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By Gary Tasman If you’ve ever attended a ceremonial groundbreaking for a school, restaurant, corporate headquarters or other new building, you understand the symbolism of that first turn of the dirt. The groundbreaking ceremony signifies the start of that construction project. In most cases, however, months or even years have already been spent preparing the land for future growth, as planners and developers work behind the scenes to make the property “shovel ready.” Attempting to market a property that is not shovel ready can be a significant barrier to making a commercial property sale. In fact, it’s hindered some significant transactions right here in Southwest Florida. But what does it mean to have a shovel ready property, and why is it so important? What Does Shovel Ready Mean? The term shovel ready became popular during the Great Recession, as part of the American Recovery and Reinvestment Act of 2009. The legislation placed funding priority on projects that could begin construction rapidly, in hopes of jumpstarting the economy by providing investment and employment opportunities quickly. The term “shovel ready” became an important buzzword, and an even more important strategy, in commercial real estate. Although there’s no standard definition for shovel readiness, the term typically refers to commercial sites that are entitled/permitted and ready to be developed. All of the front-end planning and due diligence has been completed: Environmental studies and soil analysis have been conducted and approved environmental permits are in hand, infrastructure is in place (or at least in process), and planning and zoning processes have been completed. In other words, the site is compliant with local, state, and federal regulations and prepared for the quick start of construction. A shovel ready site also has a clear title, with no questions as to its ownership to make the transfer of ownership simple. Many states and municipalities support shovel readiness through a site certification program—in fact, more than two-thirds of U.S. states have a site readiness certification, although there are inconsistencies between them and no national standard to follow. While Florida does not have such a program, some public-private partnerships are working to fill the gap. Utility providers Duke Energy and Florida Power & Light both partner with Enterprise Florida on site readiness initiatives. Enterprise Florida also offers site preparedness grants to rural communities looking to expand and attract business. While getting a large property shovel ready can require a significant investment in both capital and time, the benefits to the seller and the buyer both outweigh the disadvantages. Why is it Important for Land to be Shovel Ready? Having a shovel ready site offers differentiation for property owners seeking to market their land for sale, particularly in a hot market like Southwest Florida. While a shovel ready site is not exactly turnkey for a buyer, it will reduce their start-up costs, risk and the time it takes them to get to market.  Businesses and builders looking to ramp up quickly and establish their presence in the market will seek out shovel ready sites in order to hit the ground running. Consider this: In Southwest Florida, it is not out of the ordinary for a commercial project to take up to two years to obtain all of the necessary land use and civil engineering permits. While permitting requirements and other regulations obviously vary from county to county, similar timelines can be expected in many metropolitan areas. For a business seeking to relocate its headquarters quickly, a two-year wait on top of the actual construction timeframe can make even the most desirable location unattractive. In addition to reducing time-to-business, prospective buyers also want to reduce up-front costs and mitigate risk.  Having all of the entitlements completed in a shovel ready site creates less chance of a surprise that will delay construction or require additional financial outlay. When sites are targeted, selected, and prepared for economic development before going to market, they are more attractive opportunities for buyers. Those that attempt to sell a site without first making it shovel ready may struggle, particularly in a competitive commercial real estate market. Case Study: Lee County Port Authority’s Skyplex An excellent example of this can be found in Lee County, with the property designated for Skyplex. Skyplex is a 1,800 -acre property located on the north side of Southwest Florida International Airport property, that includes more than 900 acres targeted primarily for office sites: corporate headquarters, office complexes, and science and technology companies. The remaining land will be targeted for aviation-related uses, open/green space, wetland preservation and storm water management.  The Port Authority-owned Skyplex property is ideally located for commercial development. Situated at one of the nation’s largest airports in terms of land mass, Skyplex is convenient to Interstate 75, Daniels Parkway, Alico Road, and Colonial Boulevard. The site is located within a Foreign Trade Zone, which offers numerous cost-saving benefits. Finally, a large workforce is located within a short distance, as recent development and transportation corridor improvements have shortened the commute for those in Lehigh Acres, Fort Myers, and South Lee County. The first tenant to move into Skyplex was Sky Walk, a Publix-anchored shopping center that opened in 2017 and proved the site’s value to builders. That same year, one of Lee County’s largest employers, Gartner, announced that it would build a new 143,000 square foot campus on a 19-acre Skyplex parcel. Since then, Alta Resources has constructed a $21 million dollar facility at the Port Authority-owned commercial property. Neither Alta nor Gartner were strangers to the area– both already had a large footprint in the Gateway area, so Skyplex was a natural progression for them. The key to continuing this momentum at Skyplex is shovel readiness, according to Don Schrotenboer, real estate consultant and managing partner of Realvizory. “Headquarters wanting to relocate don’t want to wait two to three years that it takes sometimes to get through the entitlement process to reposition a property,” Schrotenboer told us on our most recent episode of the “What’s Developing in Southwest Florida” podcast.

