What is Really Going on in Fort Myers Real Estate?

What’s really going on in Fort Myers Real Estate?

On Friday night Gail and I met my brother Bill and his wife Dot for cocktails and same snacks at one of Fort Myers newest hot spots; Char. Steven Hyde has done a wonderful job with the old Denny’s attached to the Holiday Inn on route 41 near downtown Fort Myers. There was an interesting mix of young and old, from Fort Old Times like architect Wiley Parker and his wife Betty, and restaurateur Gary Gyarmathy, to a bevy of young professionals and new comers.

Speaking of newcomers, relative newcomer Phil Hugh, who has taken over that Holiday Inn and has just broken ground for the new Hotel Indigo, has his pulse on the downtown market. To quote Phil, “If you are not betting on Downtown Fort Myers, what are you betting on?” Yes, we all know that many of the new condos at High Point and Beau Rivage are “dark” (bought by long distance owners/investors), but make no mistake, they will get filled, and when they do, downtown will be ready for their occupants. After leaving Char we headed to The Bar Association on Hendry and then over to H2 on Bay. All three of the places we visited Friday night are welcome additions to a downtown scene that is certain to improve as the approximately 3000 condos get built and inhabited.

Bill and I chatted about the local real estate market and he commented to me, “There will never be a better time to buy real estate locally than today.” Implying that all this growth, streetscaping and improvements herald great things. I agree. Today we have a unique combination of low interest rates, high inventory, and a down climate that is making sellers very willing to deal. Denny Grimes wrote a good article in today’s Fort Myers News Press (Click here). In it, he states that the market does not “read” what the pundits write, it just reacts. (It does not matter what we say – good or bad) He predicts that we have a long recovery time ahead; but he is talking about the recovery of a market in general – the return of lower inventories, shorter “Days On Market” (DOM) for resale homes, etc. But I am sure Denny would agree with me that this market is great now – if only for the buyers.

There is a statistic that is commonly bantered about – and generally it refers to how much inventory we have in unsold homes. Make no mistake, we have an over supply of homes for sale, I agree; but I submit that is very difficult to quantify this inventory or even say how long this inventory will last. Furthermore it is misleading to think that any estimates are accurate or even indicative of when things will turn around.

It is wrong for us to take the listings that are sold in one month and divide that into the total number of homes on the MLS and say there are so many months of inventory.

Here are my problems with doing that:

1. We cannot get an accurate count of the homes on the market. Which MLS do we use? Are all homes on the MLS? Are they on more that one MLS at the same time? Are developers units counted?

2. Home many vacant homes are on the market? The number of occupied homes versus the vacant “investor” homes is a critical number. When an occupied home is sold there is a good chance there will be a chain reaction that will translate into a series of sales. When a vacant home is sold that is the end of the chain (perhaps).

3. There is “normal” number of homes, in any market and at any given time, that are up for resale. The number today is three times what it was a year ago; does that mean that if there are 12,000 homes up for sale now that a “normal market” has 4000 re-sales on the market? If so than our time to absorb the inventory is cut by one third. (Our “over inventory” situation is less than reported)

4. We are, arguably, in a seasonal market. The number of sales changes from season. This makes any absorption taking difficult at best.

You, dear reader, are not “THE MARKET”. You are looking for one home, one investment, one opportunity. Forget “THE MARKET” and look for the best opportunity you can find, with the best location, and the best price. Make a decision that ignores “THE MARKET” and do what is right for your plan.



Sales are slow in Fort Myers, there is no doubt. There is consensus among the agents and developers that buyers have no sense of urgency. The buyers figure they can come back next year and the worst case is that the home they wanted will still be available even at a lower price. But I am reminded of the pricing strategy I used to see at Goodwill. Goodwill prices an item the day it hits the shelf and then lowers the price every week until it is sold. When you see an item at Goodwill you might consider purchasing, you have a choice: buy it at today’s price or gamble that no one else will buy the item and you can come back next week and try to buy it at a lower price.

Today’s real estate buyers have an overabundance of choices. They can gamble and wait until next year and hope their first choice is still available. OR they can get their first choice now. Today you CAN get the best location at the best price. It just may not be there tomorrow.

On a Commercial Note: Anecdotal reports from Las Vegas at the Shopping Center show were all very positive. The large retailers and retail developers are betting on the rooftops being filled near their new developments and the retailers are filling up the new malls. Locally, The Pine Island Road corridor is seeing the same phenomenon. Our commercial teams are busy with new malls, new development opportunities and requests for retail space. This is a good sign. While there appears to be overbuilding in the North Naples/Estero/Bonita market, these retail slots are filling as well – so the pundits may be wrong about the overbuilding.

In the commercial office and industrial lease market we are seeing lease renewals coming up at greatly increased prices. This is because the new insurance and tax bills for the buildings are forcing landlords to raise rates to keep up with these higher costs. But landlords also see that new building that are being offered that they compete with are as much as 30% higher in rental rates than existing buildings. This spells opportunity for investors who are willing to wait out the lower lease rates on existing buildings. They can buy at a low cap rate and turn the property into a higher cap rate investment as leases come up. This is a strategy that we support in today’s market. Let me give you an example. (Explanation of Cap Rates) We have available now a two tenant industrial property. Rents are below market. It is being offered at a 7% cap rate today, but this building has great upside, and since the rents are low any vacancy will bode well for an increased cap rate once the tenant is replaced. It is also a true triple net which means all repairs and increases in taxes and insurance costs are borne by the tenants. Furthermore this property has leases terms that banks will loan on. (Not too short)

Until next week,

If you have missed past emails you can search here: ARCHIVES

Gregg Fous

Gregg@ma-realty.com

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