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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.

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

By Gary Tasman Why Diversity, Equity, and Inclusion Matter Commercial property has never been a particularly diverse field. An often-cited 2017 study by Bella Research Group and the Knight Foundation noted that more than 75% of senior executives of commercial real estate firms in the US were white men. Women rarely held a seat at the commercial real estate table–and people of color were practically non-existent among the C-suite. According to the study, just 1.3% of senior executives in the commercial real estate industry were black men. Yet research has repeatedly shown that a diverse workplace not only makes good sense morally, it’s also a good business practice. At Cushman & Wakefield | Commercial Property Southwest Florida (CPSWFL), we strive to develop and foster an inclusive workforce. We believe that diversity, equity and inclusion (DEI) help to create and strengthen a collaborative and productive team. Internationally, Cushman & Wakefield has a reputation for fostering diversity. The company’s DEI initiatives include employee resource groups for team members who are women, Black, Hispanic or Latino, Asian or Pacific Islander, LGBTQ+, or who have disabilities. In 2022 alone, Cushman & Wakefield was listed in the Bloomberg Gender-Equality Index and as a Best Place to Work for LGBTQ+ Equality by the Human Rights Campaign Foundation. DEI: The Moral Case and the Business Case Although many of us think of “diversity” as a term that encompasses just gender or race, inclusivity goes beyond these boundaries. Yes, a diverse workforce employs people of different genders and ethnicities, but also those of different ages, sexual orientations, education levels, cultural backgrounds, physical abilities, religious beliefs and so on. Even more important, each of these individuals must feel valued, engaged and included in a truly diverse workplace. Of course, inclusive teams are important because diversity is an indispensable social value–it is fair and just. However, as humans, we often naturally gravitate towards people who are most like ourselves, both in our social circles as well as in our workplaces. We simply relate better to people with similar life experiences to our own. While this tendency may be natural, this desire to be with others that resemble us can be a hindrance for businesses. A 2020 study by McKinsey & Company noted that the least diverse organizations were significantly more likely to achieve below-average profitability. Why are diverse teams more successful at business? There are a number of reasons. Diversity Improves Creativity and Decision-Making Members of diverse teams hold different points of view and life experiences. When these individuals provide input on a business situation, the ideas they produce will reflect their experiences and backgrounds. This leads to a more nimble, creative and innovative organization. In fact, inclusive companies are nearly double as likely to be change-ready as their less diverse counterparts and are 1.7 times more likely to be innovation leaders among their competition. Diverse Teams Foster a Culture of Engagement Have you ever been somewhere where you just didn’t “fit in”? Perhaps it was a social club, a neighborhood, a school or a workplace. When we don’t feel like we’re a valued part of something, we become less engaged. Companies that foster an inclusive environment, where different perspectives and experiences are valued, will also foster more engaged team members. Research conducted by Gartner indicates that inclusive environments correspond with higher on-the-job effort, employee retention and individual performance. Diversity Helps Us Understand Our Customers Spending time with people unlike ourselves helps to build empathy and stronger communication with one another, which also translates to more empathy and stronger relationships with our customers. Here in Southwest Florida, our residents come from a broad array of geographic and ethnic backgrounds. As commercial property brokers and property managers, we work closely with a wide range of clients: Owners, investors, tenants and vendors. The diversity of our team provides us with the cultural awareness needed to better understand these stakeholders’ wants and needs. Diversity Leads to Better Talent A 2020 study conducted by Glassdoor revealed that 76% of job seekers consider workforce diversity as an important factor when evaluating prospective employers. Additionally, one-third of job seekers said they wouldn’t even apply for a job at a company that had an apparent lack of diversity. In a time when employers are scrambling to attract and retain their team members, a diverse workforce may be just as important of an asset as competitive pay or a great benefits package. Making Progress Towards a More Inclusive Industry While there is still much room for improvement, the commercial real estate industry is making great strides in improving its DEI reputation. The first-ever global DEI survey of the commercial real estate industry notes that 92% of the firms surveyed had some type of DEI initiative in place. We are proud to be one of those companies that is a champion for DEI. At CPSWFL, we are committed to promoting an inclusive, diverse and equitable environment for our team, not only because of the business advantages of DEI but because it’s the right thing to do. A diverse and thriving workforce fosters new perspectives, creativity and better problem solving for employees, partners and shareholders. This sets a positive example for the entire team, which permeates into the community. Are you ready to work with a team that understands you? Contact the Commercial Property Experts at Cushman & Wakefield | Commercial Property Southwest Florida. You can reach us by calling 239-489-3600 or contact-us.