By Gary Tasman Many people are surprised to learn that as commercial property brokers, our role at Cushman & Wakefield | Commercial Property Southwest Florida (CPSWFL) goes far beyond simply buying, selling, and leasing real estate.  While real estate transactions are certainly our core business, we strive to offer added value to our clients.  Our experience and knowledge of our local market and economic drivers, combined with local and global research and analytics, allow us to provide our clients with nuanced insights. This empowers them to make smart decisions, whether they’re seeking to buy or sell an investment property, relocate a business, or develop a previously vacant parcel. This service—essentially consulting and counseling—has allowed us to become one of the architects of our region’s commercial development landscape. We’ve assisted large corporations, small businesses, nonprofits, and government entities as they seek to solve problems, discover hidden opportunities, and adapt to the evolution of our rapidly growing region. While CPSWFL largely assists clients in Lee, Collier, and Charlotte Counties, there is another entity that is looking at the future of our region and offering their insight into the possibilities Southwest Florida holds. That entity is known as the Counselors of Real Estate, and their work will change Southwest Florida as we know it. Who Are the Counselors of Real Estate? The Counselors of Real Estate (CRE) are a collective of problem solvers. This team of international experts offers unbiased advice on complex matters, including large scale property and development issues. Its credentialed members include real estate brokers, developers, economists, futurists, academics, investors, and experts from the financial and legal realms. Together, they are renowned for “applying rigorous, independent, and informed analysis to complex real estate decisions facing their clientele.” The CRE’s clientele is equally as diverse as its membership. They include government agencies, Fortune 500 companies, investment management firms, developers, pension endowments, appraisers, bankers, architectural and engineering firms, real estate investment trusts, and others. One of the Counselors of Real Estate’s largest initiatives is the CRE Consulting Corps.  This public service program aids nonprofits, educational institutions, and government entities with real estate analysis and action plans on a pro bono basis. This team of CRE volunteers recently advised the Town of Paradise, California on how to rebuild after the Camp Fire of 2018, one of the most destructive disasters in state history. More recently, the Consulting Corps advised the Confederated Tribes of Grande Ronde in Oregon on how to redevelop an industrialized parcel that had once been tribal ancestral homelands. CRE Consulting Corps in Southwest Florida Why have the Counselors of Real Estate turned their attention to Southwest Florida?  Because of one of the most ambitious initiatives ever seen in our region. 18 months ago, our friends at the Collaboratory (formerly the Southwest Florida Community Foundation) announced their community initiative to solve all of Southwest Florida’s social problems on an 18-year deadline. Of course, issues like hunger, domestic violence, transportation, homelessness, childhood education, poverty, public safety, addiction, nutrition, and poverty are not unique to Southwest Florida. At first glance, these challenges may all seem like individual issues.  However, Collaboratory CEO Sarah Owen recognizes the interconnectivity between these issues, and understands that our region’s future development sets the stage for how we manage — and hopefully solve — these complex problems. If you’re familiar with systems theory, you understand that Southwest Florida’s social challenges don’t exist in a vacuum. Defined as “[a] theory of interacting processes and the way they influence each other over time to permit the continuity of some larger whole,” systems theory can apply to science, nature, business, and of course, society. Typically, we address these challenges with a siloed approach. There are hundreds of nonprofits and initiatives across Southwest Florida that do important work tackling issues on an individual basis. However, because these matters are interconnected — or as the Collaboratory says, “entangled”— their progress is limited because each of these issues exists in a system that created or nurtured it. Instead of tackling individual problems, the Collaboratory hopes to rebuild the system that has enabled these problems. But, as Owen explained to us on the season finale of our “What’s Developing in Southwest Florida” podcast, “as we begin to reimagine what our region could be, our natural instinct right is just to build it back exactly as it was.”  