Cultivating the Ranch

Cultivating the Ranch

Following the crest of new home sales, Lakewood Ranch's Corporate Park has reached the top of the area's business park market.

By Sean Roth

Real Estate Editor

Dirt roads, towering trees, wild grass, barbed wire fences and cows, that was all Lakewood Ranch was 10 years ago. When John Clarke and Rex Jensen, of Schroeder-Manatee Ranch Inc., started mapping out the master-planned community in the mid-1980s, it must have sounded to regulators like wishful thinking.

But since 1995, when Lakewood Ranch's major housing development began, a large vibrant community has arisen from the dirt to become an economic powerhouse of real estate development for the two-county area.

SMR wanted a community of upscale desirable homes; they got that, with more than 4,800 homes in Manatee County. On the commercial front, the 31,000-acre Ranch has grown to include a hefty collection of all the regions' most desirable business interests - medical, higher education, home building and construction. The area has two colleges and a medical school, which is one of only six in the entire state. All within 10 years.

Because of differences in visions and regulations for the area east of Interstate 75, Lakewood Ranch has developed distinct to each county. The Manatee County Town Center side of Lakewood Ranch has experienced the greatest growth, because of its inclusion of homes and multifamily residential and supporting retail.

Although often overlooked for its larger sister park to the north, Lakewood Ranch's Corporate Park, in Sarasota County, which is limited to professional office and light-industrial/flex development, has become the largest business park in the two counties. The Corporate Park, which has a 4% vacancy rate, is set for a meteoric rise in the next 20 years, growing by another 4.7 million square feet. What's on the site now, about 1 million square feet, amounts to less than a fifth of what is planned by 2024.

One of the main faces of the Corporate Park and the other commercial developments in Lakewood Ranch is John Swart, president of Lakewood Ranch Realty Co. For the first eight years of Lakewood Ranch's development life, Swart was the sole commercial agent.

"It has just grown phenomenally," Swart says. "I have been doing this for 30 years and this is the best I have seen."

Swart started his real estate career in 1972 in a job with Massachusetts Mutual Life Insurance Co. handling the company's large portfolio of properties. Swart then went to work for a developer, who built projects in Cincinnati and Tampa. In 1998, he moved on to selling an Interstate 95 bordered master-planned community called St. Lucie West, near West Palm Beach.

"We were developing 4,000 homes on a golf course," Swart says. "We built a Publix there and Kmart. There were about seven banks sites, a medical center and we had a large industrial park - about 150 acres."

When Swart arrived for an interview with SMR in 1996, he rode along one of those dirt roads in a vehicle driven by Jim Doyle, then director of marketing for Lakewood Ranch, to see the eastern edge of University Parkway, which was generally made up of the River Club, Braden Woods and Rosedale.

"It was a little green out here," Swart says. "But, I knew this (Lakewood Ranch) was going to be a good location. Land development always jumps the highway. This is how it happened in Miami and West Palm. I never really had serious doubts; it was just such a natural phenomenon."

People forget, Swart says, that the highway between Tampa and Fort Myers wasn't completed until 1980. It was a good opportunity to develop to the east. Also there was pent-up demand.

In 1996, an office building hadn't been built in Sarasota since 1985, Swart says, adding, "And there had only been one new apartment complex north of Fruitville (since that time). All of the apartment buildings had waiting lists of at least 90 days. So we knew the demand was there."

As a comparison, what Clarke and Jensen planned was a 1,273-acre business park site (of which about 600 acres is usable).

After Swart was hired, his first task was to meet with the three consultants that were planning the park - WilsonMiller Inc., Bishop & Associates Inc. and Lombardo, Skipper and Foley Inc. - to set the actual design of the lots.

"The general overview of the area was laid out in the development of regional impact plan," Swart says. "But we needed to set up the layout of the lots and the staging of the roads."

Road construction had to wait on the development in order to allow SMR to have enough cash flow to cover the construction costs. The corporate park also had two different zonings: Interstate Regional Office Park and Major Employment Center. IROP, similar to The Gateway to Sarasota office park on the Fruitville Road interchange, allows for professional office development. On the other hand, MEC allows much more latitude in commercial development, allowing light industrial manufacturing and warehousing space.

