Annual commercial real estate report: great expectations: after two years of high vacancies and rent concessions, the South Florida commercial real estate markets appear ready for a rebound. How soon and how strong depends on he sector—and even more on the neighborhood. But the fundamentals, as they say, are looking good - Annual Commercial Real Estate Report

South Florida CEO, Sept, 2003 by J.P. Faber, Rochelle Broder-Singer

Further north in Broward's Pembroke Pines, developer Ron Bergeron has been highly successful with his Bergeron Park of Commerce and Industry. There, thanks to his rare M3 and M4 zonings, he has been able to accommodate heavy industry. "We have a variety of companies, from auto repair to metal manufacturing," says Bergeron. "True Green is one of the anchor tenants, which required an M3 for the storage of chemicals."

Bergeron got his zonings decades ago, when his 300-acre development--a former cow pasture--was strip-mined for some 40 million tons of road building materials. Today it is landscaped to produce a "campus like setting," with a special focus on smaller firms. With 250,000 square feet built out, Bergeron plans to break ground on another 250,000 square feet in March 2004.

Another niche player is Levitt Commercial, which specializes in building spec warehouses and then selling the bays to small business owners. "We build a large building and sell the bays, very much like a condo," says Levitt Commercial president Seth Wise. "We're working on five [South Florida] projects--three in Boynton Beach, one in Sunrise, and one under development in Pompano."

Wise says that he works with the Small Business Administration in a program that provides 90 percent financing of the purchase price. "We operate, in our industrial business, in below-radar-size, smaller bays. We operate in less than 10,000 square feet. That market is very vibrant. The larger bays have some areas of softness, but the small bays are doing very well. Corporate America is circling, but an entrepreneur needs to feed his family."

In the office market, developer Michael Adler is successfully addressing a similar market, with his Flexx Space concept for small- and medium-sized businesses. Adler has taken 2 million square feet of office space he controls in South Florida and divided it into smaller, flexible spaces, while providing shared conference facilities and high-tech telecom and Internet capabilities. Taking advantage of the live-near-work trend, he boasts office space that's 10 minutes from wherever you live; he also boasts an 8 percent vacancy rate.

"It really is our product type. We specialize in the entrepreneurial tenants, 1,800 tenants throughout [2 million square feet]. We are not looking for the 100,000-square-foot tenants. We have a few because they have grown, but, historically, if a tenant needs more than 20,000 square feet, it's better for them to find another type of landlord."

Conclusion: On Me Other Side

In addition to addressing changing markets, Adler also reflects the South Florida commercial market with his restraint.

"In South Florida I have built, ground up, developments well in excess of 10 million square feet. This is the first time that I don't have ground up development [underway]," says Adler. "It's a real positive in terms of what took pace in this cycle, versus the '80s. There has not been an over development of supply coming on ... so when the economy turns around you'll see demand that causes new development."