Her team at the Collaboratory knows that sometimes it takes an unbiased outsider — or a team of them — to help us understand our own challenges. Creating a Thriving, Developing Southwest Florida If you’re a regular reader of our articles, then you understand how development plays a role in our region’s success. As our population continues to surge, our need increases for more utility, transportation, and communication infrastructure. Our airports expand, creating a demand for more jobs in the tourism and service industries. Higher housing demand for our many new residents pushes out low-income buyers, creating an affordable housing crisis. Challenges like these, and many others, will be tackled by the CRE Consulting Corps as they evaluate and advise the Collaboratory and community leaders across Southwest Florida. The Corps is focused on transforming communities through understanding the region’s challenges. The goal of these experts is to create a realistic, feasible, and achievable road map for solving the community’s concerns. In the Fall of 2022, Corps members visited Southwest Florida at the Collaboratory’s request, to analyze our market and listen to stakeholders. At CPSWFL, our Commercial Property Experts had the opportunity to meet with the Corps to share our knowledge of the development landscape in Southwest Florida. Shortly after their visit, Hurricane Ian hit our region, and the Corps visited again with experts in disaster response and recovery. They will continue to return to offer their expertise on not only the Collaboratory’s 18-year plan, but also on how to reimagine our community after the hurricane. Those that fear that outsiders will be dictating our region’s growth need not worry. Community input and feedback is an essential component of

By Gary Tasman The past year has been a remarkable one in Southwest Florida, and the commercial real estate market is no exception to this trend. Record low vacancy rates, combined with a continued population surge in the region, have driven local demand for commercial property to historic levels. In contrast, high interest rates, inflation, and hybrid work conditions have made the commercial property outlook in other parts of the nation much less positive. With 2022 now behind us, our team at Cushman & Wakefield | Commercial Property Southwest Florida (CPSWFL) is taking the opportunity to reflect on some of the landmark transactions we’ve overseen during the last 12 months. While each of these transactions were remarkable in their own right, together they speak to the strength of the commercial real estate market in Southwest Florida. Industrial Development Near RSW Since the start of the pandemic, commercial development near Southwest Florida International Airport has been surging. Alico Road, Daniels Parkway and Ben Hill Griffin Parkway are lined with new warehouses, distribution hubs and fulfillment centers. With our strategic location conveniently placed between Florida’s two largest metropolitan areas, it’s no wonder that developers, online retailers, and distributors have taken notice of Southwest Florida. In 2022, the most significant transaction in this corridor was the sale of 312.5 acres located at 16200 Ben Hill Griffin Parkway. Sold by our team in May for $40 million, the property has frontages on three major roadways, including Interstate 75, Ben Hill Griffin Parkway and Airport Access Road. With nearly all of the property around it already in development, the property was in high demand, receiving multiple bids from all across the country. The land’s previous owner, Youngquist Brothers, made numerous investments in the property to prepare it for sale, including clearing the land and securing entitlement for a master planned development to include industrial, office, medical, and hotel construction. The property is currently in permitting for development of the Gulf Landing Logistics Center, a mixed-use planned development. The sale of this property speaks to the strength of Southwest Florida as a market for industrial development.  At the time of the sale, the industrial vacancy rate in Southwest Florida was a mere 1.0%, a number substantially lower than the 3.1% rate in the rest of the country. While projects like the Gulf Landing Logistics Center will surely make a dent in industrial vacancies, we anticipate that demand will continue to outpace supply in the industrial sector. Mixed-Use Development in Estero An equally notable transaction for our team was the $32 million sale of 45.6 acres at the intersection of Tamiami Trail and Coconut Road in Estero. The previous owner of the land, Lee Health, had initially purchased it as an investment property as it built Lee Health Coconut Point. The hospital system had worked with the Village of Estero to create a plan for a mixed-use development on the property.  