This tract was identified from the beginning of the county's master plan as a way to provide an economic base for both the residential to the north and the rest of Sarasota County.

"The commercial tax base for Sarasota County has been steadily falling," Swart says. "Commercial taxes now only make up 15% to 16% of the tax base (see tax table). This was designed to bring businesses and jobs to the area."

The layout also coincided with a study performed by Orlando-based Fishkind & Associates Inc. showing the economic viability of the Lakewood Ranch plan over 20 years and the positive economic impact to the two counties.

Clarke had agreed to donate 59 acres in the eastern end of the Corporate Park to the Out-of-Door Academy for an expansion campus.

After the development had been laid-out, Swart joined the Realtor and chamber of commerce organizations and started promoting the development. He and various SMR officials also talked up the development to reporters for the local newspapers and TV stations. At the time, Swart had a stack of businesses identified by Clarke and Jensen as possible buyers, so Swart contacted them. Then it was time to cold call prospective developers and businesses.

His first taker was a familiar face - WilsonMiller.

"We saw from working with them that they had outgrown their space on McIntosh," Swart say. "They had just grown from 15 to 25 people; it was really just the natural evolution of their business. So we put him together with Fred Starling (a Sarasota developer)."

Starling built a 19,000-square-foot building at the southeast corner of Lakewood Ranch Boulevard and Professional Parkway East, which opened in 1997.

That building was followed almost simultaneously by a new 83,000-square-foot industrial building for Teleflex, an electronic gauge and instrumentation manufacturer. Built by Halfacre Construction Co. Inc., the new building was east of WilsonMiller on Professional Parkway East.

New development announcements in the park stayed light through the following three years (1997 to 1999). In 1998, no buildings received a certificate of occupancy. That was followed in 1999 by three buildings, with a total of 59,450 square feet. In 2000, the volume of new completed buildings jumped to eight, for a total square footage of 135,425.

But in late 1999 and 2000, the park really hit its turning point. FCCI Insurance Group was coming to the Ranch. Although, the company announced plans to relocate from its 72,000-square-foot, five-story headquarters building on Cattlemen Road in mid-1998, it took the local insurance company almost three years to make the move. The new building was far and away the largest building in the Ranch at the time - a 260,000-square-foot glass complex on 32 acres at the southwestern edge of Lakewood Ranch Boulevard and Professional Parkway West.

Swart says he heard about FCCI's need for more space from a newspaper article on the company's growth. Swart says it was really the location next to the interstate and the vacant land that sold FCCI on the Ranch.

"The new building could be built for high employee productivity," Swart says. "There was also the recruiting element. With the speed limit on I-75 being about a mile a minute, they can recruit from a wider area."

In 2001, six new commercial buildings were completed for a total square footage of 407,950. Following those buildings, SMR expanded both Lakewood Ranch Boulevard, Professional Parkway and added more arterial roads: Business Boulevard, Merchant Court and Communications Parkway.

In 2002, 126,000 square feet were added in six new buildings. That was followed in 2003 by five buildings for a total of 81,100 square feet..

So far this year, three Lakewood Ranch buildings have received a certificate of occupancy for a total of 46,800 square feet. Swart says the Magnolia Green development has been highly successful and expects it to add another 500,000 square feet in the next few years.

How has Swart been so successful in selling Lakewood Ranch and its Corporate Park? Swart points to the Ranch's attributes, and to the Lakewood Ranch Realty team, as well as the SMR team. He now has two assistant leasing and sales agents, Diane Lee and Janet Robinson. Swart also credits the support engineering staffs at SMR and WilsonMiller.

"I certainly didn't do it alone," Swart says "Polly Webb helped us with the marketing and creating the mailings, which have been very successful. Really we just were lucky to catch the economic changes. We had a good master plan. The (large) growth of residential homes has been a positive factor. Having the convenience of the interstate has certainly been helpful."

Since 1997, land prices in Corporate Park have increased, but not to the same extent of areas such as downtown Sarasota. Land prices started at $2.50 to $4 a square foot. Now they range from $5 to $8 a square foot, a difference of at least $43,560 for the typical one acre piece.

