New Hori-Zones

What do Opportunity Zones mean for Collier County? Will they attract more industrial activities?

BY ARTIS HENDERSON

Ask REALTORS® and business leaders in the Naples area about local industrial real estate and the answer is often the same: There isn’t enough. “The vacancy rate on industrial properties is between one and five percent, which is incredibly low,” says Bill Poteet of Poteet Properties, who has received commercial REALTOR® awards from both Florida Realtors® and the National Association of REALTORS®.

“It’s a question of zoning,” Poteet says. “Industrial properties are not the most popular properties in town. People don’t want to mix cement trucks with residential communities. Developers right now have a gated community concept that works well for them and is very successful economically. We’re seeing people buy land and zone it residential or commercial, usually retail or office, mostly C1, C2, C3, or C4.”

In fact, he adds, many commercial areas are being rezoned into residential areas. Recently, the Courthouse Shadows retail center in East Naples has been torn down and swapped out for a 300-unit apartment complex. The Naples Design District has plans for mixed-use spaces that combine commercial and residential.

With residential use dominating real estate and commercial slotting in behind, that leaves little room for industrial spaces. This can potentially inhibit the future expansion of industry in the area, Poteet says. “Communities need a balance. Otherwise, we have to rely on one or two industries to maintain the economy. In Collier County right now, that’s construction and tourism with some agriculture. We don’t have a major manufacturing component. And we won’t get it unless we have more industrial properties.”

When REALTOR® Chip Olson, manager and broker at RE1 Advisor, moved to Naples in the mid-1980s, industrial properties weren’t so rare. He remembers an industrial park off Airport Road that felt like it was far outside of town. “Guys would go out behind the buildings and shoot guns because there was nobody around to bother them,” he says. “Now you look at the Airport Road area and it’s totally surrounded by residential neighborhoods.”

The area north of J and C Boulevard was the crème de la crème of industrial property in the late ‘80s and early ‘90s. Olson remembers friends who kept a ski boat on one of the lakes in the area because nobody was around. Then developers came along and transformed the property into residential communities. The days of industrial property—and awaiting ski boats—are long gone.

Immokalee Rd

Pelican Bay

North Naples

Pine Ridge Rd Golden Gate Blvd W

Golden Gate

Naples East Naples

Lely South Naples

Naples Manor

Marco Island

Collier County has grown so fast over the last 30 years that industrial spaces have been outpaced by residential and commercial real estate, which, Olson says, may ultimately be to the detriment of Collier County. “For a healthy community, you have to have a balance” in employment sectors and economic diversity.

Still, he recognizes that industrial properties can be a hard sell due to noisy trucks and other activities. “When you go into industrial zoning, it’s not as clean as office and retail space,” Olson says. “It’s not always preferred to have an industrial site backing up to your residential community.”

Olson has seen out-of-state businesses try to relocate to the Naples area without much success. They’ll move their headquarters to Collier County, but they end up going back north because they can’t find labor or materials. “We’re at the end of the world,” Olson says. “At the end of the day, it’s easier to put a production plant in Des Moines.”

Opportunity Zones

Though not specifically targeted to industrial real estate, many Naples REALTORS® are enthusiastic about the presence of Opportunity Zones in Collier County. What are Opportunity Zones? Per the Internal Revenue Service, they are “an economic development tool that allows people to invest in distressed areas.” Their goal is to promote economic growth and job creation in low-income communities while providing tax benefits to those who invest in them.

Opportunity Zones were developed through the Tax Cuts and Jobs Act of 2017. The first Opportunity Zones were designated in April 2018. In a news release published soon after the designation of the Collier County Opportunity Zones, a county official

THE COLDEST WATER

The Coldest Water was launched by Collier County entrepreneur David Ahmad in his one-car garage in 2015. By 2021, his products were being sold globally, operations had moved to an industrial warehouse, a retail shop was opened at Coastland Center, and the company was named among Inc.’s fastest-growing companies in the nation. Manufacturing is a robust component of the local economy, although industrial zoning has been waning.

“Communities need a balance. Otherwise, we have to rely on one or two industries to maintain the economy,” says Bill Poteet of Poteet Properties

optimistically stated: “ e Opportunity Zone designation will be a boon to our highest-need areas, Immokalee, Golden Gate, and Naples Manor, and will boost growth investment. We look forward to seeing local investors and businesses take advantage of the bene ts provided in our Opportunity Zones.”

Each state nominates communities to become Opportunity Zones, and the U.S. Department of the Treasury is responsible for certifying the nominations. ere are currently 8,764 Opportunity Zones throughout the United States. Collier County has ve of them:

• ree census tracts in and around

Immokalee, from Lake Tra ord to the west to the county line to the east • e Naples Manor community west of

Collier Boulevard, north of U.S. 41 East, and south of Rattlesnake Hammock Road • Land in Golden Gate, west of Collier

Boulevard, south of Golden Gate Parkway, and east of Santa Barbara Boulevard

Quali ed Opportunity Zones were designed to spur economic development by o ering tax incentives to investors who invest capital gains in businesses operating within the zone. e capital gains must be invested in a Quali ed Opportunity Fund, which is an investment vehicle organized for the purpose of investing in Opportunity Zone property. e incentive? A deferral, reduction, or potential elimination of certain federal capital gains taxes depending on how long the investment is held. Investors don’t need to live inside an Opportunity Zone, but a Quali ed Opportunity Zone business must earn at least 50 percent of its gross income from business activities within the zone.

Greater Naples Chamber of Commerce Director of Business and Economic Research Melanie Schmees says “there has de nitely been an increased interest” in these zones, with inquiries on their locations and tax bene ts. “As the county grows, the zones and the areas surrounding these zones are adding more services, restaurants, and other commercial spaces” although businesses within the zones don’t need to take advantage of the tax perks.

She predicts there will be much more interest and activity when ongoing and proposed infrastructure and road projects are completed because these will make these areas more attractive. ese include the widening of Collier Boulevard and State Road 82 in Immokalee. Schmees says the Immokalee Airport has parcels within the Immokalee zone and has received increased interest in the past year. “It’s also important to note that some of these tracts are also overlaid with other designations meant to promote economic growth, such as Innovation Zones and neighborhoods under Community Redevelopment Agency oversight, so there are a variety of resources associated with the areas.”

According to an online Opportunity Zones database (Opportunity Db), the total population of the ve Opportunity Zones within Collier County is roughly 36,000. e median household income in the zones is between $27,000 and $57,000. e median home values range from $115,000 to $404,000, depending on the zone. e percentage of households below the poverty rate ranges from 12 percent to 44 percent, compared to the statewide rate of 13 percent.

Crexi, the online commercial property real estate listing service, has several local properties listed with Opportunity Zone designation. ese include a Kentucky Fried Chicken, a senior living complex, and a tract of undeveloped land—all in Immokalee.

Opportunity Zones do just what they’re designed to do, says Stuart Tackett a REALTOR® with KW Commercial. ese zones attract investors and commercial developers to areas that might not normally draw investment, he says, like the tracts in Immokalee and Golden Gate. Which makes sense, he says. “We don’t need an Opportunity Zone in Port Royal.”

Tackett believes Opportunity Zones are a great instrument. “ ey’re a win-win for investors and these communities,” he says.