In the Know: 10 monster local deals of 2020 total $425 million; restaurant plans adjacent mini-golf complex
Phil Fernandez
When it comes to statistics, I've usually been a bit better with them on the sports side of world from my younger days of figuring out batting averages and tracking Dennis Rodman rebounds, suspensions and technical fouls.
Like, for example, your Buckeyes tonight will probably need to rush for 200 yards or more against an Alabama team of NFLers to maybe have a chance, just maybe, mind you, to win the College Football Playoff championship a few miles up the road off Alligator Alley. If they play at all.
Now on local and state stats, I often turn to CoStar Group's Brian Alford, a data king who's a lot smarter than me. But that ain't hard. He's a Georgia Tech guy, don't you know. His title kind of tells it: Florida Director of Market Analytics.
Mr. Numbers hit me with a whopper right off the bat, regarding commercial real estate.
"Sales volume in the fourth quarter finished with the second-highest level on record for the Naples market," Alford said.
With that kind of history, I immediately thought of Vin Scully's magic words from the 1988 World Series: In a year that has been so improbable, the impossible has happened.
OK. Perhaps not impossible but extraordinary during a COVID-19 era full of so much uncertainty.
As it turned out, three of the year's five biggest deals, a combined $162 million, splashed down in a five-day period at the end of December.
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It's simple. Everybody wants a piece of the Peninsula. A slab on the sand. A slice of sunshine.
And not just all those with the New York and Jersey plates in local traffic I've been writing about during the coronavirus crisis. We're seeing more cars from distant lands like Utah and Montana. Sure, we're kind of whiny about unseasonable seemingly arctic highs in the 60s, but those folks won't normally see anything that warm for another four or five months unless they come or move here.
Capitalists from far and wide are paying heed, with Alford finding "an increase in attention from out-of-market investors.
"Ninety-nine percent of all sales volume in 2020 was attributed to nationally-based buyers," he said. "National investors have increasingly targeted high-growth economies in less urban/dense locales."
LandQwest's Adam Palmer, recent president of Florida's Certified Commercial Investment Member chapter, this summer had noted a similar trend.
"There’s incredible amount of demand, particularly from out of area institutional investors, that are just dumping an incredible amount of capital," Palmer said.
What are these money bags buying these days?
Mostly apartments. Lots and lots of apartments.
"Multi-family deals dominated the top 10 in Collier," Alford said. "Most commercial real estate indicators are approaching normalization in Collier County, meaning back to or exceeding pre-COVID levels. The majority of job losses have been recaptured, multi-family asking rents have almost returned to pre-March peak levels, and the investment markets are improving. Sublet and available space on the market has risen a bit over the past year, but not to any red flag levels and not to the extent we’ve seen in most markets nationally."
The top 10
Here are the mega-price tags for Collier, according to Alford:
1. Feb. 2, $85 million: 8633 Addison Place Circle including Addison Place multi-family near Immokalee Road and Collier Boulevard.
2. Dec. 22, $82.3 million: 7425 Inspira Circle including Inspira multi-family off Rattlesnake Hammock Road.
3. May 7, $60.4 million: 4800 Aston Gardens Way including Aston Gardens at Pelican Marsh multi-family near Livingston and Immokalee roads.
4. Dec. 21, $51.7 million: 1361 S. Airport Road including Simply Self-Storage building near Davis Boulevard.
5. Dec. 17, $28 million: 1100 Immokalee Road including building of Naples Daily News, which has become the tenant.
6. Oct. 22, $27.5 million: 3868 City Gate Blvd. N. including Paradise Coast Sports Complex near I-75 and Collier Boulevard.
7. Nov. 3, $25.4 million: 2580 Wild Pines Lane including Wild Pines of Naples multi-family near Shadowlawn Drive.
8. Oct. 28, $24 million: 3531 Plantation Way including Naples 701 multi-family near Bayshore Drive.
9. Jan. 16, $20.2 million: 8810 Immokalee Road land at Collier Boulevard, where Founders Square is under construction featuring shops, eateries, housing and other amenities.
