Ned Dewhirst was negotiating to sell a 34-acre parcel on U.S. 41 in Estero to an apartment developer when he got a call from Lee County's economic development office two months ago.
A mystery company was interested in buying the land, but even the economic development officials didn't know who it was. They were working with an intermediary.
“This was eight weeks ago,” says Dewhirst, senior vice president of Oakbrook Properties, whose property was listed at $12 million.
After agreeing to sign a confidentiality agreement, Dewhirst learned who the mystery buyer would be: car-rental giant Hertz. “This was kind of like a lottery win,” Dewhirst says.
Hertz has a contract to buy the south county land for an undisclosed price, pending rezoning to office use. Once the deal closes in September, the company plans to build a $69 million, 300,000-square-foot office campus that will house its new corporate headquarters.
That's welcome news in an area that's seen some of the highest office vacancy rates in the region. As of the end of the first quarter, 23% of the office space in Estero and Bonita Springs is empty, according to CoStar Group. That equals more than 11 football fields of vacant office space.
Initially, Hertz is looking to lease as much as 30,000 square feet while the headquarters is under construction, according to commercial real estate brokers in the area. “They've looked all the way from Gateway to Naples,” says Randy Mercer, founding partner of CRE Consultants in Fort Myers.
For now, the direct impact of Hertz' relocation to the Bonita Springs-Estero area on office vacancy rates and rents will be minimal. But economic development officials say there may be ancillary businesses that choose to open offices in the area, and they're keen to advertise the relocation.
“We're going to ride the hype for a little while,” says Andrew DeSalvo, senior commercial broker with Premier Commercial in Bonita Springs.
“People are looking at this area because of this news,” says DeSalvo. “As you continue those success stories, you make it easier for corporate relocations.”
Brokers say executives who have been considering moving their businesses to the area may now be more confident of doing so now that Hertz has made that decision. “The intangible of this transaction is already being felt: That's confidence,” says Mercer. “It's created a nice little buzz for the area.”
Commercial real estate experts say the Hertz deal won't immediately bring down vacancy rates or push rents higher dramatically. “It will help us some and improve our numbers a little bit,” says DeSalvo.
Brokers don't expect a land rush near the Hertz headquarters, either. “There's not a lot of speculative-priced land,” says Mercer.
Because vacancy rates likely will remain relatively high for the next two years, the Hertz deal is unlikely to spur new commercial construction. “At the end of the day, the numbers still have to work,” DeSalvo says. To be sure, the heady days of the real estate boom are over. “We're still not throwing money around like drunken sailors,” he jokes.
The vacancy rate needs to fall near 12% and the absorption trending positively for rents to start rising, says Mercer. “It's early in the game,” he says.
For Oakbrook, the Hertz deal caps a long-term investment in Bonita Springs land that began when the McArdle family of Illinois traded a New Orleans hotel for 6,000 acres more than three decades ago. At the time, Interstate 75 had not yet been built in the area, but since then the land has become home to landmarks such as Coconut Point Mall and The Brooks residential community.