Shopping Mecca

Shopping Mecca

DEVELOPMENT by Jean Gruss | Editor/Lee-Collier

Margaret Miller instinctively knew the deal was right the minute she saw the South Lee County property alongside Interstate 75 back in 1995.

The president and CEO of Miromar Development was scouting sites around Southwest Florida when a broker showed her 74 acres at the intersection of I-75 and Corkscrew Road in Estero.

"When you see the right property, you just know it," she recalls. "I bought it in five minutes."

The 120-store Miromar Outlets mall she built on the site has become a huge success, drawing 8 million people a year. Each year's traffic beats the last, Miller says, with a 15% increase in 2005.

Those numbers aren't lost on the competition.

By early next year, two new malls totaling about 3 million square feet will be built nearby. That's equivalent to about 53 football fields of space.

When it's completed in 2007 near the intersection of Alico Road and I-75, Gulf Coast Town Center will have 15 anchor stores and 120 specialty shops totaling 1.7 million square feet. One of those stores will be a 123,000-square-foot Bass Pro Shop that expects about 3 million visitors a year. The developer is a partnership of the Cleveland-based Richard E. Jacobs Group and Chattanooga, Tenn.-based CBL & Associates Properties.

Further south, near the intersection of Coconut Road and U.S. 41, mall giant Simon Property Group is building Coconut Point mall. The center will have 1.2 million square feet of shops, 45,000 square feet of offices and 305 residential condos when construction is completed late this year.

Meanwhile, Miromar is expanding its outlet mall and recently opened the International Design Center across Corkscrew Road. It's a 250,000-square-foot complex where designers and their clients can select upscale home furnishings at substantial discounts to furniture stores.

The shopping malls are just the beginning of the growth. Developers are building or planning more offices, warehouses and homes in the city of Bonita Springs and the unincorporated area of Estero. In total, there's enough approved or pending commercial space to fill 263 football fields if it's all built as planned.

"You can't find another place in Florida that's rocking and rolling all at the same time," says Andrew DeSalvo, a land consultant with Bonita Springs-based Premier Commercial Properties of Southwest Florida, a subsidiary of The Lutgert Cos.

Rising demand

By themselves, the populations of Bonita Springs and Estero could not sustain so much new development. "Nobody would do it based on rooftops," says DeSalvo. He estimates the combined population of Bonita Springs and Estero totals about 65,000.

Instead, developers see the area as a regional destination for a seven-county region that reaches customers as far as Glades County. There are more than 4 million people who live within a 100-mile radius of Bonita Springs and Estero, according to Miromar Development.

What's more, 7.5 million passengers passed through Southwest Florida International Airport just north of Estero last year, a 12% increase over 2004. That compares with 1.3 million passengers at Sarasota-Bradenton International Airport. The Lee County airport just moved into a new $438 million passenger terminal in September, coinciding with the arrival of low-fare giant Southwest Airlines.

Also nearby is Florida Gulf Coast University, the state's tenth public university. It opened in 1997 on 760 acres east of I-75 between Alico and Corkscrew roads. The university has more than 7,000 students; 15,000 are expected by 2010.

Interstate 75, which will be widened from Naples to Fort Myers in the next three years, will continue to provide a steady stream of tourists. Miromar estimates the combined daily traffic count on I-75 and Corkscrew Road already exceeds 88,000 cars, or 32.1 million annually.

Shopping isn't the only commercial activity that's growing in Bonita Springs and Estero. The Alico Road corridor that cuts east to west from U.S. 41 to I-75 is a hot area for industrial parks because of its location between Naples and Fort Myers. Alico Road could one day be home to about 7 million square feet of industrial space.

So far, the demand appears to be there. About 98% of the industrial buildings in Bonita Springs and Estero are filled with tenants. Also, about 90% of the existing office space is occupied. As demand rises, especially from national-caliber tenants who are discovering Southwest Florida and need large blocks of space, rents have doubled or tripled in the last two years.

Another area of intense development is what brokers nicknamed the Miracle Mile. It's a stretch of U.S. 41 from Corkscrew Road to Pelican Colony Boulevard, which includes Coconut Point mall. According to Premier Properties, that area has approved or has pending developments totaling 3.6 million square feet of shops, 900,000 square feet of offices and 800 hotel rooms.

Meanwhile, pressure is building to develop thousands of acres east of I-75 for residential development, land the county set aside long ago for water conservation. However, a recent county study shows that some of those areas aren't environmentally sensitive. Thomas Missimer, president of Missimer Groundwater Science in Fort Myers, says the land was set aside years ago to comply with state demands for land-use plans. "It was a political solution to a land-use issue," Missimer argues. "It has nothing to do with hydrology."

Looking ahead

All this development will have a regional impact, though no one is quite certain what that will be. What's more, rising interest rates and a slowdown in residential real estate may slow things down.

For example, it's not clear what impact the two new malls will have on shops and smaller malls in Fort Myers and Naples. Already, developers such as Lutgert Cos. are rethinking plans to build more shops on U.S. 41. Lutgert recently bought a 100-acre parcel on the Miracle Mile, just north of Coconut Point mall.

Meanwhile, industrial development along Alico Road may eventually depress rents if too many buildings are built at the same time.

"Will there be some overbuilding? Yeah, but I got to believe that for the next eight to 10 years it's going to be absorbed," says David Wallace, a broker with Premier Properties.

The population growth, combined with the booming airport and university, will eventually help fill the space. Premier Properties brokers say they're working with clients now that are looking for a combined 1 million square feet of space.

What else could slow things down? DeSalvo worries about the area's low 2.2% unemployment rate and the need for affordable housing.

What's more, area roads need to be widened to handle the increase in traffic. "All the roads are under construction at the same time," DeSalvo says. Besides I-75 and U.S. 41, important roads under construction or scheduled to be built or widened include Three Oaks Parkway, Alico Road, Estero Parkway, Sandy Lane and Imperial Street.

AT A GLANCE

Estero, Bonita Springs

Vacancy, rental rates

Estero

Building Vacancy Avg. rental*

Office 10% $20.98

Retail 4% $16.82

Industrial 2% $13.10

Bonita Springs

Building Vacancy Avg. rental*

Office 15% $18.65

Retail 3% $16.47

Industrial 1% $11.20

*Rate per square foot

Total approved

and pending projects

by square feet

Building type Square feet

Retail 9,156,045

Office 2,248,000

Misc. commercial 1,681,799

Industrial 1,725,000

Community facilities 55,000

Source: Premier Commercial Properties of Southwest Florida.