March 28, 2024

Sector Portrait

Commercial Real Estate in Florida: What's HOT and What's NOT

Fort Myers, Naples/Southwest Florida

On the rebound: The collapse of the housing market has hit this area hard. Southwest Florida is emerging from the downturn, but has a long way to go. Because property values have yet to stabilize, some commercial real estate sectors are weak, but the market has bottomed out, particularly in Naples. In north Naples, large tract builders are getting ready to start construction. "As housing construction comes back, that will fuel commercial real estate," says Larry Foster, manager broker with CB Richard Ellis in Fort Myers-Naples. In the multifamily sector, Lloyd Berger, president of Berger Commercial Realty of Fort Lauderdale, handled the sale of several distressed apartment buildings in Fort Myers in the last year and saw a big appetite from buyers. "This sector is hot in every market around the state."

Borders
Borders (now vacant), Fort Myers [Photo: Borders]
Still struggling: Retail has been hit hard amid the slow economy. Along with the loss of national chains like Borders and Linens 'n Things that closed everywhere, the Fort Myers/Naples market has experienced the loss of many local shops and restaurants. "The worst is over," Foster says, "but the question is how quickly will the market come back?"


Tampa/Tampa Bay

Verandahs
Verandahs at Brighton Bay, St. Petersburg
[Photo: Richard Given, CBRE]

Developers are building nearly 2,800 apartment units in the Tampa Bay area.
On the rebound: The area is experiencing new momentum in the office sector, with small business growing and expanding into larger space, particularly in the Westshore submarket. At the same time, the Tampa apartment market continues to recover with the vacancy rate improving from an all time high of 10% or more two years ago to 7.5% today. The vacancy rate is expected to continue to improve as the job market recovers. With rents rising and concessions becoming less common, developers are building nearly 2,800 units. From an investment standpoint, there is tremendous demand for apartment buildings, says Robert Goldfinger, managing director of Franklin Street real estate services in Tampa. "Investors not only want the well-run, well-occupied buildings, but also the distressed properties where there is opportunity to add value," he says.

Still struggling: Two tenants of more than 100,000 square feet signed leases in the second quarter, giving the industrial market a boost. But there is still an abundance of warehouse space available for the typical users of an average 15,000 square feet, says Nancy Phaneuf, president of Nancy Phaneuf Commercial Realty and Development in Tampa. "Rents haven't tightened up enough for anyone to think about new construction. I think that will take at least another year." Phaneuf says landlords also are providing incentives and reducing rents to keep their existing industrial users. "There's not a huge demand for space that can't be accommodated with the inventory we have."

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