Our team was tasked to find a developer that shared the same vision for the land. The buyer, Woodfield Development and ELV Associates, plans to build a world-class mixed use project on the site, with market-rate multi-family housing alongside retail, restaurants, office, and more. We anticipate that the parcel will also house a community center or cultural center. We’ve all heard the cliche that the three most important factors in real estate are location, location, and location, and this property is a prime example. Located on US-41, directly across the street from the bustling Coconut Point shopping center, the land also has significant infrastructure already in place, which will allow the new developer to hit the ground running. Improving Southwest Florida’s Office Stock One of the most symbolic transactions we brokered in 2022 was the sale of 5220 Summerlin Commons Boulevard in Fort Myers. Sold for $10.25 million, the five-story building is particularly important to us because the fifth floor houses our CPSWFL headquarters. While office real estate sales have been slow nationally, the commercial office market in Southwest Florida has been very competitive. At mid-year, our region’s office vacancy rate hovered around 5%, well below the national average of nearly 18%. Again, we can attribute our rapid population growth to this trend. But while office properties may be a hot commodity in our area, Southwest Florida’s existing stock of office space is dated. Years with very little speculative development in our area have led to a shortage of modern space. To many investors, our area’s older office buildings signal a great opportunity to buy antiquated office stock and add value through upgrades. This can include “smart building” improvements, which not only make an office more efficient but also drive higher rents in the long run. Satisfying the Need for Multi-Family Housing Our final two landmark transactions in 2022 will provide some much-needed multi-family housing in two areas with a desperate need for apartments: Cape Coral and Naples. Located near the intersection of Chiquita Boulevard and Pine Island Road in Cape Coral, the property that will house The Hadley sold for $14.65 million in June. The 444-unit multifamily project was fully approved and ready to go vertical at the time of the sale. It is one of several large multifamily developments currently under construction in the Cape, an area that has struggled to keep up with its rapid growth and need for rental properties. More Class A apartment space is also coming to Naples, where we brokered the sale of three conjoined parcels totalling nearly 19 acres at 8552 Collier Boulevard, just west of the Florida Sports Park. The parcels sold in August for $8.995 million, and will be developed into Fiori, a 303-unit multifamily complex. Both of these multi-family properties are the vision of The Latigo Group LLC, a Los Angeles-based real estate development and investment company focused on high quality multi-family properties in strategic markets. The complexes, which are expected to open in 2024, will feature resort-style amenities like fitness and wellness features, resort-style pools, coworking spaces, and more. Both will offer one,

By Gary Tasman The year 2022 is one we won’t soon forget here in Southwest Florida. We started the year with record-breaking inflation, as supply chain issues, labor shortages, and the costs of materials all drove prices higher. At the time, we predicted a busy year for both land and development deals, thanks to record-low supply. We also predicted that the then-anticipated interest rate hikes by the Federal Reserve Bank would flatten prices and slow sales of both commercial and residential properties.  What we didn’t predict was Hurricane Ian– or how the worst disaster in Southwest Florida history would impact our economy and our property market. As we look ahead to our commercial property predictions for 2023, it would be impossible to ignore Ian’s impact. Unarguably, Hurricane Ian changed the course of development in Southwest Florida. With more than $5 billion in estimated damages in Lee County alone, our region is focused not just on building, but on rebuilding. In many ways, the hurricane will accelerate growth in our region, thanks to infrastructure funding that will bolster our emergency preparedness as a region. Where will we see growth in 2023? Continue reading for our five commercial property trends to watch. Affordable Housing on the Fast Track Affordable housing has been a concern across the state and particularly in Southwest Florida for years. The Florida Housing Coalition announced this year that there was a statewide deficit of close to half a million homes that are affordable to lower- and middle-income families. The agency estimates that in Lee County, one-quarter of homeowners are cost-burdened, meaning they spend more than 30% of their annual income on housing expenses. The numbers are similar in Collier (25.7%) and Charlotte (23.4%) counties. Renters carry an even larger burden. In Lee, 48.3% of renter households are cost-burdened, with Collier County renters at 50.2% and Charlotte renters at 52.3%. Although we anticipate that rent growth and home prices will level off, we don’t foresee prices falling down to pre-pandemic levels. The demand erosion caused by the national economic slowdown will largely be offset by expansion in our area due to the hurricane. With more than 5,000 homes destroyed in Lee County alone (and countless others