The Southwest Florida real estate world just kept humming along for the first two-thirds of 2022. The pace of multimillion-dollar deals didn’t move as fast, nor were they as eye-opening, as one year prior. But the top deals across multifamily, office, industrial, raw land, retail and residential sectors will continue to reshape the region for years to come.
Apartment complex after apartment complex changed hands from one set of investors to another looking to cash in on the hordes of people choosing to live in Southwest Florida. Some wanted to leave cold winters behind them. Others wanted to be near the warm waters of the Gulf of Mexico. Still others wanted to take advantage of the new, work-from-home environment accelerated by the COVID-19 pandemic. Many simply wanted to live near family and friends. Or, all of the above.
And then, over the course of about eight hours on Sept. 28, Hurricane Ian destroyed some 20,000 homes and multitudes of waterfront hotels, resorts, restaurants and businesses. The coastal communities of Naples, Bonita Springs, Fort Myers Beach, Sanibel, Captiva and Pine Island and the Rotonda West area of Charlotte County will take years to completely recover.
But with inland areas escaping the storm relatively unscathed, the Category 4 storm would not end the aforementioned trends of people moving to Southwest Florida, real estate experts told Gulfshore Business.
Rising interest rates, combined with high demand for area real estate, would decrease the buying power of many corporate groups and regular prospective home buyers, slowing down the process for all but the wealthiest of investors.
But Ian’s aftermath also would create new real estate trends—trends that would become clearer in the months and even years ahead, getting into 2023 and beyond.
“The hurricane changed everything,” says Gary Tasman, the CEO of Cushman & Wakefield in Southwest Florida. “Generally speaking, as horrific an event as that was, we learned some important lessons from that. It showed what our weaknesses were. Rebuilding from the hurricane will be a great economic benefit to us. We still see some favorable market positions going into this year.”
“I do think the hurricane will be the overwhelming story,” says Matt Simmons, a property appraiser with Maxwell, Hendry & Simmons. “It threw such a wrench. But if we’re talking about transactions, well, yeah. Apartments were still in the driver’s seat in terms of grabbing the headlines.”
Apartments, apartments, apartments
Far and away, apartment deals generated the biggest price tags of all 2022 real estate deals.
“The eight largest transactions were all multifamily projects,” says Paige Rausch of Aslan Realty Advisors. She monitors transactions in Lee County.
These deals began one year ago, when the Drift at the Forum in Fort Myers, with 194 units, sold for $62.5 million. Momentum Real Estate Partners of Miami made the purchase, paying $322,000 per unit, which yet again broke all the Lee County per-unit records that were broken and re-broken during 2021.
As 2022 ended, JBM, the Naples-based brokerage firm helmed by Jamie May, completed the sale of the Bonita Springs Versol apartment complex, an $87.25 million deal. The 240-unit complex, built in 2020, traded at $363,542 per unit. This marked the second time in two years JBM had sold the property, with the price rising from $70.35 million and $293,125 per unit the first time.
This deal took place more than two months after Hurricane Ian, and it demonstrated the resilience of area demand moving forward, May said.
“I think it scared the bejesus out of all of us,” May says. “It flooded my own home pretty badly. But at the end of the day, there were enough apartments that had been made that helped save the day. Just look at The Pearl.”
JBM had been marketing another Naples apartment complex—The Pearl Founders Square—prior to Hurricane Ian, and got it under contract just three days after the storm.
“It was 50% leased when it went under contract Oct. 1,” May says. “And then immediately following, they’re closer to 88% leased. They’re more than 80% occupied. A lot of the people who were displaced from their homes found refuge in an apartment community. And a brand-new apartment community in this case. The Pearl never had any damage whatsoever other than some downed palm fronds; they got cleaned up pretty quickly.
