Every quarter, MS&C Commercial brings to you the latest news from commercial real estate in Sarasota, Manatee, and Charlotte county. Read on for in depth look at what’s happening in our region in the first quarter of 2018.
State of the Market: Manatee, Charlotte, & Sarasota Counties
The tri-county area commercial market began the year trending positive with strong market fundamentals for all property types. Looking back at the quarter, the largest commercial sales in the market involved condominium and apartment projects. The growing live-work-play environment remained a draw for people from all over the region. One notable apartment sale was the FLF Holdings purchase of Carlton Arms of Bradenton, a 900-unit, garden-style apartment community in Bradenton for $110.5 million. As we move into the second quarter of 2018, the continued expansion of the area driven by the steady population growth will see an influx of new hotels, retail stores and condominiums materialize. Read on for more of the latest in the region’s commercial real estate market.
Commercial Trends and Reports
Office leasing has slipped slightly, but inventory continues to be tight. With large office users continuing to consolidate, the Co-Working space trend shows no signs of slowing down. Even with the strong recent rent gains, asking rents remain below their prerecession peak. Office Sale activity remained in the suburban submarkets this quarter. Regatta Village (45,603 sf), a retail/office complex whose tenants include Argosy University sold for $5.25 million ($115.12/PSF). The Ascom office building (18,524 sf) in Lakewood Ranch also sold during the first quarter for $2.2 million ($118.76/PSF).
Lack of New Office Construction: Sabal Palm Plaza (30,652 sf) located on the corner of Golf Street and Ringling Boulevard in downtown Sarasota is near 100% completion. Sabal Palm Bank and Gilbane Building Company now occupy the Class A office building.
Medical Office: Lakewood Ranch continued to be a magnet for health care providers. Optimal Outcomes is set to join Mercedes Medical in Lakewood Ranch’s CORE project. One notable sale in the quarter was Coastal Medica LLC’s purchase of Coastal Center (18,380 sf) for $6.65 million in West Bradenton. The building is occupied by Coastal Orthopedics and Partners Imaging Center.
Industrial/Flex leasing has remained steady during the first quarter of 2018. With very limited construction in the last 20 years, vacancy levels have compressed. Due to the low vacancy levels, landlords have been able to push up asking rents to record highs. Taylor Made Building (171,790 sf), a fully leased manufacturing headquarters, sold for $9.2 million ($53.55/PSF) in March. 2906 Corporate Way (53,040 sf) in Palmetto also sold during the first quarter for $6.5 million ($118.76/PSF). The buyer purchased this building as an investment with a cap rate of 6 percent. The current tenant is Amazon who will has 11 years remaining on their lease.
New Industrial Construction: Harrod Properties recently announced that it is preparing to break ground on a trio of new industrial buildings in Lakewood Ranch within its Gatewood Corporate Center due to very positive leasing activity. Benderson Development Company plans to start construction of the 2 million-square-foot Florida International Trade Port in Ellenton soon.
Port Manatee Commerce Center Potential: Port Manatee is ideally situated for new industrial development with its access to the vast majority of Florida’s population. Port Manatee offers many benefits to current and potential customers, manufacturers, shippers and ocean carriers by being the closest private warehouses to the Panama Canal and Cuba’s largest sea port.
The tri-County retail market finished the first quarter of the year on solid fundamentals with vacancy rates falling across the region. With a growth in year round residents — who are younger and have disposal income — Sarasota is no longer viewed as the sleepy beach town it once was. Thanks in large part to a flourishing tourist industry, leasing and sales activity has been very active in the retail market. Publix Super Markets paid $17.9 million for the Lakewood Ranch Gateway shopping center in February. Other shopping center tenants include Verizon, Beef ‘O’Brady’s, Bank of America and McDonald’s.
New Construction: Construction has started at a new 22,332-square foot neighborhood retail center in Lakewood Ranch. Costco rumors about opening a new location in Manatee County continue to be discussed too.
Retail Announcements/Openings: Earth Fare held their grand opening for its new Lakewood Ranch location in January. Whole Foods Market’s new store at University Parkway and Honore Avenue opened in January. Louis Vuitton opened up in The Mall at University Town Center too.
Prime Location Rental Rates: For quality retail real estate (quality + traffic+ good adjacent tenants) NNN rents continue to rise due to a shortage of space. Examples include: St Armands at $50 per SF, Fruitville by I-75 at $35 per SF, Downtown Venice at $30 per SF and North Port at $20 per SF.
Prices on land continue to increase as land becomes less available. This seems to reflect the lack of availability in downtown Sarasota, which in turn benefits the other submarkets who have seen increase in development interest. With the opening of Ft Hamer Bridge, Parrish and Ellington continues to boom. Recently, M/I Homes of Sarasota closed on a 33-acre property for $3,700,000 west of I-75 and south of State Road 64. The plan is to build a 124-paired villa home community called Amberly.
The median price per square foot/acre of sold parcels for Commercial and Residential zoned land for the first quarter are below:
Commercial Land: $4.20 Per Land SF / $182,927 Per Acre
Residential Land: $3.04 Per Land SF / $132,292 Per Acre
The once-sluggish multi-family market has taken off in the tri-county area over the past few years, as sellers cash out on the growing demand and tight supply of rental housing. Rising rents also have attracted multi-family investors from around the country. The market continues to be in the midst of a supply boom with population growth in the area supporting continued expansion in the multifamily market. Rents continue to increase too.
In addition to the Carlton Arms of Bradenton sale mentioned above, which sold for $122,777 per unit, the Preserve at Manatee Bay, a 152-unit apartment complex, sold for $18.75 million ($123,355 per unit) to Latitude Management Real Estate Investors in January.
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