Although there's little evidence that Southwest Florida's commercial real estate industry is headed for a decline, many builders and developers say they're starting to feel the first ripples from the residential slump. As a result, some are choosing to postpone their commercial developments or at least scale them back until the housing market rebounds or land prices adjust. McGarvey Development Company is not one of them.

Based in Fort Myers, the company continues to operate at full throttle with several new, high-profile developments underway in Lee County. At buildout, the projects will add approximately 2 million sf to McGarvey Development's current commercial portfolio of 1.2 million sf of owned and managed properties.

The company utilizes concrete tilt-wall construction on all of its projects, which include several charter schools and some of Lee County's best-known Class A office, industrial and industrial flex projects, including:

- Riverview Corporate Center, a 305,000sf Class A office park in Bonita Springs;

- Westlinks Business Park, a 50-acre commercial park in Gateway with office/warehouse buildings and two charter schools totaling 650,000sf;

- Mid-Metro Business Center, a 20-acre complex with seven office/warehouse units totaling 204,000sf.

McGarvey Development sold the Mid-Metro center two years ago to neighboring Chico's, making a rare exception to the company's build-and-hold development philosophy. Typically, McGarvey Development owns, leases and manages the projects it builds. But because the Mid-Metro property was critical to the expansion of Chico's world headquarters campus, the developer reportedly agreed to sell in order to keep the global retailer in the local market.

Staying Ahead of the Curve

Much of the company'success stems from anticipating market demand and recognizing exceptional development opportunities.

'We've always positioned ourselves for the future,' says Charles Jans, a company vice-president. 'To do that, you have to understand the market, which I think we do as well as anyone. But sometimes, it's important to get there first.'

Case in point: Riverview Corporate Center in Bonita Springs, west of U.S. 41 on 24 acres along the Imperial River. When McGarvey Development began building it in late 2000, the 305,000sf office park was the first of its kind in the market. Beyond its impressive square footage, the center features numerous upscale touches such as grand double entries with granite signs and lighted waterfalls.

Although critics questioned whether the market was ready for the project at the time, Riverview was built out and fully occupied in fewer than five years, well ahead of its expected buildout. Furthermore, it set the tone for future Class A office development in the area.

According to Jans, developing successful projects on a large scale often requires action that may seem premature in a sluggish market. 'But that way, when the time comes and market conditions warrant development, you're ready and you're there. Otherwise, if you wait until the market is ready to make decisions, you'll be behind the curve.'

That has yet to happen at McGarvey Development, which has a history of identifying, acquiring and developing the right properties at the right time. In New Jersey, where it was established in 1985, the company developed and built more than four million sf of industrial and office space. In 1996, the company relocated to Bonita Springs, where it was headquartered for 10 years before relocating to Fort Myers.

Since 2006, the company has occupied 21,000sf (the entire third floor) of the Renaissance Office Building on Daniels Parkway at I-75. Built and owned by McGarvey Development, the three-story project contains 64,000sf of Class A space and was fully leased within four months of opening.

New Developments

Half of the company's most significant, new projects are in Cape Coral, reflecting its expanding presence in the fast-growing city. Also, farther east, the company is working to develop two commercial parcels in proximity to the area's main economic drivers, namely I-75, the Southwest Florida International Airport, Florida Gulf Coast University (FGCU) and Gulf Coast Town Center regional mall.

 - Eastlinks Business Park. Late last year, construction began on McGarvey Development's newest office and industrial park in Gateway, at the intersection of Gateway Boulevard and Daniels Parkway in Fort Myers. The project was designed to complement neighboring Westlinks Business Park while also providing its tenants space to expand within the Gateway community. Eastlinks is expected to offer a total of 346,000± sf of mixed-use space at buildout.

Plans call for three distribution buildings of 57,600sf each; two one-story office buildings of 30,000sf each; and two Class A office buildings, each with 56,700sf in three stories over one level of parking. Thus far, construction has been completed on 145,000+/-sf in two dock-high distribution buildings (both with 18-foot ceilings), and one garden-style office building. The balance of construction will commence as existing buildings lease up.

Office units start at 1,300sf and feature individual entries. Tenants also have access to a landscaped courtyard with outdoor seating.

According to Jans, Eastlinks is ideal for a broad mix of tenants seeking convenient access to I-75, the airport and FGCU. Prospective office users include legal professionals, financial services providers and possibly national tenants, similar to those at Riverview.

Thus far, the project's distribution space has attracted interest from local and out-of-state companies that serve the tri-county area, including construction materials distributors, food service distribution businesses and transport/delivery companies.

'Westlinks was a very successful project and we envision similar success at Eastlinks, for many of the same reasons,' says Jans, who has noticed a recent spike in interest from distributors that want space immediately. 'Assuming that all of the current lease negotiations bear fruit, it's conceivable that we could lease 120,000sf of distribution space before the end of this year,' he adds.

