Vacancies Grow

By the end of 2007, the stagnant residential market and scarce number of housing starts hadn’t seriously undermined the commercial sector in Lee, Collier and Charlotte counties. However, commercial real estate activity generally follows the development of new housing, and a softening in the market was beginning to appear.

Industry professionals noted shifts in vacancy rates and lease costs in certain areas. Furthermore, they were foreseeing a slowdown in construction activity.

Here is what they had to say about the tri-county region’s commercial market:

Lee County
In Cape Coral, where not long ago it was nearly impossible to find office space, the vacancy rate hit 18.4 percent, says Gary Tasman, a broker with Cushman & Wakefield in Fort Myers. By contrast, office units in downtown Fort Myers are harder to come by, with a vacancy rate of 4.7 percent.

Those are just two examples of the lopsided conditions throughout the county.

The oversupply in the Cape can be traced to a combination of factors, Tasman says. First, a new, 60,000-plus-square-foot building developed by John McGarvey ratcheted up available properties that have not been rented. And of the total 940,000 square feet of product, Cape Coral landlords have lost 57,000 square feet of tenant occupation.

Tasman says the loss is due to fallout from the housing market. With activity down, construction-
related businesses, for example, closed shop or downsized. "Cape Coral is very dependent on the housing market," he says.

Regionwide, out of the inventory of 11.1 million square feet, the office vacancy rate averages 10.2
percent, with nearly 1.2 million square feet available. "That number will climb as much as 2 percent," Tasman says. "We’ve got a bit of strong medicine to take [in 2008]."

Still, the numbers aren’t so bad; when vacancy hits 10 percent or less in an area, that’s considered a good measure for building more commercial space.

Office rent prices in Lee County are $22.72 per square foot.