“A lot of people who were looking at apartment deals wanted to wait and see several weeks after the hurricane. But the market was strong. We all knew it would slow a little bit during the summer, but the hurricane’s wreckage actually brought it back. From an investor’s standpoint, Southwest Florida was one of the fastest-growing markets in the country. The hurricane actually kept it that way.”
Versol did not close until after the new year, making it a candidate to headline the 2023 Top Deals roundup one year from now.
But sandwiched between the Drift at Forum deal and the Versol sale, hundreds of millions of more dollars changed hands. May has seen indications these deals will continue taking place in Lee and Collier counties in 2023.
“Rents were going up 34% year over year in Naples,” May says. “That can’t go on forever. There were too many people moving to Florida, and not enough shelter for them to move to.”
A much smaller deal may lead to much bigger things in residential real estate moving forward, said Nelson Taylor, the market research director and vice president for the Southwest Florida land brokerage firm LSI Companies.
In July, a 40-acre parcel near the Punta Gorda Airport in Charlotte County sold for $4 million. The buyer, S2A Modular, specializes in building modular homes. It has three factories in California, one in Waco, Texas, and another in Macclenny, Florida. The company could not be reached for comment, but the potential is there to build a sixth home factory on the Punta Gorda site. It cannot be built fast enough, Taylor said, given the number of new-arriving residents and the number of vacant lots in locales such as Cape Coral and Lehigh Acres—places in perfect proximity to the site.
“We need housing,” Taylor says. “We need housing now. The quickest route to that is to go modular. It’s basically two mobile homes attached, but they’re 1,800 square feet. This is what we need. It’s like turning on a spigot. If that factory was opening and producing, that’s what we need right now—that thing just pumping out homes.”
In south Fort Myers, Pulte Homes paid $2.4 million for a 17-acre lot at the southeast corner of Idlewild Street and Plantation Road. The land will become Addison Square, a community of 52 homes, and Chuck Mayhugh of Mayhugh Commercial Advisors brokered the deal. Those homes will start at more than $500,000 and will range from 1,600 to 3,400 square feet.
Other vacant land continued to sell in 2022. And it did so mostly with building more apartment complexes in mind.
A 64-acre parcel just east of I-75 and on the north side of State Road 82 sold for $30 million in July. The Huether family of Fort Myers sold it to the Atlanta-based Varden Capital Properties. The Huethers paid $2.2 million for the same parcel in 2003. That’s a 1,263% climb in value over 19 years of sitting on it—and of cows grazing on it with the landowners having an agricultural exemption. LSI Companies brokered the deal.
“That is some high-value land,” Simmons says. “I think that’s clearly a buyer who is all-in on Southwest Florida—and was willing to pay more for one of the last swaths of land in a densely populated area. That’s a big, big bet on Southwest Florida.”
Taylor marveled at the purchase, too. Especially since his company brokered it, putting it in line with millions of dollars in other nearby deals to be developed along State Road 82 near Lee and Colonial boulevards.
“You’re probably looking at a total land value of near $120 million,” Taylor says of that deal combined with others that took place in that corridor. “They’re big swaths of land. It’s a simple thing. It’s got the land. It’s got the movement. It’s a desirable area. Lowe’s, Publix, Walmart, Target, you have all the national brands representing the area. Now, we’re just flooding it with more housing. It’s one of those things where it’s going to get return.”
A 45.6-acre parcel fronting U.S. 41 and Coconut Road in Estero sold for $32 million in August. Gary Tasman and Shawn Stoneburner of Cushman & Wakefield brokered this one, as Lee Health sold the land to the South Carolina-based Woodfield Development and ELV Associates. That land value, $10.48 million when Lee Health bought it, grew by 205% over the past five years.
Like the former Huether land, the former Lee Health land will be developed into apartments.
The Estero land will have a “live, work and play” feel to it. Some rezoning has yet to take place; it also had been used as a hurricane debris drop-off point. But the eventual plan is to create a retail and living center similar to the one at Mercato in North Naples, Tasman said. It also will complement the nearby Coconut Point shopping center.
