Lee's Land Shortage

Lee's Land Shortage

By Jean Gruss

Editor/Lee-Collier

In June 2004, Lee County economic development officials started to worry about something they'd never faced before: a scarcity of large tracts of cheap land available for commercial development.

The situation has worsened in the past 12 months. A recent search of land tracts of 50 or more acres for commercial development revealed just 12 parcels for sale in Lee County (see table). Meanwhile, asking prices today have risen 75% over what land sold for at the same time last year, according to research by the Florida Gulf Coast Group, a Fort Myers-based real estate consulting firm.

"Our land has become fully valued," says Tom Woodyard, a managing partner with D'Alessandro & Woodyard in Fort Myers.

That situation threatens to slow commercial development at a time when the county's residential and consumer population continues to grow at among Florida's fastest rates.

In June 2004, the Horizon Council, a partnership of businesses and municipal governments, charged its business climate task force to examine the shortage. It plans to report its findings to the Lee County Commission later this year.

But the Lee County land grab appears to have gotten ahead of those who want to ensure there's a future for office and industrial parks. "The land price took us a little by surprise," acknowledged Regina Smith, executive director of the Lee County Economic Development Office. Hurricane Charley interrupted the task force's work last year, delaying recommendations by a few crucial months. Smith declined to say what some of the recommendations might be but suggested there might be ways to alter zoning and land-use requirements.

The land frenzy

A confluence of events has led to the scarcity of land over the past year.

First, real estate investors from the east coast of Florida have flocked to Lee County because large tracts on that coast have disappeared. "We get a lot of people from the east coast thinking there's wide-open spaces over here," says Bill Mankin of VIP Commercial-TCN Worldwide in Fort Myers.

Another reason Lee's land grab accelerated is its population recently passed the half-million mark. That number automatically elevates the county on the site-selection lists of national and international companies looking for regional distribution and headquarters space.

Meanwhile, residential developers in the past few years also have acquired large tracts of commercially zoned land and built more profitable homes and apartments on the land instead.

"You can just look at the aerials and see land is running out in this area," says David Pegg, a commercial broker with Coldwell Banker in Fort Myers.

Aerial photographs show large patches of green in the south and east parts of Lee County, which are wetlands protected for the environment and water conservation. Some tomato and cucumber farms are nudged into those areas too. Any developer who dares wade into that area faces a snake pit of permitting and zoning battles with no certainty of success.

In the northwest quadrant of the county, the city of Cape Coral is carved up into thousands of residential lots with limited room for commercial development at its northwest tip. It's the same story in the northeast part of the county, in Lehigh Acres, where a commercial developer would have the almost impossible task of assembling hundreds of quarter- and half-acre residential lots. It doesn't help when the lot owners there think they're holding a lottery ticket; lot prices there have risen ten-fold in the last few years.

These pressures have driven up land prices along the Interstate 75 corridor that slices through the center of the county. To exacerbate the situation, there's a shortage of warehouse and distribution space.

The crunch boosted the rents for industrial space, which have surged to about $8.50 per square foot, on a triple-net basis, from as low as $4 per square foot two years ago, according to Mankin. (Under a triple-net lease, the tenant pays all expenses, including taxes, utilities, common-area maintenance.)

Still, rents have not caught up to booming land prices, putting a hold on construction of industrial and warehouse space. When land costs $6 a square foot, a developer of industrial buildings can't make much money on an $8-per-square-foot lease, says Mankin.

The land shortage has now caused Charlotte County to the north and Hendry County to the east to become prime areas for industrial land. Proposed interchanges along the I-75 corridor in Charlotte County and the widening of State Road 80 are paving the way for new development.

Still, brokers say buildings can't just appear when you need them. It takes a year or longer to line up regulatory approvals and another year to complete construction in those two counties.

And for now, mostly residential developers and land speculators are pioneering Hendry County. One example: In February, Bonita Bay Group, a Bonita Springs-based developer, purchased 4,700 acres in LaBelle, south of State Road 80 and west of State Road 29. The company plans to build residential communities there over the next 20 years.

