State of the Market - Fall 2017

Despite how frothy many of Southwest Florida’s market segments appear on the surface, overall a state of equilibrium exists for the most part as compared to a year ago. The region’s office sector remains sluggish, despite some high-profile sales activity involving the Sarasota City Center, BMO Harris Bank Building, Northern Trust and other properties downtown. The industrial sector is equally anemic, even as area service-sector job creation has netted some positive absorption. But while development has been tepid and leasing somewhat stalled, there has been one aspect of the commercial real estate market that has remained strong; that is the amount of capital looking at real estate. This is a significant market component, as it drives up prices for quality investment properties and often results in a great deal of attention paid to even marginal properties, assuming they are priced at or below replacement costs. Cash buyers continue to dominate buying groups, though they often seek “deals” based on their ability to close quickly and most of the quality properties sold are to cash buyers. Perhaps the biggest surprise to us downtown is that new residential projects continue to be announced. Even with more than 1,400 new rental units either in leasing mode or poised to come online in the coming months, the Richmond Group plans to embark on a more than 200-unit apartment project on the site of the Ringling Shopping Center. On the for-sale side, GreenPointe Communities, owner of the Sarasota Quay property, has recently announced plans to partner with Vue Sarasota Bay developer The Kolter Group to develop the latter’s planned The Grande luxury condo project – not at the Ritz-Carlton Sarasota as originally devised, but next door on the 15-acre Quay site. The bottom line appears to be that big money does not see a weakening residential demand – even with all the product, both rental and for sale, scheduled to enter the market.