More Signs of Trouble in Southwest Florida

The robust commercial industry that’s still busy building may be starting to feel the aftershocks of a Southwest Florida real estate market collapse.

The reason: Area developers are concerned that a nationwide credit crunch will result in Florida mortgage providers cutting off the flow of money needed to start new projects in the pipeline in the near term.

“I’m starting to hear rumblings that they’re taking projects off the table,” said Brenda Talbert, executive director of the Collier Building Industry Association, speaking of commercial developers.

But just how long projects might stay on hold is uncertain, and Southwest Florida industry analysts aren’t sounding the alarm yet.

The economics of the commercial real estate market for retail and office space are very different from the housing market.

Some of the pullback on the part of developers simply may be fear of the unknown as it relates to the financial markets.

“It seems like everyone’s waiting for the other shoe to drop,” said Tom Tippett, a commercial real estate analyst. “But when you look at the economic mechanics of a lot of the (commercial real estate development) deals that have been proposed, a lot of them still work.”

Lenders, spooked by rising Florida home loan defaults in the housing market, are eyeing loan risks with greater scrutiny.

“Right now, credit markets are up in the air,” Barry Klein, a commercial real estate developer, said. “A lot of people who had money to lend out for commercial … are sitting on the sidelines.”

But Klein too, said he’s not alarmed. He expects more certainty to return to the financial and credit markets in the next six months.

Turmoil in the markets for Florida mortgage loans isn’t likely to affect commercial developments that are under construction right now, he said.

Those projects already have obtained financing. Commercial developments typically take years to go from planning and permitting to open business.

Projects like a Super Target, for example, can take 3-4 years to complete, said Joe Schmitt, who serves as Collier County’s top development regulator as administrator of the Community Development and Environmental Services.

So what’s coming out of the ground right now is a reaction to the home building landscape of two or three years ago when it appeared that residential growth would continue at a smoldering pace, Schmitt said.

And commercial buildings are certainly coming out of the ground now.

In the past month, Collier County saw a record high for commercial square feet under construction, as a matter of fact.

Follow the link to continue reading this Naples Daily News account of the slowing market for commercial Florida real estate …