“In terms of moving forward, our biggest deal was that Lee Health land site,” Tasman says. “That’s going to change the dynamics of that entire section. It’s going to bring much-needed housing and high-end retail. It will have a big impact on solving some problems with that sale.”
Collier County showed its land-value growth, too. A 7.18-acre parcel on the southwest corner of Immokalee Road and Catawba Street sold for $8.2 million in June, a 241% increase from its prior sale for $2.4 million just four years ago.
A parcel just under 19 acres at 8552 Collier Blvd. in East Naples sold to Latigo Naples LLC for $8.9 million. A 265-unit apartment complex is planned for that site, and Tasman and Stoneburner of Cushman & Wakefield brokered that one, too.
Latigo Cape Coral LLC, based in Los Angeles, also purchased 27 acres just east of Chiquita Boulevard in Cape Coral for $14.6 million for even more apartments.
The constant demand for new apartments did not surprise Simmons, the property appraiser. But bucking national trends did.
“We have continued to persist with rent increases,” Simmons says. “Even when much of the country has pulled back, Southwest Florida is still full steam ahead. That’s a different position for us as a community. We’re usually on the leading edge of trends, one way or another. This time, it looks like the rest of the country has made a shift, but we have kind of bucked the trend here, at least for a while. Migration into Florida has been so strong, we just don’t have enough rooftops for people.”
Hurricane Ian’s aftermath will continue to factor into future housing needs. “It’s a really cash-heavy market,” Simmons says. “A lot of the country is pulling back as a reflex to rising interest rates. We don’t have that same rate sensitivity.”
Industrial and office still strong
The Huether land in Fort Myers had been considered by Amazon as an industrial site to build a warehouse complex. Although more Amazon sites have been put on hold, leaving a chunk of that land selling to an apartment developer, an existing warehouse off Alico Road used by Amazon generated some buzz when it sold for $67.8 million, making it the marquee industrial sale of the year in Southwest Florida. ET Fort Myers bought the 183,456-square-foot warehouse at 8270 Logistics Drive from Seefried PSO Fort Myers LLC.
In mid-December, LSI brokered three medical office buildings that combined for 80,000 square feet—and a price tag of $24.7 million. They were located in southwest Cape Coral, just south of College Parkway and near U.S. 41 in south Fort Myers.
Coconut Creek-based industrial developers Butters Construction & Development and the Canada-based property management company BentallGreenOak purchased almost 300 acres near I-75, just south of the Southwest Florida International Airport exit off the interstate. They paid $40 million, making it far and away the region’s highest-priced industrial land deal of 2022.
Harvey Youngquist’s company bought the land out of bankruptcy for $5.74 million in 2017. That gave it a healthy boost in value of almost 600% in five years. The value grew by so much because the land entitlements grew, too. It shifted from 1.4 million to 2.5 million square feet of industrial space and from 131,000 to 225,000 square feet of office space. An additional 200,000 square feet of medical office space also was added, along with up to 360 hotel rooms.
Bob Johnston, Derek Bornhorst and Jerry Messonnier represented the buyers, while Tasman represented Youngquist in brokering the deal.
One of the buyers, Malcolm Butters, the president of Butters Construction & Development, didn’t seem to mind paying the price.
“It’s a great opportunity,” Butters said after purchasing it in May. Some of the land will be developed into Gulf Landings Logistics Center, an industrial complex. “I’m very bullish on Southwest Florida. To me, I think it’s the best industrial site in all the Naples-Fort Myers corridor. I think it’s going to do very well.
“We saw this opportunity in Southwest Florida. We couldn’t resist it. The location and the visibility next to the airport is second to none. The growth story of the Southwest Florida market, it’s one of the top 10 growth areas in the nation.”
