Cape Coral/Fort Myers are Among the Top Commercial Markets in the United States
After analyzing 52 major commercial markets across the country, the National Association of Realtors (NAR) ranked Cape Coral/Fort Myers an impressive second place nationally (just behind Austin Texas) on their list of the best commercial markets in the U.S. Included in the “commercial market” sectors were multifamily housing, office and industrial space, retail, and the hotels.
The NAR criteria factored in 25 metrics, including local GDP growth, the unemployment rate, weekly wages, median household income, consumer spending, the number of new business openings and population growth. Other metrics included were, home ownership rate, building permits issued, vacancy rates, and new construction, among others.
Lawrence Yun, the Chief Economist at the NAR said, “The top commercial real estate markets that are expected to outperform the rest of the nation are generally affordable and able to draw new residents with a greater flexibility to work from home.” Yun added, “These growing markets also offer much lower office and retail rents and are, therefore, able to attract new and expanding businesses.”
Referring to Cape Coral/Fort Myers, the NAR study states office space and industrial markets have held up exceptionally well to the pandemics impact. It is only one of two major metro areas across the country to experience an increase in office occupancy during the 4th quarter of 2020 (the other being Raleigh, North Carolina). The office vacancy rate was only 5,7% during this period, about a third of the national rate of 15.5%.
Because this southwest Florida region offers favorable commercial costs, it is likely to continue to attract new businesses. Commercial rents are just $19.60/square foot, compared to the average national rate of $35/square foot – just 56% of the national average. Additionally, its office vacancy rate is just 3.4%, compared to the national average of 5.2%. And low vacancy rates usually translate to new construction. Residential builders will take notice, knowing that many people relocate to where the jobs are.
In general, Florida performed very well in the study, as four other metro areas made the list (Jacksonville, Miami/Fort Lauderdale, Orlando/Kissimmee, and Tampa/Saint Petersburg). This means that about 10% of the top commercial markets nationally were in the Sunshine State.
Extrapolating to the rest of the country, Yun predicted the U.S. economy will continue to improve in 2021 and the commercial real estate market will follow suit. “A recovering economy and the near certain job growth will steadily lead to the absorption of commercial properties.” And worth repeating, a healthy and growing commercial real estate sector inevitably leads to stronger residential markets. Yun added, ”The apartment rentals market could once again experience very low vacancy rates by year’s end.”
Referring to the pandemic, NARs senior vice president of research, Calvin Schnure, said, “Some [commercial] sectors have been harder hit, especially lodging and resorts.” This can be expected to change, as business improves, and people begin traveling in pre-pandemic numbers.
Creative entrepreneurs can be expected to fill the void, starting new businesses in the places where other businesses couldn’t withstand the pandemic and were forced to close.
Brandon Hardon, NARs research economist added, “ … Adaptive reuse and conversions will create opportunities for investors and developers.”
As Florida leads the nation in its economic recovery (as the NAR report confirms), this would seem an opportune time for residential investors to take a fresh look at southwest Florida.