rendered with major damage), demand will remain high for both long-term and temporary housing. Initiatives from Fannie Mae and Freddie Mac will work to alleviate some of our affordable housing woes, and new multifamily developments coming online will add much-needed supply to our housing stock. However, our community’s leaders know that to truly solve our region’s housing crisis, we need to increase supply, and create equilibrium between supply and demand. Unfortunately, increasing our supply of housing and rental stock will take time, and 2023 is too soon to see relief. Construction costs are high due to shortages of both materials and labor, and the cost to borrow money for development also presents a challenge. However, Hurricane Ian has made our housing conundrum more urgent than ever, and we expect that local governments will be motivated to take action. The Reimagining of the Office Part of the reason for our region’s housing woes is the population explosion we experienced during the pandemic in 2020 and 2021.  Office workers with newly-remote positions were given the opportunity to work from anywhere in the world. Many chose to live in paradise and relocated to Southwest Florida. As of 2022, 26% of American employees work entirely remotely, and nearly two-thirds of U.S. workers are at least partly remote. This creates a challenge for office-based employers, who will need to re-think their work model or face the possibility of losing employees to companies with more flexible policies. Another, more local, factor will also force office occupiers to reconsider their model. Prior to the hurricane, our region’s supply of commercial real estate was already limited. The Southwest Florida office property vacancy rate was a shockingly low 4.8% entering the fourth quarter of 2022, according to our MarketBeats report for Q3 2022. In line with the low supply, office asking rent had climbed to $20.79 per square foot, an increase of nearly 12% from just 24 months earlier. With wages also growing by close to 8% over that same period, employers will need to find ways to cut costs. While it’s unlikely that most employers will switch to a fully-remote workforce, the need for cost containment will encourage many businesses to switch to a hybrid model to reduce operating costs and satisfy employee desires for more freedom. And while hybrid work may reduce some demand for office space in our area, we predict that some of our more antiquated commercial stock will be redeveloped into industrial space or even multi-family properties to satisfy the region’s needs. Pent-Up Demand for Mega-Resorts Hurricane Ian impacted more than just homes and offices– repairs are underway at numerous hotels and resorts across Southwest Florida. Three of the largest resorts in Collier County, the Ritz-Carlton Naples, Vanderbilt Beach Resort and LaPlaya Beach Resort, sustained major damage. Others in Lee County, especially those on vacation mecca Fort Myers Beach, are either closed for repairs or permanently shut down. As of early November, roughly 40% of Lee County’s hotel rooms still remained closed. With little room for tourists this season, our region will see a substantial buildup of demand for lodging options. Yes, tourism numbers are likely down for at least the next year, but a number of new mega-resorts will alleviate the strain as vacationers and snowbirds begin to arrive in late 2023.  Margaritaville in Fort Myers Beach and Sunseeker Resort in Punta Gorda will be joined by a Four Seasons resort in Naples, all in planning well before Hurricane Ian. Once these resorts come online, we expect that they will produce outstanding occupancy and positive room rates, thanks to the pent-up demand for quality vacation spots. Once these resorts prove the concept, like-minded investors will want to join the party. With tourism still the region’s major economic driver, new resorts will not only bring in

By Gary Tasman There are a lot of reasons to love Southwest Florida: beautiful beaches, abundant activities, and a snow-free environment typically top residents’ lists. But ask the average Southwest Floridian what they dislike most about our region, and you’ll often hear the same answer over and over again: traffic. That response likely wouldn’t survive employees at navigation app developer TomTom. The TomTom Traffic Index, which analyzes urban congestion worldwide, ranks the Fort Myers-Cape Coral area as the 13th most congested metro area in the entire United States, just behind Philadelphia, Atlanta, and Tampa. TomTom estimates that Lee County drivers lose 73 hours sitting in traffic in a year– more than three days’ worth of time. Fortunately, work-from-home initiatives, new transportation corridors, and employers who have relocated to more commuter-friendly locations have relieved some congestion in our region. For those Southwest Floridians still frustrated by traffic, we have good news: More relief is coming from the Florida Department of Transportation (FDOT). Transportation Infrastructure and Population Growth FDOT has been