Inflation, rising interest rates, Russia’s attack on Ukraine, the instability of oil prices, all of these factors will play out over the next year in the commercial real estate sector.

Justin Thibaut, the new CEO of LSI Companies, focused his 30-minute Market Trend presentation Wednesday night at Caloosa Sound Convention Center on the big three commercial sectors: industrial, office and retail, and he did so in that order.

“The chase is on,” Thibaut told the gathering of about 1,000 Southwest Florida real estate stakeholders. “What do I mean by chase? It’s the chase for the next development opportunity.”

In 2020, the region combined to generate about $1.16 billion in commercial real estate sales volume.

“Seems like a really good year, right?” Thibaut said. “Then we nearly doubled in 2021 to $2.17 billion. An 87% increase. That’s a huge increase.”

In industrial, like all the other sectors, supply of large warehouse facilities and fulfillment centers keeps falling. The theme moving forward: investors filling the gaps by building new ones.

“They need inventory,” Thibaut said. “If they can’t buy it, they build it. The chase is literally on that next development opportunity.”

Industrial comprises just 19% of the commercial real estate market in the region.

“It’s the smallest volume but the most desired asset in Southwest Florida,” he said. “What we’re seeing more and more of: Industrial tenants are not necessarily industrial users,” Thibaut said. Pawn shops, breweries, medical marijuana businesses, etc., are all renting industrial style spaces these days. Occupancy sits at 98% to 99% across the region. Rents have risen by about 10% from a year ago.

“That’s great news for buyers into this market,” he said.

Industrial projects such as Meridian Airport Park near Alico Road on the east side of Interstate 75 that began years ago are suddenly the hottest of commodities.

“What’s happening is the sales volume in the industrial world is decreasing, because there’s nothing out there to buy,” Thibaut said. That’s bringing waves of new deliveries into the market. There’s a lot of new construction waves in Collier and Lee counties. It’s starting to happen in Charlotte County. Charlotte’s probably next on the map for big distribution centers and warehouses.”

Thibaut is such a big believer in Charlotte County that the next Market Trends event will happen there. It’s scheduled for Sept. 8 at the Charlotte Harbor Event and Conference Center in Punta Gorda.

Thibaut then talked retail. Written off in 2020 as people stayed home and shifted to online shopping during the onset of the COVID-19 pandemic, retail still comprises 55% of the region’s commercial market.

“In 2021 and 2022, the sector has reemerged as one of the hottest,” Thibaut said.

Empty big-box stores by brands including J.C. Penney at Coralwood Shopping Center in Cape Coral and Gulf Coast Town Center in south Lee County are finally being filled again, with a Hobby Lobby at the former and an At Home at the latter.

Sprouts supermarket chain is moving into a former Staples office supply store off Pine Island Road in Cape Coral, Thibaut noted.

“It’s being revitalized,” he said. “We’re seeing this happen all over the place.”

Not far from there, Farmer Joe’s, an off-brand supermarket, is already up and running with an often-packed parking lot.

“This place is absolutely on fire,” he said. “They’re challenging powerhouses like Publix and Sprouts.”

The office sector represents about 26% of the region’s total commercial real estate sales volume.

“It’s a challenging sector,” Thibaut said. If the pandemic evolves into being endemic, “this could signal the great return. The migration back to the office.

“I went back to the office, and then lo and behold, I freaking got COVID.”

That drew a few laughs. To entice workers back to the office, look for future office buildings to be full of amenities such as in-house cafeterias and workout rooms.

Offices have been hot commodities.

The new NeoGenomics headquarters for the cancer diagnostics company at 9490 NeoGenomics Way recently sold for $33.5 million for the 150,000-square-foot building, or $223.33per square foot, a price well below the replacement cost of the building.

“It’s great for the buyer,” Thibaut said.

In north Naples, the office tower at 5811 Pelican Bay recently sold for $55.5 million for 177,000 square feet, or $313.55 per square foot.

But some companies may turn away from having big offices because of rising costs for insurance, maintenance, utilities and taxes. Plus, they adapted to working from home during the pandemic.

“Everything is still up in our market, but I’m sure I’ll be telling a little different tale at the end of the year,” Thibaut said.