In the Know: Lee County apartment complexes lead way for mega-real estate deals in 2020
In Lee County, multi-million-dollar real estate deals seemed immune to COVID-19-related economic repercussions.
The year began and ended with record-setting apartment complex sales.
In between, the top 10 land deals for 2020, as compiled from public records by records-hunting real estate broker and analyst Paige Rausch of Aslan Realty Advisors, showed apartment complexes comprising a big chunk of the transactions.
Rausch saved me some time and effort by looking up the top 10 deeded real estate transactions of 2020. They do not include the planned sale of Fuccillo Kia off Pine Ridge Road in Cape Coral, as the closing of that site has been pushed back to later this month.
They are, in descending order of price:
- $96 million: Retreat at Vista Lake, Fort Myers, Feb. 19. A 640-unit apartment complex at the northeast corner of Winkler Avenue and Veronica Shoemaker Boulevard, built in the early 1990s, sold at $150,000 per unit.
- $71.9 million: The Edison, Fort Myers, Dec. 2. A 327-unit apartment complex at the northeast area of Colonial Boulevard and Ortiz Avenue, new construction, sold at $219,877 per unit.
- $64.6 million: Uptown at Liberty Park in Cape Coral, Jan. 2. A 320-unit apartment complex of new construction sold at the northeast corner of Pine Island Road and NE 24th Avenue at $201,000 per unit.
- $54 million: Sanibel Straights, south Fort Myers, Dec. 3. A 224-unit apartment complex of new construction sold at the northeast corner of Summerlin Road and Pine Ridge Road. That amounts to $241,000 per unit, a per-unit record in Lee County, Rausch said.
- $29 million: Raptor Bay at Pelican Landing, Bonita Springs, to be developed by London Bay, closed Dec. 14. The plans are to build 503 condominium residences fronting Estero Bay in a multi-year, multi-phase plan on 475 acres, including the existing golf course.
- $26 million: O’Brien Auto Park, 3550 Colonial Blvd., Fort Myers, Dec. 15. Larry Morgan’s Tampa-based Morgan Automotive Group bought the Hyundai, Mazda and Subaru dealerships, announcing plans to build a standalone Genesis dealership on the site in the future. This was the highest-priced commercial property of the year.
- $23.3 million: This land deal off Corkscrew Road, east of Estero, consolidated Pepper Ranch land with Verdana Village. Construction on the housing development is set to begin in 2021 by Cameratta Properties.
- $16.75 million: Midtown Cape Coral apartments, off Veterans Parkway and SW 17th Place in Cape Coral. This 90-unit apartment complex sold at $186,000 per unit.
- $16.7 million: Lee Health acquired medical buildings at 16271 Bass Road.
- $16 million: Argo Development Corp. bought 396 acres of land off Corkscrew Road, east of I-75, and plans to build a housing community. The number of units have yet to be announced. This closed Aug. 28.
There’s a reason six of the top 10 sales were apartments or planned condos, Rausch said.
“Multi-family weathered the 2020 recession better than most property sectors – only industrial held up better – and market deterioration was far less than in previous recessions,” she 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, multifamily tends to be the most resilient commercial real estate asset classes.”
Developments along Corkscrew Road comprised two of the largest land deals in 2020.
Verdana Village will begin taking shape in 2021 with the first of a planned 2,400 homes set to break ground. Model construction will begin in March, and homes will be ready in June or July.
“We created a stormwater control basin on the southern end of the property,” developer Joe Camerotta said. “We’re looking for the ability to have a more diverse and less expensive home. We’re looking for more affordability along with something more environmentally friendly.”
Record-low interest rates on 30-year mortgages are doing nothing but helping, he said.
“Mortgage rates, back in the early ‘70s and ‘80s, when I first started my business, you thought they’d never be in single digits again,” Camerotta said. “Now they’re sub-three. If mortgage rates continue to stay low, affordability of the housing market stays low. It allows people to buy a home and gain equity in a property. The housing market, at least in our projects, has been on fire. I’ve never seen anything like it in 20 years in Florida.
Randy Thibaut, a land broker and founder of LSI Companies, sure has noticed.
“I would say this is the most interesting real estate market aside from 2005,” Thibaut said. “The bubble and the bust. This has been the most interesting real estate market in Southwest Florida since then.
“It’s going to be interesting to see how that plays out in 2021 after the impact of what’s happening with the forgiveness of evictions and foreclosures and the economy. What will happen? I don’t know that that transaction activity at that level will continue for new deals in 2021.”
Gary Tasman, the CEO of Cushman & Wakefield in Lee County, said the region has made attempts at diversifying the economy over the years. Those efforts paid off during the onset of the pandemic.
“2020 will be the year that completely reversed what one would expect,” Tasman said. “During a pandemic, during a highly-contested political environment, we had fires and all the things we had in 2020, we’re glad to say goodbye to 2020. But it’ll be a time that home builders and home sellers have seen the biggest surge since 2005 and ’06. And never would have thunk it?”
Fleeing more densely populated areas also helped fuel the Southwest Florida real estate market.
“Covid fleers,” Tasman called them, “leaving other markets for sunshine and warm air and some space.”
As 2021 begins, Rausch and Thibaut each said the market could stabilize, but any shifts would depend on where three trends head:
• Extended delinquency moratoriums: How long they get extended will be a factor in maintaining the current real estate surge.
“This has a downside impact to multi-family property income, and if it is extended for a significant period of time, owners/operators may be unable to continue subsidizing lost income,” Rausch said.
• Mortgage forbearances: Some of the nation’s largest multi-family lenders have provided loan payment relief. If eviction moratoriums are extended but forbearance periods are not, there is an elevated risk of loan defaults, which could bring bad news, Rausch said.
• Vaccine uncertainty: Multi-family demand is tied to jobs and job creation, which provide the income to pay the rent. A widely-distributed COVID-19 vaccine would help allow Americans to return to normal.
“However, 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.
Said Thibaut: “We’re in an exuberant time in the real estate market. We need to enjoy that as long as we possibly can. However, 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.”