paying close attention to population growth in our region as it prepares for the transportation needs of the future. Between Lee, Collier, and Charlotte Counties, 100 new residents are moving to our region daily. Lee County is one of the 10 fastest-growing counties in the United States, growing 19% in the last decade. All three counties are expected to continue growing at a rapid pace for the foreseeable future. Explosive population growth like ours nurtures demand for new services, new industries, and new jobs. The pressure generated by each of these factors will urge significant investments in transportation infrastructure. For example, as Northwest Cape Coral’s population expands, the widening of Burnt Store Road will allow residents better access to Interstate 75. Other transportation projects in the works promise to relieve traffic at I-75 and Colonial Boulevard in Fort Myers and improve access to the interstate for commuters in Golden Gate. However, I-75 itself is also a focus. FDOT Southwest Connect Program FDOT’s Southwest Connect program takes interstate connectivity a step further than the aforementioned initiatives. According to FDOT, each project within the program is expected to move people and goods safely and efficiently while balancing regional transportation needs with community concerns. The four pillars of FDOT’s program are: interstate improvements to accommodate long-term needs for capacity and mobility; new interchanges to I-75 and accessibility improvements to existing interchanges; enhanced liveability and economic growth through complete streets design principles; and multi-modal accommodations to enhance access, efficiency and safety in transportation. As FDOT works to identify the future transportation needs of our community, it will engage the public and local agencies, including county and city governments. Possible transportation alternatives may include strategies like managed lanes like those dedicated to carpool/high occupancy vehicles, truck-only lanes, or express lanes. Improving access and flow on the interstate will surely relieve some of our region’s traffic woes. However, numerous other initiatives and studies, particularly in Lee County, are focused on reducing the number of vehicles on our roads altogether. Public Transit Initiatives in Lee County A $3.89 million improvement project to LeeTran’s Rosa Parks Transportation Center in midtown Fort Myers is adding four more bus bays and expanding access for bicyclists, pedestrians, and persons with limited mobility. The improvements will be the first of any significance for the facility since it opened 22 years ago, and a welcome sight for anyone who depends on public transit in Lee County. The Southwest Florida Vanpool Program also reduces the number of vehicles on our roads by providing a low-cost, convenient commute. The fleet, provided by Enterprise, includes large passenger vans, minivans and crossover vehicles. The program allows coworkers who live near one another to form vanpools of up to 15 commuters, who share expenses and driving responsibilities. However, the most futuristic of FDOT’s initiatives is the autonomous shuttle program it hopes to implement in the next five years. LeeTran has been identified as a partner transit agency, and a potential route for the driverless shuttle is being identified in downtown Fort Myers. While the initial stage of this program may not make a significant impact on our region’s overall traffic woes, the program itself is evidence of FDOT’s willingness to look at outside-the-box solutions to our area’s traffic woes. Transportation Infrastructure and Commercial Real Estate Naturally, when we talk about improvements to transportation in our region, most of us wonder how they will impact our own daily commutes. However, the importance of transportation infrastructure improvements expands far beyond our own personal convenience. Investment in transportation infrastructure is vital to the health of the commercial real estate market in any community. Residents need access to goods and services, employers need access to personnel, and manufacturers need access to distributors and warehouses. Commercial growth in Southwest Florida has closely followed infrastructure investment, and this trend will continue as our population boom continues. The ability to transport goods, services, and employees are vital to the success of our region’s businesses. With transportation advancements, smart businesses will be able to reduce costs, boost their productivity, and create jobs for the 100 newcomers a day that arrive in our region. How will transportation changes in Southwest Florida impact your business? Are you in the right location to take advantage of our region’s growth? If you’re seeking the answers to these questions, contact the Commercial Property Experts at Cushman & Wakefield | Commercial Property Southwest Florida. Our team of commercial real estate professionals has the knowledge and experience to help guide you and your business. Call us at 239-489-3600 or contact us.