Southwest Florida’s apartment boom has kept cruising through myriad obstacles—such as a global pandemic, and construction supply-chain disruptions, and more recently and ongoing, higher interest rates. Now, the boom is poised to face yet another challenge: With more than 15,000 additional apartment units under construction or cleared for development across Southwest Florida, the industry looks as if it soon might pass the point at which supply exceeds demand.
“Anecdotally, we track demand through internet response and all the different ways that people do it,” says Larry Nygard, founder and president of Crown Development Inc. He has been developing apartments since 1985.
“We’re seeing a bit of a slowdown right now,” Nygard says. “We’re not sure if the desire to move to Florida has slowed a little bit, or if everything is just on pause because of the election or something like that.”
Nygard’s company has built two complexes in Cape Coral with a third on the way in Bimini Square, a 218-unit complex scheduled to open off Cape Coral Parkway at the end of 2025. Nygard has pushed the pause button on planning more, even with $700 million in federal government funding coming to Lee County for Hurricane Ian recovery and affordable housing projects.
“I looked at it,” Nygard says of the trends. “And frankly, my analysis: There’s an apartment surplus coming. I chose to just take a pause on that and let the dust settle. Financing costs and government incentives do help, but they’re not the only components that would make a project affordable. I just think it’s going to be a difficult time for some properties going forward. We’ll let the market settle a little. I’m in a fortunate position where I don’t need to do another project.”
Jamie May of JBM, the region’s largest institutional multifamily brokerage company, also sees signs of a slowdown. Those signs included many new apartments offering startup deals for residents, such as a 13.5-month lease on a 12-month payment.
“Things are cyclical for sure,” May says. “And we go through this every couple of years. We’re waiting for new construction to come online. A lot of these new developments have been doing rent specials.
“The pandemic created this elevated rent growth throughout all of Florida. For everything the pandemic brought us, it also gave us occupancy in apartments. A lot of the younger tenant base can work remotely.”
The pandemic created a mad rush of new residents to Florida. This prompted many developers to start new projects in the Sunshine State, several unbeknownst to each other, all at the same time. Those are just opening or under construction now, right as that mad rush of new residents has subsided.
“If they plan on getting any raises or working their way up to the next level, they’re going to have to be with colleagues,” May says of current office working conditions. “Mingling and sharing ideas. We’re seeing a lot of businesses pull back and bring workers back to the workplace.
“At this point, it takes three years for an apartment deal to be built and stabilized. We now have a bit of a glut of apartments. There’s too much going on at the moment.”
Zimmer Development Company, based in Wilmington, North Carolina, has 799 units that have either just opened or are nearing completion in Cape Coral, downtown Fort Myers and south Fort Myers.
“We’re still full steam ahead,” says Lowell Zimmer, his namesake company’s development manager.
Zimmer’s company just welcomed the first residents to The Ivy, a 275-unit complex in downtown Fort Myers he called its “crown jewel.” Construction continues on the 294-unit Inspiration at South Point off College Parkway on a site that used to be a goat farm. And Oasis at Surfside, Phase II, will have 228 units in Cape Coral.
“It has become a tougher environment,” Zimmer says of developing apartments. “It’s tougher to get good financing. Rates aren’t where they were a year ago. But I kind of look at it like an opportunity. A lot of people look at it like tough times; I look at it like we’ve got to weather the storms.”
Along Cape Coral Parkway near the heart of downtown Cape Coral, 555 units are under construction and nearing completion. The Cove at 47th (327 units) by Flaherty & Collins Properties and Nygard and Crown’s Bimini Square (218 units) will change the landscape of south Cape Coral.
But those two projects represent just 5% of Lee County’s 11,034 planned new apartment units that will be spread across 41 complexes from 32 different development companies, according to data pulled by JBM.
Collier County has 3,157 apartment units in the works, according to JBM’s data. Those will be spread across 12 complexes built by 11 companies.
Charlotte County has 1,300 apartment units planned. Those will be spread across five complexes being developed by five companies, according to JBM’s data.
“The thing you’ve got to keep in mind in real estate, especially in Florida, is the lead time in putting these projects together,” Nygard says.
The volume of current apartment construction projects relates to the pandemic-related surge in demand from three years ago, he said, not current demand.
“You get the train moving, and you can’t stop it at some point,” Nygard says. “Everybody looks at the current conditions around them; we don’t operate in a vacuum. Everybody’s doing that.
Before you know it, you’ve got 10,000 units under construction in a time that demand is softening.”
Those 10,000-plus units in development will be joined soon by thousands more; Lee County received 61 applications from developers looking for a piece of that $700 million in grant money to build affordable apartment units.
“Everybody thinks there’s just this huge pot of gold at the end of the rainbow when you produce housing,” Nygard says. “But it’s a business just like everything else. The costs aren’t going to go down just by want. The only way to effect that change, just like anything in America, is through competition. That’s going to make a difference.”
In the works
Southwest Florida has more than 15,000 apartment units in development. Here’s a look at where some of the larger complexes will be—3,405 units worth.
Lee County
The Hadley, 444 units: 1434 SW 2nd St., Cape Coral, by Latigo Group and Greystar
Siesta Lakes, 412 units: 264 Tierra De Paz Loop, Cape Coral, by Shoreham Capital/Bridge Investment Group and Wynkoop Finance
Mark at Colonial, 404 units: 11021 Colonial Blvd., Fort Myers, by Tellus Partners, near the Colonial and Lee Boulevard intersection
Novo Gateway, 344 units: 11205 Colonial Gateway Drive, by Shelton McNally Real Estate Partners, also near the Colonial and Lee Boulevard intersection
Collier County
Everly, 434 units: 3250 Magnolia Pond Circle, by the Richman Group, near Interstate 75, south of Golden Gate
Azalea Park, 394 units: 3805 Hacienda Lakes Parkway, by Florida Star Development, south of I-75 and east of Collier Boulevard
Fiori, 303 units: 8552 Collier Blvd., by the Latigo Group, just north of Rattlesnake Hammock Road
Charlotte County
Canopy at Babcock Ranch, 373 units: 17174 Curry Preserve Drive, by Milhaus Development
Parkside Punta Gorda, 297 units: 26120 Jones Loop Road, by Ardent Companies
