The Flourishing Lee Industrial Market

Southwest Florida never has been known as an industrial powerhouse, but it has carved a niche for itself in recent years as a good location for small- to mid-sized manufacturers and businesses supporting the booming homebuilding market. Lee County's industrial space market -- possibly the healthiest segment of the local real estate market -- is a reflection of that steady growth in manufacturing and distribution.

The industrial market, while small, is strong and shows bright prospects for the future. Quick absorption of speculative space is an indication of this strength. With Lee and Collier Counties consistently ranking in the top 10 hottest homebuilding markets, companies that supply and cater to the housing market have been doing well. And an increased presence of international companies reinforces this area's superiority as a jumping off point to markets in Central and South America.

Smaller companies fueling growth

To understand the real estate end of the industrial market, it helps to understand the business end. Southwest Florida is an area dominated by small businesses. According to the U.S. Census Bureau, only 54 local manufacturing, construction and wholesale trade companies employ more than 50 workers, and only seven have more than 250 employees. Seventy-six percent of the 2,350 businesses in these industries employ fewer than 10 people. Therefore, a large industrial business in Lee County is one with more than 50 employees.

In addition, because Southwest Florida is at the southern tip of Florida, we're at the end of the distribution line domestically. However, we're well situated for tapping markets in Latin America.

What this area does have going for it are very low business costs, excellent quality of life and competitive real estate prices, whether constructing or leasing. Just one example is wages, often the biggest outlay for a company. The average annual pay in Lee County is $23,246, according to the U.S. Bureau of Labor Statistics. That compares to a national average of $30,250 and annual wage rates up to $45,000 in such places as New York and New Jersey. That's one of the reasons we continue to see a strong market locally for small-sized industrial companies.

Another reason is Southwest Florida International Airport, which in the last five years has increased its shipping and cargo capabilities by more than 51 percent. With the airport's steady expansion into foreign flights, we're also starting to see more of an international presence in Lee County's industrial business community.

Emerging Areas East of I-75

In the past, industrial space and Metro Parkway have been almost synonymous -- such is the lock that the Metro Corridor has had on the local industrial market. But while Metro Parkway still is strong, there has been an upturn in emerging areas east of I-75, near the airport and even some older industrial locations in central Fort Myers.

During the last year there were more than 40 small industrial transactions under $500,000 in Lee County, and 60 percent of those were in the Metro Parkway Corridor. The Metro area offers a central location convenient to many companies' customer bases. It also offers small industrial lots, for which there is strong demand due to the number of small and emerging companies in the market.

But we're also seeing signs that the industrial market is spreading east of I-75:

B.F. Industrial Center -- a 46-acre industrial park just east of I-75 on Luckett Road that is being developed by Bundschu-Kraft, the successful developers of Billy Creek Commerce Center, recently saw the completion of three speculative buildings ranging from 6,000-to-7,500 square feet.

The 295-acre Westgate Regional Centre in Lehigh Acres has been hot lately. Notable businesses locating there include Cyto Meridian, an Irish company, and Easy Picker Golf Products, one of the world's largest manufacturers of equipment for golf driving ranges, including ball pickers and dispensers. Easy Picker relocated from Costa Mesa, Calif., due to skyrocketing business costs and built a 45,000-square-foot plant in Westgate. It currently employs 54 people.

Westlinks Industrial Park in Gateway recently has seen significant speculative construction by McGarvey Development Company.

Jet Park/JetPort Interstate Commerce Park near the airport on Daniels Parkway has seen an increase in new construction.

Speculative Space Market

Maybe the brightest part of the industrial market has been speculative space - buildings constructed by a developer before tenants have been lined up. During the last two years, 90,000 square feet of spec space have been built in JetPort, and 120,000 square feet have been built or are under construction in Westlinks.

The good news is this space has absorbed well at a 63-percent rate. One example is a 22,500-square-foot speculative industrial building built by Flordeco Inc. in JetPort. Klocke of America, a German company that manufactures packaging for the cosmetics industry, subsequently purchased the building and after tenant improvements recently held a grand opening of the facility, which will employ 60. Klocke wanted to be near the airport for ease in shipping its products as well as being able to serve markets in South America.

Strong Outlook

Another prime example of the strength of the industrial market has been the good absorption of mature vacant space. Three examples in the older industrial sections of Fort Myers include:

* 65,800 square feet on Hanson Street selling for $1.75 million.

* 63,000 square feet on Work Drive selling for $900,000.

* 57,280 square feet on Fowler Street selling for $1 million.

Again, this is an indication of a healthy industrial market when older space is moving along with new space. While Lee County's typical industrial tenant has been small in size and local, today we are seeing many of our small, local industrial tenants grow with the market and move into larger facilities that they own instead of rent. They are a very diverse group of companies -- from bookbinders to air conditioning businesses.

However, the area still lacks significant single-tenant space greater than 30,000 square feet, a situation that often keeps our area from getting a second look by more mid-sized companies.

To end on a note of caution, while industrial and flex space remains strong, the mini warehouse market is heading into an overbuilt situation, evidenced by the 11 new mini warehouse projects that have broken ground during the last 12 months.

Frank D'Alessandro is president of Frank D'Alessandro Commercial Realtors in Fort Myers.