10. March 20, $17.2 million: 1260 Creekside Parkway off Immokalee Road.
Plus:In the Know: Here are your most popular questions, favorite stories in a year we'll never forget
Multi-family acquisitions have become the norm the past five years or so, Alford said.
My colleague David Dorsey found comparable activity for Lee County, where 2020's top four were all apartment complexes, including a $96 million transaction that tops Collier's.
“Multi-family weathered the 2020 recession better than most property sectors," Aslan Realty Advisors real estate broker and analyst Paige Rausch said. “Traditionally, one of the reasons that investors like the multi-family asset class is that housing is a primary need and, no matter their economic circumstance, people tend to prioritize their rent payments above all else to ensure they have a safe place to live. As a result, multi-family tends to be the most resilient commercial real estate asset classes.”
The outlook
It hasn't been as smooth for many other sectors, Alford said.
"In Collier County, the pandemic impact was largely limited to exacerbating prior trends. The office sector had weakened during the two to three years leading up to the public health crisis and that accelerated a bit over the past three quarters," he said. "Retail store closure picked up a bit as well, but for the most part, these were retailers that were already struggling. Most closures were likely to happen regardless, and the event horizon was accelerated."
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So economically, are we completely out of the coronavirus woods yet?
"For the most part, Collier County looks in pretty good shape compared to most U.S. markets," Alford said. "Collier County is likely to see additional softening in the retail and office markets, at least over the next couple of quarters, due to lagged pandemic impact. The investment sector in office and retail will also likely remain depressed until we get more clarity on the path of the virus, vaccine roll-out, and long-term stickiness of WFH or social distancing trends."
Wait. WFH?
Oh, Working From Home. These "get to the bottom line" guys have an acronym for everything.
The COVID-19 vaccine seems to be key for our future, not just for personal health.
“We’re in an exuberant time in the real estate market. We need to enjoy that as long as we possibly can," said Randy Thibaut, a land broker and founder of LSI Companies. "I think that come second quarter of the year, we’ll know if it’s a market that will continue as it is, or if there will be some settling down with the vaccines.”
A widely-distributed vaccine would help allow Americans to return to normal. That would be a plus for a multi-family market reliant on jobs and job creation, which provide the income to pay the rent.
“If the vaccine timeline is delayed or is not widely accepted by a skeptical population, sustained job losses could elevate multi-family delinquencies and decrease demand,” Rausch said.
Taking a whack at it
If the expected permitting kicks in, construction could begin this week on the latest venture by the enterprising Forgèt family, which operates The Warehouse Cuisine and Cocktails.
Adjacent to that in the Cameron Commons complex off Bellaire Bay Drive, you'll begin to see Volcano Mountain Adventure Golf rising out of the ground.
"The course is going to be a couple million-dollar investment in what we believe to be the fastest growing area of Naples," said Kevin Forgèt, general manager of The Warehouse, which he opened in 2017 with nephews and fellow ravioli lovers Benjamin and Bobby.
Oh, it's fast-growing all right. Across Immokalee Road from the Founders Square project we referenced earlier in the column and a whole host of new developments we've addressed the past 18 months in that region off Collier Boulevard. Plus, about 3,500 feet from the No. 1 item in our top deals list.
"The inspiration behind the whole process was to bring a family-friendly entertainment venue to this part of town as there are a lot of full-time families in the communities out here," Forgèt said. "The course will have a tropical feel with lush landscaping, various waterfalls and even a tiki hut at the 18th hole."
With your putting, you can enjoy food, along with some adult beverages, and it'll be a place for young and old, Forgèt said.
"The mini-golf course will be a challenging, yet extremely fun course that can be enjoyed by anyone from the age of 4 to 100," he said. "The course will be doing a lot of events, conjunction activities with The Warehouse restaurant."
Target opening: June.
Based at the Naples Daily News, Columnist Phil Fernandez (pfernandez@gannett.com) writes In the Know as part of the USA TODAY NETWORK. Support Democracy and subscribe to a newspaper.
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