Southwest Florida: This Region's On Fire

From Sarasota to Naples, Southwest Florida sizzles with construction activity.

By Debra Wood

Residential construction in Southwest Florida has taken off, followed by commercial and public projects, but the prospects of labor and material shortages could create problems this year.

"It's on fire from Sarasota down to Marco Island and everything in between," said Todd Gates, president and CEO of Gates McVey Builders of Naples. "We literally have more work than people."

Fred Pezeshkan, president and CEO of Kraft Construction Co. of Naples, agreed. "We have not seen any slowdown in construction in the real-estate market," he added. "Demand for construction and supplies and materials is as high as it's been in 25 years."

Florida Lifestyle

Bruce Franklin, president of The ADP Group, an architectural firm in Sarasota, said the construction pace will sustain itself as smaller companies relocate to the Southwest coast. "With the bay and beaches and the arts, it's a very desirable place to live, not only for second-home and retiree populations but more so for young professionals," he added.

According to the U.S. Census, more than people 100 per day move to Collier, Lee, Charlotte and Sarasota counties. Multiple hurricanes have not scared people off, and industry experts doubt the seasonal storms will impact future development.

"Our population is going to double during the next 10 to 12 years," said Gates, chairman of the Economic Development Council of Collier County. "There will be 1 million people in Southwest Florida that aren't here today. People will continue to get old. We'll continue to have nice weather in January, February and March, and they are going to come. The question is what are they going to buy."

Many of them purchase condominiums. Kraft is building Madeira on Marco Island for MassMutual Financial Group of Springfield, Mass.

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Developer The Lutgert Cos. of Naples expects Boran Craig Barber Engel Construction Co. of Naples to complete two high-rise condominiums in summer 2006: the 18-story Aria in Naples and 25-story Azure at Bonita Bay.

Developer WCI Communities of Bonita Springs, Fla., has many projects in the pipeline, including the 21-story Florencia at The Colony Golf & Bay Club in Bonita Springs and Lesina, a 20-story tower in Hammock Bay Golf & Country Club in Naples.

Gates said he expects the real estate market in the northern U.S. to influence local trends. People selling their homes for top dollar in that part of the country will have more to invest in a new condominium, but if real estate cools and they settle for less, newcomers will seek more affordable Florida options. Properties in Naples cost more than homes in communities farther up the coast.

Michele Harrison, director of sales with developer Elias Bros. Communities of Naples and vice president of the Collier Building Industry Association, said he expects the area will see some effect of rising interest rates and energy costs this year.

Many projects with a residential component also contain retail and commercial space. The ADP Group designed and Kraft is building the Plaza at Five Points in Sarasota, a 16-story project with 50 upscale condominiums on the top seven floors and 90,000 sq. ft. of office, 20,000 sq. ft. of retail and a parking garage on the lower levels. Franklin credited Five Points with kicking off Sarasota downtown redevelopment.

In the past, most people moving to Sarasota County opted for single-family homes, said Kathy D. Baylis, president of the Economic Development Corp. of Sarasota County. The corporation is concerned about a shortage of land for future business development with so much consumed by residential.

Private Sector Support

"Commercial properties follow the growth of residential markets, but we don't have as much of that," Kraft's Pezeshkan said.

Even so, new residents need banks, insurance, medical services, retail and restaurants, so some work exists. Gates predicted that such commercial will continue as long as the population keeps increasing.

Bovis Lend Lease of Atlanta has completed about 40 percent of the first phase of Coconut Point in Estero for Simon Property Group of Indianapolis. The big-box shopping center is scheduled to open this spring. A second phase of the $200 million project will include retail, office and residential space and open later this year.

"We're seeing quite a boom in commercial with new Wal-Mart stores and a lot of action particularly along the interstate and in the downtown area," Baylis said. "Office buildings are leased before they get out of the ground. It's hard to build anything on spec here. People are absorbing it so fast."

Baylis said office vacancy rates are less than 5 percent downtown and less than 7 percent countywide, adding, "It's a very vibrant market."

Also on the private side, Kraft, in a joint venture with Suffolk Construction Co. of West Palm Beach, has begun work on the first $200 million phase of construction at Ave Maria University, the first new U.S. Catholic university in 40 years.

Located in rural Collier County, the school has spawned a residential development of the same name, projected to contain 11,000 residences and commercial businesses.

Public Projects

More people also require more public infrastructure. Kraft tries to keep a balance of public and private work and is building a courthouse parking garage and libraries in the region.

MWH Constructors of Broomfield, Colo., is extending water, wastewater and irrigation utility lines, upgrading the capacity of several water facilities, and slip lining sewer pipes for the city of Cape Coral as part of a $476.5 million program management-at-risk contract.

The Lee County Department of Transportation hired construction manager Jacobs Engineering Group of Lakeland to manage construction of a 3-mi.-long replacement bridge from Fort Myers to Sanibel. Boh Bros. Construction Co. of New Orleans is completing the bridge work and Lodge Construction of Fort Myers the toll plaza and associated roadwork.

The $129 million project includes three fixed-span bridges and two causeways and was about 35 percent complete in October, said Paul Wingard, deputy director for Lee County DOT and project manager for the Sanibel Causeway. It is scheduled for completion in January 2007.

The Florida DOT also has several large projects in the tri-county area. Hubbard Construction Co. of Orlando recently began a $32.3 million milling, resurfacing, widening bridge replacement project on State Road 45 (U.S. 41) in Sarasota County.

In Lee County, Gilbert Southern Corp. of Tampa, is rebuilding the Interstate 75 interchange at Alico Road. The $31.8 million project should wrap up by the end of 2006.

Magnum Construction Management Corp. of Miami is constructing a new $26.6 million I-75 interchange at Golden Gate Parkway in Collier County. It will lower I-75 by 18 in. under the Golden Gate overpass and build five new on- and off-ramp bridges by 2007.

Challenges

While demand for new projects remains high, finding enough skilled workers and securing building materials presents problems for contractors. Adding to the labor shortages, rising housing prices makes it difficult for construction workers to live near their jobs, forcing long commutes.

"We're very concerned in committing ourselves to long-term projects, starting a year or two from now, not knowing what the market will be and [if] the supply of material and labor will be available," Pezeshkan said.

Glen Hoover, Bovis project executive for Coconut Point, echoed Pezeshkan's concerns about scarce materials and workforce issues. Bovis switched from concrete block to tilt-up construction on Coconut Point, due to the shortage of 12-in. masonry block, and changed to a built-up roof to avoid high insulation costs associated with a single-ply roof.

"Materials continue to go up and up and up, and that causes everybody nervousness," Hoover said. "The cost of petroleum-based products is so volatile."

Harrison also raised concerns about the "Katrina effect" on labor and supplies. She said escalating costs may result in limited releases of new projects. But overall, industry experts remain bullish about construction activity in Southwest Florida.

"All indications are the growth will continue in the next 15 to 20 years," Pezeshkan sad. "The question is what will be the rate of growth. I think we will see a slowdown in the rate but not a major drop."

Useful sources:

Ava Maria
http://www.avemaria.com

Plaza at Five Points
http://www.plazafive.com/

Sanibel Causeway
http://www.sanibelcauseway.com

Golden Gate Parkway Interchange
http://www.i75mobility.com

WCI Communities Inc.
http://wci.wcicommunities.com