Not out of land ... yet

Compared with Collier County, its southern neighbor, Lee is not land poor. In fact, there are no large tracts of land for sale in Collier, says Fred Kermani, partner with CB Richard Ellis in Naples.

One player likely to have a big impact is the Lee County Port Authority, which controls 800 acres on the north side of Southwest Florida International Airport that could accommodate an industrial or office park. Although there are no immediate plans for that huge parcel, the Horizon Council says it's a critical component to future growth. The tract's location on Daniels Parkway near I-75 puts it in a prime central location.

The Port Authority also controls 57 acres under the airport's old terminal building and parking lot. That structure will be torn down after the new terminal opens later this year. But airport officials have said they'd prefer to see aviation-related businesses move into that tract so the authority can collect airport ramp revenue. "We'll be looking for the highest and best use," says Susan Sanders, the authority's marketing director.

Meanwhile, developers have been discussing office parks around Florida Gulf Coast University, which sprang to life in 1997 on 760 acres south of the airport along I-75 and will be home to 20,000 students by 2015.

Janet Watermeier, president of the real estate consulting firm Florida Gulf Coast Group, says the recent creation of an engineering school at the university could be the spark that ignites office parks that cater to high-tech businesses.

One 220-acre site controlled by developer Jack Antaramian near the intersection of Corkscrew Road and I-75 could be a prime parcel for this kind of development, Watermeier says. She says the site has room for four 50,000-square-foot office buildings, though the developer has not filed site plans. Antaramian already has donated 75 acres of that property to the university.

Watermeier says there are at least two other sites that could accommodate office development on either side of I-75 along Alico Road. Still, these kinds of large tracts are becoming scarcer, and Watermeier says she is eager to make sure that high-paying tech jobs come to the sites that are left. "We'd like to see those companies hire our kids."

LEE'S LARGEST AVAILABLE PARCELS

A recent search for vacant parcels of 50 acres or more for sale for commercial development turned up only a dozen sites in Lee County. They include:

Airport Area

Airport Exchange Park 231 acres Just south of Southwest Florida International Airport, Airport Haul Road Gary Tasman, VIP Commercial, (239) 489-3303

Brown DRI/Airside Plaza 130 acres Daniels Parkway near the Gateway, Fort Myers Cathy Moffitt, (239) 275-1176

Fort Myers 80 acres Treeline Avenue near Southwest Florida International Airport Fred Kermani, CB Richard Ellis, (239) 659-1447

Southwest International 208 acres North of new entrance to Southwest Florida International Airport, Treeline Avenue Bob Johnston, Jerry Messonnier, CB Richard Ellis, (239) 481-3800

Commerce Park, Fort Myers

Cape Coral

Hancock Creek Park DRI 363 acres Along Diplomat Parkway, Cape Coral Greg Eagle, Eagle Realty, (239) 542-2333

Cape Coral Commerce Park I, II 71 acres On Pondella Road near Pine Island Road Gary Tasman, VIP Commercial, (239) 489-3303

Cape Coral 80 acres Near Wilmington Parkway and Nelson Road Josie Pierce, Re/Max Realty, (239) 242-2000

Lee County

Lee County 165 acres Near intersection of I-75 and State Road 82 Cynthia Skolnick, Skolnick & Waitze Realty, (239) 343-7222

Lee County 85 acres Luckett Road on the east side of I-75 Mike Strayhorn, Strayhorn Realty, (239) 939-7577

Lee County 160 acres North of Alico Road, west of I-75 Mark Farrell, Southwest Florida Capital Corp., (239) 267-8888

Fort Myers/North Fort Myers

Fort Myers 95 acres State Road 82 and Lee Boulevard Bernie DeWolfe, DeWolfe Realty Services, (239) 433-3433

North Fort Myers 160 acres 1,000 feet fronting U.S. 41 Josie Pierce, Re/Max Realty, (239) 242-2000

Source: Lee County Economic Development Office