May 17, 2017

Stars aligned

By: Vicki Parsons - IT

By: Kevin McQuaid | Commercial Real Estate Editor

May 12, 2017

Syd Kitson began work on Babcock Ranch, an 18,000-acre town in Charlotte and Lee counties, more than a decade ago. The project was sidelined by the recession, but today it is among several showcase real estate communities moving forward in Charlotte County.

For years, Charlotte County’s real estate market was a lot like the “Island of Misfit Toys” from the animated “Rudolph the Red-Nosed Reindeer” Christmas tale.

To its north, Sarasota County collected accolades for its stellar beaches and created cities like North Port that made “fastest growing” lists. To its south, Lee and Collier counties boasted pockets of immense wealth and established sustainable communities with significant business bases.

During boom times, tens of thousands moved to the counties around it. Charlotte largely languished.

More than a decade ago, a few ambitious projects were proposed, but they staggered from the damage inflicted by the Hurricane Charley in August 2004 and again four years later, when the recession ravaged the Gulf Coast.

Babcock Ranch suffered from bureaucratic battles, hurdles of regulation tied to its goal of creating an environmentally sustainable town and a desire to approach energy consumption differently than any other community in the state.

Murdock Village was crushed by immense debt and the inability of developers to gain traction once the recession took hold.

But today, with developable land to the north and south shrinking, land costs rising and historically low interest rates holding steady for now, Charlotte County is poised to be the next Gulf Coast real estate mecca, analysts say.

Already, builders are working on the first homes and commercial space in long-awaited Babcock Ranch, and a buyer has emerged to purchase roughly half of the land in Murdock Village from Charlotte County.

Elsewhere in Charlotte County, Naples-based Lely Development Corp. recently bought more than 560 acres of land known as Tucker’s Grade just off Interstate 75, where the company hopes to develop as many as 2,400 homes and as much as 50 acres of commercial space with retail space and hotel rooms.

Together, the three developments could add more than 10,000 new residences to the county within the next five years, together with associated commercial development.

“Charlotte County now finds itself in the path of growth,” says Syd Kitson, the developer behind Babcock Ranch. “It’s picking up there even more than we anticipated, though we knew it was only a matter of time before people discovered it.”

Lennar Homes and a handful of other builders are working to complete the first slate of residences in the ranch early next year, and Kitson is readying infrastructure, completing a charter school scheduled to debut in the fall and constructing a business incubator and wellness center.
The ranch’s Founders Square, a retail and restaurant complex, opened last year.

Charlotte County’s pending success comes amid a confluence of events in the counties surrounding it.

In the south of Sarasota County, for instance, the four-community West Villages has emerged as one of the fastest-growing master-planned communities in the U.S.

Last year, West Villages notched nearly 850 home sales, according to Burns Real Estate Consulting, which compiles an annual list of top master-planned community sales.

To Charlotte County’s south, Lee County land prices have risen dramatically, even as the county is slated to become one of the fastest growing in Florida in terms of population over the next two decades.

Collier County, too, has experienced a run-up in prices as the inventory of well-located property connected to infrastructure has eroded.

“In Collier County, we’re just about out of property to develop,” says Joseph Boff, president of Naples-based Lely Development Corp., which recently spent $6.5 million to acquire the Tucker’s Grade site in Punta Gorda.

“I’m hoping I’m not crazy buying that land, but if we can be the first off the highway exit we’ll be thankful.”

Boff says his development won’t be able to move ahead until utilities are extended to the site, which could take up to two years.

Meanwhile, Murdock Village, a long-stalled new town that Charlotte County leaders believed could spur growth a decade ago, also appears to have renewed life.

Naples-based Private Equity Group has contracted to buy roughly half of the planned village’s land — about 400 acres — for about $11 million, officials say.

The company, which five years ago bought nearly 5,200 acres from Alico Inc. in Lee County, also will be required to pay for about $11 million in required infrastructure, says Ray Sandrock, Charlotte’s County administrator.

Officials from Private Equity Group, which is conducting due diligence on its planned Murdock Village purchase, did not return telephone calls for comment. If the company moves ahead, it is expected to finalize its Murdock Village purchase this fall.

In addition to roughly 2,000 new homes, Private Equity would likely build retail and other commercial space, hotel rooms and a visitors’ center as was envisioned for Murdock Village more than a decade ago.

“It would be almost the full concept of what Murdock Village was supposed to be,” Sandrock says.

Like Tucker’s Grade, however, it would likely be 2019 before Private Equity Group could begin constructing homes within Murdock Village.

Still, the movement has many real estate participants and analysts feeling more optimistic about the county’s chances than at any time in the past decade.

“It does appear to finally be coming around,” says Ashley Bloom, national land and development services product council chairman for commercial real estate brokerage firm SVN.

“Charlotte County also has the other advantage of being a more affordable market than its neighbors.”

Homes in Tucker’s Grade, for instance, are likely to be priced between $200,000 and $400,000, Boff says. By comparison, the median price for a single-family home in Sarasota, Lee and Collier counties well exceeds $200,000.

“There’s definitely renewed interest in Charlotte County,” says Sandrock. “There’s demand, certainly, but there’s also a confidence among developers we haven’t seen for a while.”

He believes the work the county has done in rebuilding Punta Gorda in the wake of Hurricane Charley and enhancements to the Punta Gorda Airport have boosted confidence.

Kitson, too, credits Charlotte County’s administration for helping create an environment for growth.

“Over the past 10 years the leadership there has done a great job of executing some very forward thinking,” he says. “And it’s not just one thing, it’s been a series of things, from downtown Punta Gorda to the Tampa Bay Rays’ sports park to the airport to Charlotte Harbor. It’s helped the entire county.”