As the year came to a close, two notable car dealerships changed hands for the second time in less than two years. Kia of Cape Coral, the former Fuccillo Kia dealership that had been recognized by the Korean brand as the best-selling Kia dealership in the world under Billy Fuccillo’s guidance, sold Dec. 19. Morgan Automotive Group paid $14.5 million for the Cape Coral land and $22.35 million for the Kia of Port Charlotte land.
“The last two years have been very unique,” says Larry Morgan, founder and owner of Morgan Automotive Group, which has grown from owning 30 to almost 65 dealerships over the past five years. “From a possibility standpoint, they’ve been really good. They’ve also thrown quite a few curveballs at us. We went from having no cars to sell to having used cars that were worth more three years after compared to what they paid for them when they bought them. Now the prices are coming back down again.”
Luxury retail, homes continue success
In April, Hoffman Family of Companies paid $14.5 million for the Old Corkscrew Golf Club off Corkscrew Road, east of Estero. It also paid $4.5 million for the adjacent Cottages at Old Corkscrew Golf Club, about 20 acres.
In Collier County, Fifth Avenue South continues to soar with lucrative retail real estate deals. In May, Bruce Barone Sr. and family purchased 165 Fifth Ave. S. from Jim Smith and family. The price: $27 million for the retail and office building that’s just under 20,000 square feet.
“It’s a big number,” says Rob Carroll, who brokered the deal along with Patrick Fraley of Investment Properties Corp., on behalf of the Barone family. David Stevens, also of IPC, represented the Smith family.
“I think it’s indicative of the power of Fifth Avenue,” Carroll says. “I think Fifth Avenue has kind of risen to the top location in the Naples area. It has become the iconic face of Naples. In the last several years, it’s grown in attention and status from national retailers. If you are a luxury retail brand, and you want to take advantage of the Naples market, it’s really where you’ve got to be.”
That deal took place more than four months before Hurricane Ian churned though the area. But on Nov. 30, two months after the storm had cleared, another mammoth deal took place. It signaled that the luxury residential market would not take a hit from the hurricane.
A West Gulf Drive home on Sanibel Island, one built in 1998, sold for $11.7 million, the highest-priced home ever to be sold in that ZIP code. Brian Rist, who had founded the Storm Smart brand of hurricane shutters, made the purchase more than a year after selling his company. The home has 300 feet of beach frontage along the Gulf of Mexico to go with five bedrooms, six bathrooms, a tennis court, wine cellar, swimming pool, elevator and 6,000 square feet of living space.
Michael McMurray, a broker with Royal Shell Real Estate, closed the deal. The home had been on the market for just 20 days. “It’s a special piece of property,” McMurray says. “It’s on a high ridge. It’s probably the best beach area on Sanibel.
“After a Category 4 hurricane, it means the islands are going to come back, and they’re going to come back stronger than ever.”
Multimillion-dollar deals in March, May
The trend of multifamily apartment complexes selling for tens of millions of dollars in 2021 continued well into 2022. In just the months of March and May, five complexes in Bonita Springs, Estero, Fort Myers and south Fort Myers sold for a combined $487.55 million.
In March, there were three. The Lennox, an aging, 936-unit Fort Myers complex near Boy Scout Drive, U.S. 41 and Summerlin Road sold for $122.2 million, about $159,000 per unit; Cardinal Capital Properties of Dallas bought it. Estero Oaks, a 280-unit complex, sold for $94 million to the Fort Lauderdale-based Royal Palms Companies. Diamond Oaks Village, a 55-and-over community in Bonita Springs, sold for $77.75 million to Castle Lanterra Properties, based in New York; this one grew by 52% in value from a previous sale just two years prior.
In May, Murano at Three Oaks, a 318-unit complex at the southwest corner of Interstate 75 and Alico Road, sold for $122.5 million to Murano Top Associates LLC. The Reserve at Coconut Point, a 180-unit complex in Estero, sold for $71.1 million to Air Communities of Denver, Colorado. At a price of $398,000 per unit, it was another Lee County per-unit record.