It’s not just the housing market in Southwest Florida that’s been running strong, commercial building is booming too.
Commercial values are up from between five to eight percent throughout the area, says Enn Luthringer of Fort Myers-based Commercial Real Estate Consultants, thanks to a steady rise in demand over the last nine months across retail, office, and industrial buildings.
Luthringer said that investors had already made a move in advance of the increase and purchased much of the available commercial property.
“From an investment side, very little product is on the market. A lot of it got purchased already so we are seeing values increase as a result of decreased inventory.” Luthringer said.
The Lee and Collier County area is seeing some of the best growth in the region according to Luthringer. He said that the presence of Southwest Florida International Airport and an increase in retirees who are choosing to stay in the area during the winter months has led to steady population growth.
According to the U.S. Census Bureau, the Fort Myers and Naples metro areas were both among the 20 fastest growing in the nation, at fifth and 17th, respectively.
That growth has fed both the housing and commercial markets.
“We are definitely growing faster, we’re leading the way for Southwest Florida,” said Luthringer. “That’s driving both the housing increases and the commercial real estate, specifically the industrial side, is following that trend in order to service home builders and the industries associated with home building.”
The trend is expected to continue over the next twelve months, but Luthringer said that there are a few policies that local government could improve upon to help encourage further growth.
He pointed specifically to Collier County’s impact fees as being a hindrance to commercial growth. Lee County’s impact fees differ by area, but generally run about $4,100 per thousand square feet for retail space. Collier charges $8.61 per square foot which comes out to $8,610 per thousand square feet for the first 6,000 square feet. That means a 5,000-square foot retail building would cost over $20,000 more if built in Collier.
“Collier County’s impact fees have historically been higher than Lee or Charlotte and I think that has retarded the growth in Collier,” Luthringer said.
At the state level, Luthringer said that removing Florida’s commercial lease tax would have a big impact. Governor Rick Scott has pushed for the elimination of the commercial lease tax for years, pointing out that Florida is the only state to charge the tax. The tax stayed in place, though the legislature did reduce it by 0.2 percent to 5.8 percent.
While the increase in demand has been driving rental rates upwards, Luthringer is optimistic that there is still affordable space for new businesses to grow.
“For small businesses, I think we still have opportunities and spaces that are priced correctly for the new guy,” he said.
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