Creating a City

Cape Coral is one of the last frontiers in southwest Florida's red-hot real estate market.

The Cape's earliest settlers will tell you the city has always been a diamond in the rough, just waiting for a chance to sparkle. But from the late 1950s, when brothers Jack and Leonard Rosen snatched up every foot of cow pasture and swampland they could, until about three years ago, big chunks of Cape Coral real estate have remained under the control of single owners: first the Rosens and their Gulf American Corp., then GAC, and then Avatar.

Only in the late 1990s, when Avatar sold most of its holdings to Minnesota Power's sister company, Allete Properties, which obtained the necessary zoning and permits for development, did outside entrepreneurs finally have the chance to create in Cape Coral what they had so successfully built over the last decade or so in other Southwest Florida cities: gated communities. Will Stout, an Atlanta developer who heads Realmark Group, and Bob Hensley, president of Grosse Pointe Development Co., seized the opportunity,

Spending more than $58 million in the past few years to acquire 1,200 acres of property in the largest Gulfshore city south of Tampa.

Take, for example, Stout's Cape Harbour, one of just a handful of gated communities in the Cape and the site of his three-story, $7-million, 11,000-square-foot home built by Cape Coral-based Aubuchon Homes. The community of 350 homes priced up to $5 million offers a 76-slip marina and will bring the city its first exclusive shopping. Meta, a 50-acre mini-city, will offer a hotel, high- and mid-rise condominiums, offices, restaurants and boutiques.

Two years ago, Stout's plans would have seemed overly ambitious. No house on the Cape had yet sold for a million dollars, and waterfront lots were still affordable. But during just one week in March 2002, Stout sold a $3-million Cape Harbour home to an investor and a $2.8-million model to a buyer who, he says, represents the new Cape Coral resident. "Most of our buyers live in Bonita, Naples, Sanibel or Captiva and know how good Cape Coral is from a boating standpoint," he explains. "Land prices in Cape Coral are one-tenth, even at today's prices, those of Naples. The water's the same and the climate's the same."

Hensley's Tarpon Point Marina in the city's historic Rose Garden area has created a land rush only slightly less frenzied than the first. In the late 1950s and the 1960s, buyers were purchasing Cape Coral land sight unseen, convinced that Florida real estate was as valuable as California gold or Texas oil. Fast forward to 2002, when purchasers camped out for several days to get their pick of Tarpon Point Marina's 47 single-family homesites and 120 multi-family homes. One buyer plunked down $1.2 million for a homesite. The next phase of three high-rise condominiums, with 210 units priced from the low $600,000s to more than $2.1 million, went on the market in late February.

Michael Schneider-Christians, a realtor with Century 21 Sunbelt in Cape Coral, says prices have been rising, especially for direct Gulf access and other waterfront lots. In just three years, prices for waterfront lots have quadrupled. Before, it took three decades for Cape Coral to triple in value.

"Cape Coral has been a community known for affordability. It still is, but there has been tremendous growth in the last three to five years in upscale markets, and that has brought diversity," says Gary Aubuchon, president of Aubuchon Homes.

Some are amazed to see multimillion-dollar homes rising in Cape Coral. But old-timers, those who drive around with "I Love Cape Coral" bumper stickers and remember the days of the city's original architects, aren't surprised. They just wonder why it took so long for big-money development to arrive.

"Cape Coral's location is spectacular," says Kenny Schwartz, who as Gulf American Corp.'s first general manager was also the first Cape Coral resident, arriving in 1957. "Here's this piece of land surrounded by water. To buy this property and amass the acreage-that was the brilliance of the Rosen brothers."

