The Fifth Annual Guardian Title

Real Estate and Development

Snapshot was held in Fort Myers

last month. An evening's worth of

real estate statistics indicated

that Lee County's building boom

maintained its furious pace

throughout 1997.

Frank D'Alessandro

of Frank D'Alessandro Commercial

Realtors, the event's principal

speaker, quantified the

instinctive belief that Lee County

enjoyed yet another great year in

1997. He also predicted that

growth in 1998 would continue

largely unabated. However,

D'Alessandro strongly cautioned

against an excess of builder and

developer optimism in 1999.

Among the reasons for

D'Alessandro's caution is the fact

that a significant number of real

estate deals are being driven more

by easy availability of capital

and less by pure demand. He added

that a pull-back in starts would

likely bring demand and supply

more into balance over the next

few years.

One early indicator of commercial

market softness is the increase in

vacancies throughout Lee County.

Last year's vacancy rate climbed

to 18.02%, according to an office

market survey by the Allen Morris

Company. This compares to overall

vacancies of only 12% in 1995 and

13% in 1996.

One reason for the projected

market softness is the overall

increase in rents. New buildings

command an average of $15 per

square foot with $3 for common

area maintenance (CAM). This

compares with a median rate of

just over $11 for existing space.

With businesses moving to new

space, second and third generation

office space is standing empty.

But, for the moment, the beat goes

on. In fact, every area of real

estate boasted more transactions

in 1997 than in 1996--except for

restaurants.

Commercial

More Banks

Of 24 bank deals, 58% involved new

buildings. This is surprising

given the rate of bank

consolidation--capped off by the

NationsBank's acquisition of

Barnett late in 1997.

Lots of Retail Activity

There were 52 retail/shopping

center transactions in 1997. Of

these, 67% involved new

construction. Eleven new

supermarkets sprouted up in the

battle for preemptive market

share: Five Winn Dixie, three

Albertson's, two Publix, and a

single Kash n' Karry. In 1998,

we'll see two more Publix

supermarkets.

One major ray of hope for upscale

shoppers: the Simon-DeBartolo

Group acquired the Edison Mall as

part of a large transaction. These

folks are noted for bringing in

high-end department stores such as

Nordstrom's and Bloomingdale's

when they make this kind of

acquisition.

Strong Industrial Activity

A combination of new construction

and older building absorption made

for a very healthy industrial real

estate market involving 30

transactions, which included

78,000 square feet of new space.

The strongest growth area centered

on the Metro Parkway corridor.

Older industrial properties were

readily absorbed in 1997,

suggesting a very healthy demand.

Mini-Warehouse Glut

We have all seen them popping up

like weeds along U.S. 41. In fact,

11 new mini-warehouse facilities

graced our landscape in 1997. Of

these, four were located in Bonita

Springs, suggesting an early

market saturation for storage

space facilities.

Residential

Multifamily Rental

Although there is today a

comfortable 92% occupancy rate in

rental housing, so many new units

are projected that we can

anticipate overbuilding in 1998. A

glance at what's lurking out there

tells the story: 2,000 units are

being planned. There has also been

a huge increase in permits pulled:

0 in 1994 and 1995; 96 in 1996; an

astounding 736 in 1997.

Residential for Sale

The brisk building pace continues

unabated in Lee County. In fact,

six new major golf course

communities are coming in 1998,

including The Brooks, Pelican

Sound and West Bay Club. At

build-out, The Brooks will contain

more than 5,000 housing units.

The market is shifting generally

to multifamily villas, coach homes

and low-rise garden condos in all

price ranges. This is especially

true in Bonita Springs, where

multifamily permits spiked from

176 in 1990 to 638 in 1997. During

the same period, single-family

permits grew from 270 only to 384.

Although the market should remain

reasonably healthy, DÕAlessandro

anticipates a potential oversupply

in some sectors in 1999. This will

make it difficult for builders to

enjoy the 4-plus percent annual

price increases they have seen

since 1994. At best, they should

expect flat prices in the near

term.

More Information Available

This is only a snapshot of the

Real Estate Snapshot Conference.

If you would like a copy of the

complete conference workbook,

contact Linda Brown at Guardian

Title, (941) 332-0110.