By Gary Tasman For the majority of residents in Southwest Florida, our lives have chiefly returned to our pre-pandemic normal. Offices, restaurants, retail stores, and tourist attractions are buzzing with activity—and in many cases, they’re busier than ever before. It would be a mistake, however, to think that just because things feel “normal” again that nothing has changed. The ways that we both live and work have actually modified tremendously over the last two years, and our commercial property needs are following suit. Because of our rapidly growing population, some businesses have outgrown their capacity. Other workplaces have less need for space because of a shift to remote or semi-remote work. Delivery services and BOPIS (buy online, pick up in-store) models are changing space needs for retailers including grocery stores and restaurants. As businesses try to adapt to this paradigm shift, many will need to renovate their space or rebuild it entirely to remain competitive. But which of those options should they choose? There are a number of questions to consider when debating converting versus demolition. What’s Your Budget? Perhaps the most important consideration when making a decision of this magnitude is budget. With all other things being equal, remodeling a space is typically going to be a more budget-friendly option than a demolition and rebuild. However, a number of variables we’ll discuss later in this article can challenge that notion. When estimating your demolition or conversion budget, make sure you’re projecting carefully. Inflation, supply issues, and labor shortages have made the costs of goods and services difficult to predict for commercial builders. On a recent episode of our podcast, “What’s Developing in Southwest Florida,” Mark Stevens of Stevens Construction Inc. told us that building costs have recently increased by more than 20%. If rebuilding is your preference, but current economic conditions make you wary, consider this: You have much better control of your budget during a remodel. If your cash flow slows due to a change in consumer behavior or a recession, you have the flexibility to pull the plug on some of your “want-to-haves” and focus your budget on your most imperative needs. While you would also have similar flexibility during a rebuilding process, demolition is a bell that can’t be unrung. What’s the Building’s Age and Condition? The full lifespan of a commercial building is considered to be 50-60 years, depending on the location, type of building, materials used, and other variables. According to a 2018 study by the U.S. Energy Information Association, 46% of the commercial buildings in the United States were built before 1980, meaning they’ve either outlasted their projected lifespan or are coming close to it. Here in Southwest Florida, our commercial buildings are younger than the national average, but many are still creeping up on the end of their functional life. Our damp climate and sometimes harsh weather conditions can also negatively impact building conditions, causing foundation issues, roof damage and structural impairments, many of which can go unnoticed for years. Older structures may need significant upgrades to comply with more recent regulations and building codes. Thirty years ago this month, Hurricane Andrew devastated South Florida and swiftly brought substantial changes to the state’s building code. The Americans with Disabilities Act, enacted in 1990, presents additional requirements that older buildings may not possess. Structures more than 30 years old will likely need substantial and costly upgrades to meet compliance during renovation, making conversion potentially as costly and time-consuming as a demo and complete rebuild. On the other hand, some older buildings have “good bones,” or have been through multiple updates over their lifespans, making them more viable options for a remodel. As an example, older warehouses are adaptable for a number of uses because of their open space and large and accommodating foundations. While the age of a building and its condition are two important factors to consider, there are other variables that can help make the decision between converting and demolition. How Long Will You Need It? Chances are, if you’re making the decision about whether to convert or demolish your commercial space, you’ve already begun to make projections about your future needs. While you don’t need to be Nostradamus and predict every possible contingency, you should have a reasonable expectation about how long you plan to stay in your location. It stands to reason that if you only expect to be in the building for a short period, renovation is likely the smarter option. You may even be able to kick the can down the road on some age-related issues if you don’t expect to need the building for a decade or more. However, if you expect your location to be more of a “forever home” for your business or your portfolio, demolition and a complete rebuild make for a stronger long-term investment. There are two reasons for this. First, you should be able to recoup the typically higher costs of the rebuild over time. More importantly, when you do eventually decide it’s time to sell, you’ll be marketing a much newer building with more modern amenities. Is Sustainability a Concern? Many businesses have adopted ESG (Environmental, Social, and Governance) initiatives to guide their strategy, develop policies and procedures, and reveal growth opportunities. Environmental, Social, and Governance are often referred to as corporate sustainability. In essence, “The less CO2 and waste a company produces and the more it cares about peoples’ wellbeing, the more interesting it is for employees, customers and investors,” explains Ariane Husemann, Cushman & Wakefield’s Head of Sustainability for the DACH region. Because there are no uniform global standards for ESG or sustainability, it can be challenging to determine if a structure fits into a company’s ESG framework. Owners should look at the purpose of the building, the company’s goals, and the facility’s suitability for its employees, along with its potential environmental impact. If sustainability is a concern, converting a facility may be the more ESG-friendly option. Existing buildings, says Lutz Schilbach, Cushman & Wakefield’s Design +