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Location no longer matters in Southwest Florida, residential real estate has cooled, but the fire’s still burning. And Hurricane Ian reinvigorated coastal markets despite destroying so many properties.  

Those were three of the many takeaways generated Tuesday at the Market Trends of Southwest Florida real estate event, which drew more than 1,200 people to Caloosa Sound Convention Center in downtown Fort Myers.  

“The future ain’t what it used to be,” was this year’s theme, and the phrase adorned the cover of an 88-page program packed full of data.  

The data included Babcock Ranch as the fastest-growing new home community in the region, said Randy Thibaut, the first of three presenters and founder of LSI Companies, a regional real estate brokerage company. There were 1,407 new homes permitted there last year with Ave Maria ranking second with 806 and Westport in Charlotte County third with 515.  

“Our market has changed since COVID,” Thibaut said. “It’s no longer about location, location, location. It’s about availability, price and higher ground. We see Babcock Ranch, which is the fastest-selling community in Southwest Florida, and the fifth-fastest growing in the entire United States. Which has changed the dynamics completely around.”  

Residential permits rose by 3.8% from 2021 to 2022, from 25,183 to 26,147 permits, according to data pulled by LSI.  

Multifamily permits rose by 62% in Lee County and 57% in Charlotte County and decreased by 18% in Collier County.  

“We expect multifamily permits to level off,” Thibaut said.  

Build-to-rent communities like Soltura will be on the rise. “When pricing hits a wall, and interest rates are high, build-for-rents are in,” he said.  

Also, look for Charlotte County to trend upward in development data. “Charlotte County, here we come. Why?” he said. “Affordable land and availability.”  

Thibaut, Denny Grimes of Denny Grimes & Team and Justin Thibaut, CEO of LSI Companies each incorporated into their presentations that rising interest rates have cooled real estate markets across the region, but regional real estate seems to be outpacing the rest of the country.  

Grimes focused on the resale housing market. He started his presentation showing an early scene from “Top Gun: Maverick” when Tom Cruise’s character takes his jet to Mach 9, then inches it all the way to Mach 10 before going for even more speed. Ultimately, the jet fizzles out at Mach 10.4.  

“Did we push it too hard?” Grimes said of 2021, which was the best real estate year on record for sales. “Did we take it too far with the market?”  

Maybe, maybe not. But the market forces of rising interest rates, from 3.8% to 5.34%, to 5.97%, to 7.81% finally hampered the buying power of homebuyers, slowing home sales.  

In Lee County from 2021 to 2022, single-family home sales dropped by 19.5%. Collier sales fell by 31% and Charlotte by 9.3%.  

The median sales price rose to $416,250 in Lee, $775,000 in Collier and $389,450 in Charlotte.  

“What happened?” Grimes said. “I’ll tell you what happened. It’s called the [Federal Reserve]. But we have to keep things in perspective.”  

In 1982, when Grimes was in high school and had a mullet-style haircut – he showed the photograph on the screen – interest rates were 16%.  

At some point, Grimes said, interest rates would fall again and prices accordingly would rise.  

Grimes also expected high-rise condominium buildings to increase.  

“High-rise living,” Grimes said. “When low-rising living is unavailable or unaffordable, high-rising living goes on the rise.”  

Justin Thibaut concluded the presentation, giving a rundown of commercial real estate broken into hospitality, industrial, retail and office segments.   

“The whales – cash buyers – in our market are back,” Thibaut said. “But they have a different target now. Coastal properties.”  

Hurricane Ian wiped out about 75 coastal hotels and 3,400 rooms in Lee County alone.  

“Today, less than 200 rooms are available,” Justin Thibaut said. “OK. We have a major problem on our hands. Let’s build it back.”  

Building it back will prove costly for the developers, costs that later would be passed on to vacationers. The Margaritaville Resort, slated to be completed by the end of this year on Fort Myers Beach, eventually would be a “mid-range” property, not an elite one, he predicted.  

“I’m not trying to be a downer here,” Thibaut said. “It’s just a reality.”  

Industrial has overtaken office as a safer real estate bet, he said, as occupancy rates eclipsed 98% in the tri-county area, with rents hovering close to $11 per square foot in Lee and Charlotte counties and $14.87 per square foot in Collier.  

By comparison, office occupancy hovers at close to 95% in Lee and Collier and 97.4% in Charlotte, with rents at $19.77 per square foot in Charlotte, $22.48 in Lee and $31.15 in Collier.  

“Rents and occupancy are trending upwards in all three categories,” Justin Thibaut said.  

“We’re seeing interest rates, we’re wondering what’s going to happen next. My thought is that it’s probably going to get a little worse before it gets a little better. But, at the same time, coming out of Hurricane Ian, we have been reinfused with cash buyers. So, we’re going to see a lot of really high transactions, high volume, big deals happening this year.”  

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