Investors are scouting for land in Southwest Florida

As people move to Lee County, there’s an increasing need for commercial real estate developments.

Lee & Associates
Published in the Naples Daily News 6:00 a.m. ET September 14, 2020
Real estate experts say Southwest Florida is a hot zone for developments.

If you’re a commercial landowner in Southwest Florida, consider selling now or prepare to hold.

Real estate experts say there are institutional buyers who are eager to acquire land for development, thanks to strong population projections.

“As a landowner, if you have an opportunity, sell now,” said Skip Thinnes, senior vice president at Lee & Associates in the Fort Myers-Naples area.

Land sales mirror economic cycles, and real estate veterans such as Thinnes who have guided clients through many economic ups and downs say it’s important to recognize the opportunities and consider the risks before the end of this growth cycle arrives.

Now is a good time to sell land to apartment developers, for example, according to Thinnes. As populations flee high-tax states like California and pandemic-affected cities like New York City, investors are flocking to Southwest Florida in search of land to build rental housing.

“I have people who want to build apartments, and the issue is finding the land,” Thinnes said.

These developers typically move fast. A developer buys the land, builds apartments and leases them up to about 80% occupancy before turning around and selling them to an institutional investor, such as a publicly traded real estate investment trust or private equity fund.

“Based on population projections for the next five years, as many as 20,000 additional new renters may move to Lee County, but only half that number of new apartments are in the development pipeline,” said Thomas Webb, a certified commercial investment member and the director of the multifamily investment division at Lee & Associates in the Fort Myers-Naples area.

“It’s still a good time to sell land for apartments, despite the development that’s in progress,” Webb said.

In particular, there are opportunities to develop workforce housing because many of the newly built apartments have been on the luxury end.

“There’s a pent-up demand for workforce housing,” Webb said. “We’re seeing a push for that from communities, schools and health care providers.”

Senior housing continues to be in strong demand too, as older adults in northern states decide to make the move to Southwest Florida’s friendlier weather and tax climates. The long-term opportunities are significant.

“Everyone’s focused on the big wave of baby boomers, but the boomers’ kids are going to be in even greater numbers,” Thinnes said.

Also on the housing front, developers are scouting land in Southwest Florida to build rental communities of single-family homes. These rental homes typically measure 1,200 to 1,400 square feet, have one-car garages, and are clustered around a large community center.

“This new trend of single-family house rental communities originated in Arizona about five years ago and is spreading rapidly across the country. The pandemic is boosting the trend because many people would rather rent a house than an apartment. That is going to capture the renter who is in between renting and owning a home but who doesn’t want to live with someone above or below,” Thinnes said. Webb agreed: “It’s also aimed at the young families that don’t want to climb up three stories to an apartment and can’t afford a down payment to buy a home.”

Of course, not all land is created equal. It depends on what you’re trying to sell and what the land is zoned for, both Thinnes and Webb cautioned.

Land for shopping centers and offices isn’t in demand because the pandemic is keeping many people working and shopping from home.

There are always exceptions, though. For example, the boom in sales of recreational vehicles has spurred demand for land from dealers, campgrounds and developers building RV communities.

Despite the positive outlook for apartments, real estate experts say it might be risky to wait to sell land because the end of the year may bring new economic and political challenges that could affect land sales. For now, the conditions for land sales to apartment developers in good locations present compelling opportunities.

For more information about land opportunities in Southwest Florida, contact Skip Thinnes at Lee & Associates at 858-337-1111 or via email at sthinnes@lee-associates.com. For information on multifamily investments, contact Thomas Webb at Lee & Associates at 239-230-2198 or via email at twebb@lee-associates.com.

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The Naples – Ft Myers office was established in 2011 in response to the explosive growth in Southwest Florida and is now recognized as one of the most successful commercial brokerage firms in Southwest Florida. We are backed by the resources of the largest broker-owned firm in the nation. Each of our nationwide Lee & Associates offices has a strong local ownership combined with a powerful platform from the national network which includes 59 offices and nearly 1,000 brokerage professionals. These resources, combined with the office’s in-depth research capabilities and cutting-edge technology, enables our professionals to offer their clients the highest level of service in the industry.

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