designer1@mandmmultimedia.com

By Gary Tasman If you’ve lived in Florida long enough, you understand the emotional roller-coaster that recovery from a disastrous event like Hurricane Ian can produce. In the days after the storm, it’s easy to toy with the thought of moving to a landlocked state– or at least an interior community. “Never again,” we say.  However, most residents and businesses choose to stay, either out of a love for our Southwest Florida lifestyle, a sense of obligation to the community, or possibly because of sheer stubbornness. The interaction between those who choose to stay, those who move away, and those who seek new opportunities in the region all play a significant role in shaping our commercial property landscape. Supply, Demand and Post-Hurricane Recovery Immediately after a disaster event, property owners and managers conduct an assessment of the impact of the storm. This can include inspecting structures for physical damage and mechanical failures, determining what services and utilities will need to be restored, and assessing what repairs or resources will be needed to restore operations to normal. Difficult decisions are often made during this first phase. Property owners need to determine if damage should– or can– be repaired. Expenses, safety concerns, and other considerations may render a facility beyond repair. For these properties, owners will need to decide whether to rebuild or sell. While you might think that property owners will have challenges selling after a disaster, in actuality, Hurricane Ian will transform our commercial real estate market into an even stronger seller’s market.  We entered the summer and fall hurricane season with an exceptionally tight inventory of office and industrial space available.  At the end of the third quarter, our MarketBeat reports showed an office vacancy rate of 4.8%, substantially below our area’s ten-year average of 7.7% and the national average office vacancy of 17.8%. Industrial properties were even more difficult to secure, with a record-breaking low vacancy rate of 0.7%, compared to 3.2% nationally. Because of the number of properties that were either temporarily or irreparably damaged during the Hurricane, the available commercial inventory will become even tighter. At the same time, demand will spike because of the many businesses that need to relocate to continue operating. This interaction between an already record-low supply and high demand will cause prices on commercial properties to increase. The Impact of Newcomers to Southwest Florida Helping local businesses get back on their feet and find new space has been a priority for the Cushman & Wakefield | Commercial Property Southwest Florida (CPSWFL) team since the moment Hurricane Ian passed our region. Many of our early efforts also included helping government agencies, nonprofits, disaster recovery companies, and others involved in emergency response as they flocked to our region to assist after the storm. CPSWFL was ready to help those who came to help us. For example, we assisted FEMA in securing a sublease of Gartner’s then-vacant office space in Gateway, so that the agency could begin offering recovery services as quickly as possible. Newcomers are also arriving in the form of commercial real estate investors. For the last several weeks, our brokerage has received numerous inquiries from developers prepared to invest billions of dollars in commercial properties in Southwest Florida. At the same time, we are also fielding calls from many property owners with older buildings– standing or not– who want to know what their land is worth before deciding to sell. New builders in our area will receive economic benefits from disaster recovery grants that will allow them to build back better, stronger, and more efficiently. While they’ll need to pay a premium because of our staggeringly low inventory, they will reap the benefits of properties with proven locations and infrastructure already in place. Sellers, on the other hand, will be able to offload their properties in as-is condition and still come out of the transaction in good financial condition, particularly when compared to what they could have sold their properties for before the storm. While some may find it easy to look at these real estate investors as opportunists, their arrival will produce a number of positive benefits for our community. Hurricane Ian’s Silver Lining For the thousands who have lost loved ones, their homes, or their livelihoods in the wake of Hurricane Ian, it may be difficult to believe that there is a silver lining to the storm’s impact. However, one does exist. Most Floridians are aware of the building code changes that occurred after Hurricane Andrew in 1992.  Buildings that were constructed prior to Andrew were built to lower requirements for elevation and construction durability. However, numerous changes at the municipal level, as well as the 2002 Florida Building Codes, have made new construction much safer and more hurricane-resistant. Many of our coastal high hazard areas like Fort Myers Beach, Sanibel, Captiva and Pine Island,  held a disproportionate number of older buildings, constructed before the Florida Building Codes were enacted.  These structures were simply not designed to withstand the level of force that Hurricane Ian brought, and many were destroyed or damaged irreparably.  However, as investors replace this old building stock with new properties, our market’s inventory will be replaced with higher quality, more durable buildings at higher elevations. Better-constructed communities will produce positive impacts on property values and municipal revenues. In turn, this will allow for improvements to infrastructure like roads, bridges, parks and other municipal investments. We’ve seen this cycle happen before. After Hurricane Charley devastated Punta Gorda, the community experienced a renaissance of commercial revitalization along the Peace River that continues to this day. Newer, stronger buildings in our region will also have another positive impact. Our state’s property insurance woes are well-documented. Currently, insurance companies balk to issue policies to those in high-risk areas, and the available policies typically charge extraordinarily high premiums.  However, as the quality of our state and region’s building stock improves over time, the risk of insuring properties in our state becomes lower, and the average cost of a property

