Lee County has enjoyed a six-year run of strong economic growth and expansion, especially in its real estate markets. Nevertheless, a combination of local, national and even global factors will result sometime soon in a slowdown in activity and growth.

It won't be a crash. It will be more like a soft landing - an easing into a slower local economy that allows businesses and investors to wind down and regroup.

Certain areas of Lee County (Bonita/Estero, Cape Coral and Lehigh Acres) will remain stronger than others, because they are fueled by a still-strong residential real estate market.

However, construction activity in other market segments -- especially retail, office and apartments -- will decline slowly as time is needed for residential growth to catch up to the frenzied commercial development during the last several years.

Local factors

As I have reported all year, we are approaching the end of a land rush period that led to a construction boom and now has resulted in a market of some excess space, signaling an extended cooling off period to allow for absorption.

What are the signs for Lee County?

* More than 2,200 rental apartment units under construction or in permitting,

* 1,200 assisted care living facility (ACLF) units coming on line,

* Nearly a dozen new mini-storage complexes and

* More than 800,000 square feet of vacant mid- to big-box retail space in the market.

Besides this excessive inventory of space, real estate developers are getting another dose of medicine called a "credit crunch." Residential interest rates are down, but commercial rates are up. On the commercial side, banks are now requiring more equity, resulting in lower loan-to-value rations and increased reserves. This is due to a decreasing interest in the secondary market to buy commercial loans; the return is not great enough to cover the risk.

A good barometer of where the local economy is headed is evident by the number of land contracts in the pipeline. Land sales tend to be a good predictor of future growth because of their wide ripple effect from site development businesses (surveyors, appraisers, architects, engineers and marketing companies) to contractors, to equipment suppliers once building development is complete and tenants move in. During the last six months we have seen a slowing in land sales and an increase in fallout during the Due Diligence period.

National and global trends

Everyone knows the economic pressures we have been starting to feel nationally and globally. The stock market has experienced tremendous volatility in the last several months. The "Asian Flu" is likely to start to affect many U.S. businesses, especially those that rely heavily on exports. And there are beginning signs that consumer confidence is starting to flag.

The county's unique economic and demographic patterns insulate us from some of these national trends, but eventually, there will still be an effect.

Our local economy has remained strong during the last two decades for two main reasons: tremendous growth in population and visitors. From 205,000 in 1980, Lee County's population now tops 400,000 and still is growing at a healthy 2-1/2 percent a year. During Season, the population explodes to nearly 500,000. Add to those 1.9 million tourists each year, and you have the ingredients for a healthy retail/service-based economy and commercial real estate market. Consider this fact: the Fort Myers-Cape Coral area ranks 10th nationally in the amount of gross leasable retail area per capita.

This steady growth, strong winter population and volume of tourists has allowed the area to develop a large quantity of commercial space. However, it has also led to an abundance of excess space as these demographics have shifted around the county and the commercial development has picked up and moved to follow it.

During the next few years, we will probably see more residential activity than commercial, allowing our demographics to build up to support another round of heavy commercial development. We will still see some retail, office and industrial announcements -- just not the volume to which we are currently accustomed.

In late October, the president of the Federal Reserve Bank of Atlanta, which oversees our region, visited Fort Myers to talk to business leaders and get a read on what is happening in the local economy. His assessment: "The economy in this area is still quite good. But there is an extreme uneasiness."

Looking at the bright side

Still, not all is gloom. There are two factors that still are driving much of the residential growth in our area. Florida's East Coast developers are running out of good development land and recognize the higher quality of life on our West Coast. In addition, our southern neighbor, Collier County, is running out of large development tracts. This has led, in part, to the strengthening of the Estero/Bonita submarkets.

Estero/Bonita

The area is halfway between Fort Myers and Naples and has benefited from growth pushing northward and southward from these two major markets. As a cheaper, but still upscale, alternative to Naples, Bonita's residential growth should remain strong.

However, commercial development will decrease over the next few years. In the last few years the area has seen four new grocer-anchored shopping centers, nearly 10 banks and a Target super store. Because some of this development bought future market share, an oversupply has been created that will need to be absorbed.

Lehigh Acres

This community still benefits from having the most affordable land in Lee County and the highest elevation. The widening of Lee Boulevard from two to six lanes and extension of Daniels Parkway to Gunnery Road should open more access, which means more development.

Cape Coral

Forty-four percent of all new homes in Lee County are being built in Cape Coral -- Wow!

Its abundance of affordable housing and the largest supply of waterfront lots in Lee County make it still-primed for development. The Midpoint Bridge allows easy access of the county's workforce to and from the Cape.

What this means for the future: as demographics build in Cape Coral, we will see larger scale commercial and retail development to meet this new demand.

Things to watch

There are many unknowns that could have an impact we just cannot figure into the equation.

* European Economics -- Europeans own 5 percent of Lee's real estate market. Will this continue to grow?

* Eco-Tourism -- Will it catch on? Lee County is a great market for it, and it is gaining popularity.

* Cuba Factor -- If the country opens up, watch for its effects on tourism.

* Natural Gas -- TECO/People's Gas is bringing a pipeline to Southwest Florida. This will bring a more efficient power source for new industrial businesses.

* Southwest Florida International Airport - It's the airport that never stops growing. W