- February 22, 2013
Executive Director, Cushman & Wakefield Commercial Property Southwest Florida
Tasman, 54, founded the Fort Myers affiliate of Cushman & Wakefield seven years ago. He has has been involved in the region's commercial real estate market since 1994.
I'd characterize the commercial real estate market in Lee County as: One that is gradually improving, and lately that rate of improvement has been increasing. The wealth effect in Collier (County) is a large part of what drives the commercial market in Lee County. Collier is well known nationwide, it's a wealthy enclave, but Lee is the bigger population center. So there's a symbiotic relationship there. The fundamentals that drive this market are basically threefold: tourism, residential growth and, in turn, related commercial growth. And of late officials here have been working to expand the economic base, to focus more on higher wage job creation. Companies like Gartner, Alta Resources and Hertz are the result.
In Collier County growth is being driven largely by new housing construction. The Collier office market is starting to rebound, though, and retail has rebounded nicely — as evidenced by the sale of the Mercato retail and office complex earlier this year and other transactions. Industrial is very hot, though it's been hampered by a lack of inventory. If you look at the numbers, industrial has been active but it would be even more active if there were more space available.
The biggest change in the market in the two counties this year has been that in Collier, residential development has started to come out of the ground and led to maturity in the State Road 951 commercial corridor. In Lee, the biggest change has been the expansion of the housing market in Cape Coral.
One big mover in Southwest Florida is the (Southwest Florida International) airport. Passenger traffic is up like 10% so far this year, and it's how people discover the area. The entire commercial cycle begins with population growth.
The biggest challenges the commercial real estate market here faces are infrastructure and a lack of quality inventory. There's space here, but functional, high quality space that businesses today demand? We have a shortage of that in every category, including office. There's a 17% vacancy rate there, but if you really drill down, there's not a lot of very desirable space. If we had an 80,000-square-foot office building with open design, modern amenities and adequate parking, we'd be able to absorb it. We also have a need for a 150,000-square-foot or 200,000-square-foot industrial building. As for the infrastructure, we have a lot of roads and utilities that are close to failure. Several intersections need to be improved and roads need to be widened, and there's not a good funding mechanism in place. If we don't get our heads around that, it's going to slow us down economically. People don't want to come here and sit in traffic for three hours.
The property type with the most activity at present is multifamily apartment communities and senior living, which is amazingly active and runs the gambit from independent living to assisted living to skilled nursing and hospice. With apartments, there are about 2,000 units either under construction or in pre-construction, and even then we won't be overbuilt, we'll just be at equilibrium.
I'm forecasting for the balance of this year that office and retail rents will increase faster than the national average because of the squeeze in inventory. Office rents will increase at a moderate rate, and I believe we will see serious consideration of some speculative industrial and retail development, and even perhaps an office building in Lee County.