By Gary Tasman Whenever a disaster like Hurricane Ian occurs, fraudsters seem to come out of the woodwork, offering to repair roofs, remove trees, or expedite government assistance. And while most of us are on high alert to these types of scams, there are many types of fraud that occur every day without our awareness. One of the most common is real estate fraud, which can impact both residential and commercial property owners, often with devastating consequences. In 2021, real estate and rental cybercrime losses totaled $350 million, an increase of more than 64% from the previous year. More than 11,500 victims were targeted by these scams, to the tune of more than $30,000 in losses per victim. There are multiple types of real estate fraud that bad actors can commit to dupe buyers and sellers. These include wire fraud, land fraud, mortgage fraud and rental fraud. While all of these are significant, we’d like to focus specifically today on wire fraud and land fraud, which have become two of the most predominant forms of deception in the real estate industry. What is Real Estate Wire Fraud? Put simply, wire fraud is a scam that involves the use of telecommunications– and in real estate, this typically means email, although it can also occur via fax, phone, or even text messaging.  In real estate, the most common form of wire fraud will trick a buyer into transferring a large sum of money– such as a good faith deposit, downpayment, or closing costs– to a fraudulent bank account. One survey of title agents indicated that wire fraud attempts occurred in roughly 33% of all real estate transactions in 2020. How does this happen? If you’ve ever purchased a property, you understand how complex the transactions can be. They can involve multiple realtors, mortgage companies, title agents, and even attorneys. As the closing date draws near, there is often a flurry of emails and calls while the final details are worked out. Scammers take advantage of this frenetic situation and send a legitimate-looking email to the buyer, stating that the wire transfer instructions have changed and offering new instructions. The buyer, eager to expedite the closing, wires the money as directed, and doesn’t realize until the next day that the legitimate account never received the funds. Typically these scams first start through a phishing email. Bad actors will send malicious emails to realtors, brokers, attorneys, title agents and similar parties, in the hopes that someone will click on a phishing link and download spyware to their computer. “Once that email is clicked on, you might as well have invited the fraudster to sit behind you and just watch everything that you do,” says David Lanaux, President/Owner of Title Professionals of Florida. “They look at what’s going on, they see the communications getting passed back and forth between themselves and the client, and when the timing is right, because they know when the closing’s going to happy, that’s when they interject and send that client new wire instructions, new information that changes the whole course of the transaction, and before you know it, that money is gone.” Lanaux has become very familiar with real estate fraud.  On the most recent episode of our “What’s Developing in Southwest Florida?” podcast, Lanaux revealed that his company has caught nine attempts at fraud in just the last two months, although not all were wire fraud attempts. According to Lanaux, the Southwest Florida real estate market is particularly susceptible to wire fraud because close to 50% of real estate transactions in our area are cash sales, making scams like these a lucrative proposition. What is Real Estate Land Fraud? Land fraud can also impact both residential and commercial transactions. In this scam, a huckster represents themselves as the owner of an undeveloped property and contacts a real estate agent or broker to sell it, often at a reduced price to encourage a rapid sale. This scam is also sometimes called title fraud. Land and title fraud are most common when the rightful property owner lives out of the country or does not regularly check on the property. An example of this happened in Cape Coral in late 2020, when an out-of-state couple purchased a vacant lot for less than $8,000, below its assessed value. The owner, who lived in France, discovered that her property had been sold out from under her when she didn’t receive her annual property tax bill. She was also bilked out of a Port Charlotte property. Preventing Real Estate Fraud Real estate industry professionals, as well as buyers, sellers, and property owners can all take steps to reduce the incidence of real estate fraud. Cybersecurity needs to be a top priority, as just one malicious link can open the door for scammers. Hackers can and will target anyone involved with real estate transactions, including lenders, attorneys, real estate brokers and title agencies. The Federal Trade Commission offers a number of resources to recognize and avoid phishing scams. Professionals should also alert their clients to be wary of any email that contains wire transfer instructions or other requests for financial information. Real estate agents and brokers should be familiar with the red flags that are common in land fraud attempts. These include sellers who appear out of the blue and are eager to unload a property quickly for less than market value. Other red flags include sellers who are located out of the country or who only want to communicate over email. Lanaux recommends asking for seller identification up front and working with your title company to verify the seller’s credentials. Buyers must be skeptical of any email or text message they receive about wiring a down payment or deposit. If they receive an email with new wire transfer instructions, they should immediately call the purported sender and confirm before clicking any links. Additionally, buyers can provide themselves with peace of mind by doing their own independent research on a property before making a