Last week, Allen Heise traded e-mails about his business and Charlotte County market conditions with staff writer Michael Braga.
QCan you explain your real estate development background in Naples and Palm Beach, and provide some examples of the kinds of projects you were involved in?
AI am originally from Chicago and I grew up in the real estate development business working for my father, Richard A. Heise Sr., who developed several major projects, including One Financial Place, the home of the Chicago Stock Exchange and the Chicago Board of Options Exchange.
I attended Northwestern University and Columbia University's graduate school. In the early '90s, I connected with Richard Primeau and formed PHD Holdings, which completed two very successful, high-end residential condominium developments -- Grand Bay and Coco Bay -- in the Pelican Bay area of Naples.
While living in Naples, I got a letter from one of my Columbia classmates asking me to locate a project to co-develop with the Guggenheim Brothers under the name Guggenheim–Heise Partners. I eventually located a 700-acre tract in North Palm Beach owned by the MacArthur Foundation. The final plans for the project included 36 holes of golf and more than 600 homes.
Unfortunately, the project was not meant to be. After a year of negotiations, the MacArthur Foundation became involved in financing the acquisition of Westinghouse Communities. Guggenheim-Heise worked with the foundation as an adviser, but the transaction ultimately blew the Guggenheim deal apart.
But plenty of good came from the Palm Beach deal. Jim Fazio was on board to develop the golf courses and partnered with me to establish a bar in Palm Beach a few blocks north of the Breakers Hotel. That bar --251 Club -- became one of the most popular nightspots in the area. And it was in Palm Beach where I met my wife, Maria, while playing golf.
QWhat attracted you to Charlotte County? When did you move there, and what sort of operation are you running?
AOur activity in Port Charlotte began in late 2001 with the purchase of waterfront residential lots in Charlotte County's Gulf Cove area. We acquired 22 lots ranging in price from $44,000 to $80,000. During the 2005 boom the lots were appraised at up to $400,000 each.
Planning to relocate full-time to the area, we purchased a home in Port Charlotte that was destroyed by Hurricane Charley just 18 hours after we closed on it.
In 2004-05, we sensed that the residential real estate market was going to change and began exiting the residential market and buying commercial waterfront property.
QCan you describe some of the projects you are involved in now?
AThe Heise Property Group is now focused on commercial developments in Port Charlotte, including three waterfront sites. These mixed-use, waterfront developments will include retail space and wet/dry storage facilities for more than 850 boats.
After wrestling "forever" with government agencies to obtain necessary commercial dredge and dock permits, we are now putting together plans and meeting with potential investors and tenants for the three sites. Marine Bank, the largest bank in the Florida Keys, with new branches in Charlotte County, is on board.
With Charlotte County having over 20,000 registered boat owners and 290,000 platted single-family lots, we see "in-town" boating facilities as filling a logical future need for the area.
In Naples, it was all about the beach. In Palm Beach, it was all about the social scene, and in Charlotte County, it's all about world-class boating and fishing.
Life in Port Charlotte reminds us of the Florida Keys and Naples 10 years ago.
Although the commercial market is more favorable at this point in time, we have no doubt that residential market will once again strengthen, and we are actively researching residential investment opportunities in the area.
QWhat is your view of the commercial real estate market? How has it changed since the boom and what are your predictions going forward?
AIn 2003-05, the crazy mortgage products, appraisals and fraud, rampant in the residential real estate markets, were comparatively limited in commercial real estate.
This helped keep commercial property values and commercial overbuilding in check. Moderate inflation, combined with low interest rates and a weak U.S. dollar, should continue to support commercial real estate markets.
Smaller Florida real estate markets, heavily tied to the home building business, are experiencing some commercial real estate contractions from two primary sources.
Businesses with heavy ties to the home building industry are consolidating operations and reducing their commercial space needs. Also, home builders facing liquidity issues are selling their commercial properties in order to raise cash. These commercial real estate contractions should rebalance in 2008.
This area has unique elements which are favorable for the local commercial real estate market:
General Development Corp. master planning errors: When platting Port Charlotte in the '50s, GDC seriously underestimated the need for commercial property. For unknown reasons, GDC also mistakenly carved up the prime commercial area in Charlotte County into 50-foot-wide lots. In December 2005, Charlotte County adopted a "Commercial Overlay District" along a section of U.S. 41 in order to address the county's commercial property needs.
Hurricane Charley and mold issues: In terms of employer workplace liability, mold will become the next asbestos. Most commercial buildings in Port Charlotte were severely damaged by Hurricane Charley. Energy-efficient, hurricane-strength, mold-free commercial buildings are in demand. New commercial buildings require doors and windows that do not need hurricane shutters.
Bonefish Grill/Saks Fifth Avenue problem: As my wife constantly reminds me, these types of retailers and restaurants are 60 minutes in either direction from Port Charlotte. There are too many residents and too much growth for businesses like these to ignore in Charlotte County for too much longer.
Inadequate north-south traffic "arteries": Consider all of the major north/south roadways (besides U.S. 41 and I-75) that exist in cities like Sarasota and Naples.
In Port Charlotte, U.S. 41 and I-75 stand alone as the major roadways to handle the county's north-south vehicle traffic. This drives an enormous amount of traffic onto the "five-mile strip" area of U.S. 41 in Port Charlotte, between Edgewater Drive and Veterans Boulevard.
Commercial buyers/tenants are looking for frontage along the five-mile strip on U.S. 41, where traffic counts are the highest in Charlotte County.
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source: heraldtribune.com
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