"We think they are still in-line with the area," Swart says. "Obviously they are too pricey for a distribution center. This is a true suburban office park; obviously we aren't the same as the downtown market. I hear prices down there are around $50 a square foot. But we don't see them as a competitor. We do our benchmarking with comparable land sales in other areas."

One of the major trends the Corporate Park and all of Lakewood Ranch has consistently captured is the business expansion market.

"Moving is traumatic," Swart says. "When they build here, they are usually building for the next 10, to 15 or 20 years."

The Corporate Park has such a low vacancy rate because its growth is so planned out. Of the office and industrial property that is offered for lease, so much of it is pre-leased that the risk of vacancy is low. In the history of the Corporate Park, only 25% of the space was available at completion, according to Lakewood Ranch Realty statistics. Excluding the past two years, 83% of the space was pre-leased.

"We are not going to got ahead of ourselves like so many people did in the mid-1980s," Swart says. "We became very concerned in 2003, when we had accumulated 100,000 square feet of vacancy. So we slowed down the pace of development to reduce the amount of vacancy to an acceptable level."

One of the biggest concerns for SMR with the continued expansion of the Ranch is traffic, and he says it simply requires constant attention. Tim Martin, vice president of engineering, regularly works on that problem.

So what would Swart and SMR do if the economy suddenly took a drastic downturn? They would hold off selling and use the land for one of SMR's other businesses, such as cattle grazing and agriculture.

"We are going to do this in a patient, careful way," Swart says. "Just like John Clarke says, 'If I don't like it, I can just grow more cows there.' That is the advantage of having owned the land here for 100 years; you don't have to be in great rush to do things."

BUSINESS SCOPE

Sarasota downtown 2.2 million

Sarasota County4.732 million

Bradenton Downtown 610,000

Lakewood Ranch Corporate Park407,829

*Doesn't include buildings 10,000 square feet or less

Projects in Corporate Park

TypeProjectSquare feetPre-leasedYear Opened

OfficeWilsonMiller 19,000 19,000 1997

IndustrialTeleflex 83,000 83,000 1997

OfficeLakewood Professional Center 20,450 20,000 1999

IndustrialAmerican Mini-Storage 25,000 01999

IndustrialPalm Printing 14,000 14,000 1999

OfficeUniversity Professional Center 19,000 19,000 2000

OfficeLee Wetherington Homes 8,800 8,800 2000

OfficeLakewood Corporate Center 45,000 29,000 2000

IndustrialTVC 34,000 34,000 2000

IndustrialSarasota Deli Provisions 10,000 10,000 2000

IndustrialHalfacre Construction 8,000 8,000 2000

IndustrialTime Warner6256252000

OfficeLakewood Professional Center II 20,450 02001

OfficeFCCI 260,000 260,000 2001

OfficeSarasota Coastal Credit Union 14,000 14,000 2001

OfficeSpeedCom 38,000 38,000 2001

OfficeUniversity Commons I 75,500 50,000 2001

IndustrialRussell Engineering 15,000 15,000 2001

OfficeMiles Media Group 28,700 15,000 2002

OfficeRobbins 10,000 3,000 2002

OfficeJ. Barnette 10,000 02002

OfficeManatee Community College 36,000 36,000 2002

OfficeR.E. Crawford 18,000 3,000 2002

OfficeGarden Courtyard Offices I 15,000 02002

IndustrialKid's Super Gym 11,000 11,000 2002

IndustrialGemisis 38,000 38,000 2002

IndustrialBesTechnologies 8,000 8,000 2002

OfficeGarden Courtyard Offices II 19,488 02003

OfficeDon Lawson 8,000 5,000 2003

OfficeCredit Union Consultants 11,241 8,000 2003

IndustrialChaffee Enterprises 12,000 4,000 2003

IndustrialCrowther Roofing 8,000 8,000 2003

IndustrialR&S Investment-Ironwood I 45,000 02003

OfficeDooley and Mack Constructors 28,000 21,000 2004

OfficeMyers Construction 8,800 3,000 2004

OfficeBarnette II 10,000 02004

Total 1,035,054 785,425

Sarasota County Property Taxes

YearResidential%Commercial%Total

2000$17.975%$3.9617%$23.8

2004 (proposed)$30.779%$5.815%$38.8

$= billions

Source: Jim Todora, Sarasota County Property Appraiser