The evolving 2024 market for Southwest Coast commercial and residential real estate (land development, single-family and multi-family construction and affordable housing) received significant feedback from three veteran analysts at the annual meeting last week. Got a highly rated prediction. A professional market trends soiree hosted by LSI Companies in the cavernous riverside halls of the Calusa Sound Convention Center in downtown Fort Myers.
In areas hit not only by the coronavirus in 2020 but also by Hurricane Ian in 2022, permits decreased in two counties, Collier and Charlotte, last year, but increased in Lee County, and development is strong in some counties and is likely to be sustainable in all counties in the future. predicted Justin Thibault, president and CEO of LSI, a specialist in land and new home sales and development.
That could be especially true for developers, home builders and commercial or industrial real estate investors who focus on “local indicators” rather than national trends and don't wait for unusually discounted deals, he said. added.
Several market characteristics in Southwest Florida are unique to the region and could change the arc of the development market here. The market may also be affected by national factors, such as federal interest rate cuts.
Experts say the following about the problem:
■ A new Live Local law passed by Congress paves the way for developers in the state to receive tax breaks, avoid some local zoning regulations on density and provide government incentives if they build affordable housing. By adding money, we are creating an administrative permit path. , is faster and less expensive because it is not subject to public voting.
LSI CEO Justin Thibault told the audience that development remains strong and sustainable.
■ Current legal battle over Section 404 of the federal Clean Water Act. For many years, the 404 required federal permits before developers could dredge or fill in U.S. waters.
With its 404(g) addendum, the U.S. Environmental Protection Agency gave both states and Native American tribes, rather than the federal government, the right to administer its permits. In Southwest Florida, local elected leaders are strongly supportive of development, which would likely open the door to widespread development activity. Many developers moved forward with new plans and projects with the support of elected officials.
Several politicians stood and received applause at the event. “We couldn't do this without you,” Thibault told them.
Residential real estate expert Denny Grimes presents his predictions at our annual Market Trends event.Provided photo
However, the 404(g) was challenged in court by environmental advocates and blocked by a judge. The ruling is on appeal, but with many projects on hold, “we'll just have to wait and see what happens, hopefully under another judge,” Thibault said.
He is joined by Denny Grimes, president of Denny Grimes & Team at Keller Williams Realty, a residential real estate expert, and Maxwell Grimes, a commercial real estate expert. Matt Simmons, managing partner of Hendry & Simmons, was also present.
For real estate developers of all kinds, “this is going to be the year of education for answers,” Thibault predicted to a packed house, estimated by the host at 1,200 people.
They came to learn because they wanted to know.
The data-rich presentation is provided by LSI Companies as an exquisitely detailed booklet and will be made publicly available later this week at www.MarketTrend-SWFL.com.
This includes everything from population and employment rates to airport traffic numbers, factory configurations for diesel fuel, aluminum, copper, and brass, and costs for steel mill products, wood, and concrete. This includes things like county and city average housing costs and the number of residential permits issued for single- and multi-family homes in the three counties.
Among the many communities that participated in growth last year, Babcock Ranch ranked first by community in terms of single-family homes with 773 permits in Charlotte and Lee, and Ave Maria in Collier with 399 permits. and was ranked second.
But Ave Maria and Babcock were tied for the most multifamily permits, with 280 each. Across the three counties, 30 builders were ranked for participation.
“I take into account a number of indicators, including what the federal government is going to do (such as controlling interest rates and wetland development), the availability and cost of materials, rents and sales prices, and what sales of new homes will be.” , who the president will be (and how that will affect the economy), all of those things are going to be shed light this year,” Thibault said.
“It was a question that we didn't have an answer to in 2023. But we will have an answer in 2024.”
Advice for buyers and sellers
Denny Grimes has been in the industry for 40 years and has regularly heard people argue that there are no buyers in difficult markets when it comes to residential and commercial real estate as the market levels out and stabilizes. , offered wisdom gained from years of experience.
“There is no shortage of buyers in any market. If sales are down, it's because there is a shortage of viable sellers, not buyers,” he said.
Grimes is now telling home sellers that the once-in-a-lifetime crisis that began months after the arrival of COVID-19 when so many people moved to Florida to escape other parts of the state It warned that it cannot expect to benefit from a significant increase in the list price of Country. Availability declined, labor and materials became harder to find, and prices skyrocketed as if the market had put the blame on sellers.
But for sellers, waiting for prices to rise again, even when interest rates have fallen and the cost of money has become cheaper, means “I put my size 32-waist pants in my closet because I'll wear them again.'' It's like, “Keep it there.''' Grimes suggested.
“The most crowded state in this country is the state of denial,” he added.
So, while the market appears to have once again regained the reasonable stability of the pre-COVID-19 2019 market, now may be a good time to buy or sell without getting too greedy with expectations.
“Advice to buyers: If things start to move in their favor and prices soften, the public reaction will start with the same vices.Buyers were buying for greed, but now buyers are buying for greed.'' “We're going to wait like crazy for it to go up,” he explained.
Probably not a good idea.
“For sellers, most people want to have conversations about money, but there's another 'M' word. motivation. So if you want to sell your home and move closer to your grandchildren, is it really about money? ”
“So my advice to sellers is to consider the following questions: What can you do instead of selling now? Wait for home values to rise again? But when?”
Matt Simmons started by pointing out the big picture. “We're in a different place than we were the last 10, 12 years. We have to be realistic. The reality is that a secular bull market desensitizes you to the reality of risk. ”
Here are the messages from all three speakers: Larger national trends, such as changes in pricing and lease rates, and national, regional, and even state factors must be ignored.
Know them and be aware of them, but don't apply them to the southern Gulf Coast, he says.
“Instead, what matters, especially for asset classes, is what is changing locally.”
Currently, in commercial real estate, “office, retail and industrial vacancies are very low,” Simmons explained.
“And then there's the impact of interest rates. So if you're looking for space, don't expect a discount.
A change occurred in the mid-to-late 2000s. We have overbuilt many commercial asset classes. ”
In some cases, they remained seated for years.
“For example, the industrial parks that are experiencing explosive growth now were only there in 2008. It took until the mid-teens for them to start moving again.”
“And now if you buy commercial products, you can get discounts starting in 2022. From the Fed, we have reached the peak and now projects are starting.”
The future is suddenly rising again, he suggests.
“In December 2023, there was 1 million square feet of land with permits issued for industrial use only in Lee County alone, which means there will be a lot of new space coming up.”
His warning is: “As our population grows and we lead the country in job creation, that can lead us to complacency.”
If the spigot shuts off, the local economy could suffer or collapse, he said.
Simmons said one of the most critical issues facing Floridians and employers is the lack of affordable housing, and reflected on the Live Local Act as an element unique to Florida, and said He pointed out that it will definitely bring benefits.
Critics of this plan tend to defend traditional comprehensive land use planning.
But they may not fully understand, he suggests. “A big reason why there aren't enough apartment buildings is that it's very expensive to deliver a single-family home.
“40% of the cost of delivering a unit is due to regulatory requirements. So Live Local takes great advantage of that. This allows for multifamily in density zoning categories that didn't exist before. . And that also leads to reduced taxes.”
So no matter what happens in the next year or two, “Live Local is going to be a game changer,” he says. ｜
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