 - Mid-Cape Corporate Center. McGarvey Development made its Cape Coral debut in 2006 with this $65 million, mixed-use center, situated on 30 landscaped acres near the intersection of Santa Barbara Boulevard and Pine Island Road. When completed, the center will contain a total of approximately 300,000sf in three distribution buildings and four office buildings, as well as the Cape Coral Charter School (McGarvey Development's fourth charter school). Ultimately, the center is expected to employ as many as 1,000 people.

To date, all three distribution buildings have been completed, providing a total of 102,000sf of dock-high and flex industrial space. A national distribution company occupies the entire dock-high building, while the two at-grade buildings have a mix of tenants, mainly companies related to the construction, service and product distribution industries. In February, the U.S. Postal Service (USPS) will join them when it opens a new carrier annex in 27,895sf.

An additional 16,000sf are available for lease. Flex industrial units include 18-foot clear ceilings, individual entrances, ample parking and sidewalks. Office buildout is available, as well.

The center also will have four Class A office buildings totaling 176,000sf. The first opened in September, providing 68,655sf in three stories. Features include impact-resistant glass, back-up emergency power and spacious lobbies with professionally designed finishes. Spaces start at 1,500sf and can be customized.

The other three office structures are planned to include 30,000-45,000sf each and will be built on demand. Jans says that the superior quality of his company's product and its 'very competitive' pricing should help fill the existing space, even if the commercial market softens. Base rent for Class A office space is $19/psf, with a CAM charge of approximately $9, which includes electric and A.C.

'When we first came to the Cape in 2006, office vacancy rates were very low to zero. Now they're starting to come up slightly,' says Jans. 'However, we're confident in the quality of the product we deliver and the price at which we can deliver it.'

 - East Cape Commerce Center. Located near the intersection of Pine Island and Pondella roads, this is the second major commercial project McGarvey Development is constructing along the fast-growing corridor. When completed, the 36-acre project will include a total of 10 flex buildings providing a total of 412,000sf of office/warehouse space.

Three of the 10 will be dock-high distribution buildings totaling 148,800sf, with units from 4,800sf. The remaining seven buildings will comprise 262,460sf of at-grade distribution space. Four of the seven buildings will contain units of 4,000sf each, while units will start at around 1,500sf in the remaining three buildings.

Jans says the company is offering the smaller units in response to market needs. Unlike most of the larger flex space users around I-75, many Cape Coral tenants are looking for space in the 1,500-2,000sf range. 'Those who want to expand or who seek transition space will like these units, which will act as incubators for the 4,000-8,000sf user of the future. The appeal of the East Cape Commerce Center is that it enables the entry-level business to grow.'

So far, two building shells are up and expected to be ready for tenants before the end of the year. In addition to a 43,200sf dock-high building for 4,800+sf users, there is an adjacent drive-in building containing 37,000sf for smaller users.

'There's demand for quality (distribution) space in the Cape Coral market right now and not enough product to meet it, especially for smaller, service-oriented users,' says Jans. 'I think this center will appeal to a fairly broad segment of that market, because there's really nothing like it there.'

 - Three Oaks Regional Center. Although McGarvey Development's current focus is on its two Cape Coral projects, it is also working on development plans for a massive project in south Fort Myers, at the corner of Alico Road and Three Oaks Parkway. Tentatively named the Three Oaks Regional Center, the mixed-use development is the company's most ambitious endeavor yet, with more than one million sf of commercial space to be developed at one of the hottest commercial corners in Southwest Florida.

McGarvey Development acquired the105-acre site from Chico's in late August for just under $40 million. The parcel was a portion of acreage the retailer had purchased for the relocation and ongoing expansion of its world headquarters. (Chico's scrapped the idea earlier this year.)

Currently, the developer is working to modify plans for the original Development of Regional Impact (DRI). Pending approval of the amended DRI, the developer hopes to begin on-site infrastructure work early next year and vertical construction in the third quarter. Buildout is expected to take seven to 10 years.

Plans call for a total of approximately 1.25 million sf of developed space, with 19 office buildings occupying approximately 1.1 million sf. There will also be a retail component of about 146,000sf.

'It's going to be cutting edge; a really spectacular project,' says Jans. As with all of the company's projects, most of the work will be done by an in-house team of professionals, including architects, contractors and specialty tradesmen.

The first three signature office buildings each will offer 180,000sf of Class A space in six stories over a level of parking. To enhance the center's clean, corporate look, each structure will feature contemporary architecture and dramatic, ground-floor windows arching to the second floor. Banding and other exterior embellishments will add visual interest to the facade and prevent a monolithic appearance.

McGarvey Development plans to market the project to large, out-of-state companies interested in relocating or expanding in Southwest Florida, including those from the Northeast. Jans predicts that as Southwest Florida's population approaches the 700,000 milestone, the market will attract new businesses from major metropolitan areas.

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