Fruitville Road east of East Avenue takes off

The face of Fruitville Road east of downtown is finally evolving from sporadic residential to a future of low intensive office and community service headquarters.  The transition will take about three years, but by 2005 the change will be dramatic.

Why the wait?  The 1980s city plan for Fruitville Road required a minimum of one-acre lots for rezoning to office use. In the 1990s, the code was modified to permit smaller lots for office use. The revision addressed difficulties with assembling parcels, as well as a key market factor: Our business community is predominantly made up of companies with five or fewer employees. Smaller companies need smaller facilities, requiring smaller land parcels. The code adjustment makes redevelopment and in-fill a realistic opportunity along Fruitville Road.

Downtown: Plenty of buzz, but little activity

The Ritz Carlton is open and proved to be the jewel that we all had hoped, but the rest of the downtown real estate market – commercially, in particular -- is relatively quiet. Boca Bargoons opened with a loud splash and a lot of traffic at 1st Street and Orange Avenue, and Gallerie des Artes is now open at 1516 Main St.

During the late 1990s, the development downtown experienced was almost exclusively residential. That doesn’t appear to be changing.  The only cranes on the skyline are at Beau Ciel and the second Ritz tower condominiums.

Leased investments still at a premium 

Many Eckerds and Walgreens properties are for sale based on a rate of return of 8.75%.  The shrinking stock market has directed many buyers to real estate, but most buyers demand returns of 9.5% or greater.

Multi-family feels pinch of supply, lending

Apartment vacancies in Sarasota County have fluctuated from 14% to 9% depending on the project and location.  Rental rates range from $.80 to $1.10 per square foot, also depending on the project and location. Sufficient supply from the mid-1990s and tightening of lending practices has cooled many planned apartment projects.

Office leasing stalled; sales steady

Low interest rates have kept many buyers in the commercial real estate market, but the true industry barometer is leasing activity. Sarasota County’s office market is still slow; vacancy rates are stalled at about 7% downtown and 17% along I-75.
Conversely, while not matching the blistering pace of 1999, sales have remained steady. Land sales on Fruitville Road in the city limits are inching up to $16 per square foot in some cases.

Retail update

Southgate Mall remains the leader in Sarasota retail with high occupancies and rental rates north of $30 per square foot.  Generally, our market has seen reasonably steady occupancy rates for retail with some small infill projects, but no major projects in some time.
Where are the next retail developments?  Clark Road is a sure bet as residential rooftops increase. It would seem that near or in downtown is a likely spot, but development costs could hamper new retail activity downtown.