Fort Myers and Naples
Stan Stouder has worked in the real estate business since 1981, when he went to work for West Coast Realty in Fort Myers, a destination he chose because his family vacationed there. Over the course of the next two decades, Stouder worked for Re/Max, became in 1986 the youngest professional ever to receive a coveted CCIM designation and ran his own brokerage and consulting firm. In July 1998, Stouder and five other brokers opened a Southwest Florida office of commercial brokerage firm CB Richard Ellis — today’s CBRE Inc. In 2012, Stouder and fellow founding partners elected not to renew a licensing deal and formed CRE Consultants. Today, he focuses on land sales and industrial investments. From 2009 through 2012, Stouder also hosted a television show called “Market Place Wisdom” on CTN 10, WRXY in Fort Myers. Later this month, he will be the featured commercial real estate speaker at Market Watch at the Hertz Arena, an annual presentation of experts on the area’s real estate market.
Give us an overall assessment of the commercial real estate market as it stands in Southwest Florida at present.
It’s good, but it’s not great. It’s rising, but at a decreasing rate as compared to the past few years. The last economic recession here was apocalyptic, frankly, and we’ve had steady growth since then, since about 2012 til now. My assessment is the metrics are good but not in all tranches. In retail and industrial, if you can build quite big or really small, there’s great demand. Especially in Naples, anything over 20,000 square feet or under 2,500 square feet is really attractive, but Naples has barriers to entry because there’s little available land. Values in Charlotte to Lee to Collier counties, in general, tend to double with each county beginning with Charlotte.
"While I think things are healthy they’re not on the boil anymore, though I don’t foresee anything like the crash we had in 2009." — Stan Stouder, CRE Consultants
What’s the CRE market like in Lee County at present? It seems as if housing of all types continues to proliferate there.
What’s driving Lee County are the same sectors driving all of Southwest Florida: Self-storage, industrial, senior living and multifamily rentals. And of those, there’s a large volume. It’s been very robust. Meanwhile, 75% of all residential sales are for homes priced at $250,000 and under. There’s been a proliferation of high-end multifamily product, and a demand for it, but it’s a relatively small demand compared to the overall. New multifamily residential development has really been skewing the permits overall, and the other hot sectors are also residentially driven. Assisted living is a type of housing, of course, self-storage is fueled in large part by renters in apartments, and in this market, industrial spaces tend to be occupied by service providers and trades. We have very little manufacturing, for instance. What one can’t find are spaces of 2,500 square feet or less, despite a fair amount of demand, and that’s because a lender won’t finance that space spec and it’s difficult to pre-lease those smaller spaces. Lee also had negative office absorption in 2018 for the first time in like five years, even though vacancy is like 7.1% — while industrial stands at 3.1% and retail around 4.3%. That’s the sign of a healthy market.
Where do you see the Southwest Florida commercial real estate market heading in 2019?
It’s a good time to build — lumber prices have fallen something like 20%, from what I understand, of late. But we have a problem in building affordable housing because land prices have risen so dramatically, along with the costs of many commodities and labor. But I think it’s a good time to build any type of structure, because I expect the economy to hold on and interest rates to maintain where they are and, if prices cool somewhat and activity diminishes a little, that could free up labor and make prices a little more affordable. I’ve also said for the past 18 months or so that’s it’s a good time to sell properties and developments.
What about even further out, beyond 2019? We’ve read that Lee County is one of the fastest growing in all the U.S. in terms of population and job growth.
I can’t see much beyond 2020, but I think at least until then, the economy should be stable in this part of the world and things will cool somewhat from extreme highs, and investors should feel pretty comfortable with occupancy rates and their returns, especially in industrial product, where the growth in rents and sales have been fantastic over the past few years. In 2016, 130 industrial buildings in this market sold at an average of $49 per square foot. The next year, 2017, 101 traded at $63 per square foot, and last year, we had 125 buildings sell at an average of $82 per square foot. So we’re not losing velocity in sales and prices are continuing to increase. So while I think things are healthy they’re not on the boil anymore, though I don’t foresee anything like the crash we had in 2009, because we have single-digit vacancies in the three key sectors, land prices are still escalating, one can still buy office space for less than its replacement cost and retail, while as an industry is undergoing a metamorphosis, individual projects like Benderson (Development Co.’s) are continuing to expand here.