the same month in 2006. Ball expects 4% traffic growth during this tourist season, down from last year's 8% growth.
So Ball and his staff got 100 of the 750 acres on the north side of the airport rezoned for commercial use and issued a request for proposals to develop it. John Madden Co. was the only firm to respond to the request. Ball says the reason Madden was the only developer to respond was likely because most developers are hesitant to lease land from a public agency. Generally, developers prefer to control the land before they build on it.
A park for techies
Madden, 77, no relation to the football announcer, has a home on Captiva Island near Fort Myers. He's developed nearly 10 million square feet of office space in Colorado and other western states for companies such as Chevron and Allstate Insurance.
Madden's grandson, Steve Brown Jr., will lead the company's first Florida project on the 100 acres of the airport land. Dubbed the Madden Research Loop of Southwest Florida, Brown envisions the park as a haven for tech-related companies.
There's currently no office park dedicated to tech-related companies in Fort Myers. "We talked to a few companies and there was a lot of interest," Brown says, declining to name those interested.
In particular, Brown says chief executives from tech companies in places such as Boston want to have offices in Southwest Florida where they have second homes. He recalls one conversation with a company that tried to recruit a chief science officer to Memphis, Tenn., and none of the applicants wanted to relocate to that city.
Tech companies tend to congregate with others because their employees can share ideas and resources. In addition, they typically choose high-quality office or lab space surrounded by lushly landscaped grounds to house highly paid employees.
In the first phase, Madden plans to build four buildings totaling 262,000 square feet and a parking deck. Asking rents haven't been established and Brown is still negotiating with the airport on the terms of the land lease. But he expects to start construction Sept. 1.
Outside looking in
Increasingly, Lee County is appearing on the radar of companies expanding in Southwest Florida because of its fast-growing population that now exceeds 500,000.
Prospective tenants are now demanding larger blocks of space than before. When McGarvey Development started operations in Lee County about a decade ago, leases of 2,500 square feet were the norm. Now, it's double that. "Huge deals are now the norm," says Price. For example, the company is now in discussions with a prospect that needs 90,000 square feet.
Regional and national companies involved in industries such as finance and insurance are looking at Lee County for expansion. There are more of those than locally based companies seeking to expand. "Now the deals have changed," Price says.
Bechard agrees. "The earlier buyers were all local," he says. "All the recent big buyers are regional or national."
Bechard says he's been able to nearly double the asking price for land in his business park since he started it four years ago. "When you're talking about a whole new road like Treeline and an improved airport that continues to set records, it's just a high-visibility location that's going to get better all the time," he says.
REVIEW SUMMARY
Industry. Commercial development
Trend. Southwest Florida International Airport continues to attract new investment.
Key. Spending on large public projects like airports spawns private investment.
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