The rumbling momentum in industrial properties being built sans tenants is tumbling out of Polk County and the Interstate 4 corridor to other sites along the Gulf Coast.
One standout example is in Lee County. That's where EastGroup Properties Inc., a self-administered equity real estate investment trust, is building a multitenant industrial complex without tenants lined up. The 92,558-square-foot building, SunCoast Commerce Center IV, should be completed in May, say officials with the Jackson, Miss.-based REIT. It's a $9 million project.
“This is the next phase of development in our SunCoast Commerce Center because we believe the economic recovery in Southwest Florida is now on solid ground,” says John Coleman, senior vice president of EastGroup's Florida regional office.
The first buildings in the SunCoast Commerce Center opened for tenants in 2007, and the next two buildings were built in 2009. Jerry Messonnier, a principal with Lee & Associates who specializes in Southwest Florida industrial properties, says the warehouse market was dormant for eight years until the EastGroup announcement. “The fact that it's building this on spec shows that EastGroup is committed to this market,” says Messonnier.
That commitment has already led to one fresh tenant: Mattress Firm. The company recently agreed to lease 25,000 square feet in SunCoast Commerce Center IV. “Quality and flexibility are key to fast-growing tenants who have to adjust to market opportunities,” says Coleman. “Many companies are looking to expand or consolidate their operations, and they need space right away.”
Messonnier, along with fellow Lee & Associates industrial experts Derek Bornhorst and Bob Johnston, are marketing the building to companies similar to Mattress Firm. The trio seeks credit-worthy tenants — no mom and pops — with a distribution map from Marco Island through Sarasota, says Messonnier. Companies that have space in the other buildings at SunCoast Commerce Center include FedEx, Lennox and J.B. Hunt.
Two competitive edges for the Lee & Associates team, says Messonnier, are supply and location. Messonnier estimates less than 5% of the warehouse space in Fort Myers is available today. The three other buildings at SunCoast Commerce Center are at least 95% occupied, he adds. “Large blocks of new industrial space are virtually nonexistent in the Southwest Florida market as fast-growing businesses have filled much of the available space,” says Messonnier.
Also, adds Bornhorst, a large chunk of the space that remains available in the warehouse market is obsolete. “Trucks need space to maneuver and deliver their goods efficiently onto elevated loading docks, and SunCoast Commerce Center IV offers all the amenities of a modern distribution center, from power systems to sprinklers, ramps and bay spacing,” says Bornhorst, a senior vice president with Lee & Associates.
The location, south of Luckett Road, includes extensive frontage along Interstate 75. The center is in the Fort Myers/Lee County Enterprise Zone, a tax-advantage area that encourages development.
EastGroup, even before the project opens its doors, is already talking more expansion in Southwest Florida. The company has enough land in Fort Myers to build 1 million square feet, Coleman says. That includes space in the SunCoast Commerce Center. “We are long-term owners of industrial buildings and parks,” Coleman says, “and we like to grow with pro-business communities such as Fort Myers and Lee County.”