Cape Coral was a city of none, but it was marketed by two savvy brothers, who convinced thousands of pioneers to jump on this once-in-a-lifetime opportunity. They sold Cape Coral as a waterfront wonderland to cold-weary Northerners dreaming of fun in the sun. They set up offices in Northern cities, enticing prospects with slide shows and a free Florida vacation. Prospective buyers were flown into Cape Coral, where they stayed at the Rosen-controlled Nautilus Inn. They were wined and dined and taken to the city's Rosen-created attractions-the fabulous Rose Garden, Waltzing Waters and porpoise shows. The 400 miles of canals that would eventually be dug (not so much to create waterfront as to fill land for development, says long-time resident Elmer Tabor) were described as the centerpiece of an American version of Venice, Italy.

Like so many of these pioneers, Mary Lou Griffith, now a 30-year-plus Cape resident, was introduced to the city in her Indiana kitchen. An acquaintance had learned that she and her first husband, Chris Ketridge, were planning a trip to Florida, and presented a Cape Coral slide show to them. The couple ended up putting $50 down for property, which they inspected on vacation. "Snow was falling when we left, and we loved the warm weather in Florida," Griffith recalls. "My husband wanted the property, but I thought it was awful. There was nothing there. I just wanted to get to Florida to play golf. But we decided to keep it."

When they moved to Cape Coral, the town had a population of 200, and mail was divvied out at a tiny Gulf American building in boxes marked with letters of the alphabet. A weekly newsletter, written by Gulf American's public relations man, Richard Crawford, offered updates on town activities. It eventually evolved into the Cape Coral Breeze, the city's daily newspaper.

Through the decades, stories have described the Rosens as robber barons bent on plundering the unsuspecting by wiretapping hotel rooms at the Nautilus Inn and practicing other sales tactics that bordered on guerilla warfare. But those who worked for them, including Schwartz (who left under less than friendly terms) and Griffith (who headed the company's flight program, arranging to fly in prospects and Northerners who wanted to inspect their Cape property), say they respected and admired the men. "They were decent, hard-working people," says Schwartz. "They weren't shrinking violets, but they never encouraged us to lie or misrepresent the company as some would have you believe. They were just very persistent."

Business, says Schwartz, got ugly only when it involved independent agents. "We did everything we could to crush and destroy the independent realty companies," he says with a laugh. "We sold to so many people, some of whom changed their minds. We didn't want them handing off the property to the independents to sell for less. We didn't want them competing with us."

Betty J. Wills worked as a sales associate for one of those firms, Petrie Realty. Her boss, Pete Petrie, followed the Rosens, setting up his office across from Gulf American and then moving nearby when the larger company relocated to its new-four story building on Cape Coral Parkway. "Pete really defied them," says Wills. "Gulf American wouldn't let Pete go into the Nautilus Inn because they were afraid he'd steal clients. We had to sign an agreement that we wouldn't approach any of the people they brought in on buses. Then they would follow us and wouldn't let us talk to anyone."

Elmer Tabor's grandfather started Wonderland Realty, the first competing firm. "The Rosens were always pushing Cape Coral as a waterfront wonderland," says Tabor. "So my grandfather used the name for his business."

His grandfather's clients were often sellers who bought property on a whim, only to question their decision once they returned to their Northern homes. "By the time they paid $50 down and $50 a month, they were paying $30,000 for property they could buy for $3,000," says Tabor, who now runs the firm. "But they did get a three-day vacation in Florida courtesy of the Rosen brothers."

From Gulf American's international business office, housed in a rented orange-juice stand at Pondella Road and U.S. 41, agents drummed up business by flagging down motorists, says Schwartz. As profits grew, the company eventually moved to the Cape Coral Parkway office. By 1970, the city boasted 8,000 residents.

Cape Coral has changed enormously since then, and it's braced for more change now, as developers large and small lay their plans. The number of homes and lots for sale in the Cape represents nearly 50 percent of the Lee County market. At the beginning of February 2003, there were 2,200 single-family homes and 7,200 lots for sale in Cape Coral. In all of Lee County, listings for homes and lots topped out around 20,000.

Developer Stout says Cape Harbour couldn't have happened any sooner. "This was the first time that property was sold to an outside interest," he says. "Unlike Sarasota and Naples, there weren't outside capital dollars in this city" until three-and-a-half years ago.