The World According to Ross

McIntosh has brokered more than 8,700 acres and $275 million in commercial, residential and instructional development land sales since 1993, and humbly admits he's more apt to err in a prediction than hit it right on. Want to get an idea of what's going on in Southwest Florida? Large aerial maps dominate the walls of his Naples office. Multi-colored pins identify potential development opportunities and indicate McIntosh's strategy.

During our interview with McIntosh, he noted that all the factors he looks at to identify potential growth areas may forever be changed by the events of Sept. 11, 2001.

What is the single, most identifiable trend in Southwest Florida's real estate market?

The northward expansion of the market, particularly along Interstate 75. They don't like to hear this in central Lee County, but the engine that's driving their housing market used to be job formation and family formation-I have a job, I buy a house; I get married, I buy a house; my wife and I have a kid, we buy a house. The other factor was retirement-I retire, I look for some place in the sun.

But, there's another engine-a huge engine in the middle-that's making us all prosper. It's the well-off, 50 year olds in their peak earning years. They're coming here for conventions, for vacations, and they're supporting our restaurants, our golf courses and our shops. This whole upscale ambience is being driven by those baby boomers who are resort buyers.

They take nice vacations, coming to Naples and staying at the Ritz or the Registry. Then they're deciding, 'Gee, we can rent a condominium for a month at the price of one week at one of these hotels.' Then, they stay two months at the condominium and say, 'We can own a condominium ..'

And what has happened is south Lee County with Bonita Bay, Pelican Landing, Miromar Lakes, Grandézza and West Bay Club is now catering to that market, which has historically been a Naples market-not a Fort Myers market. There's a homogenization going on where the two are beginning to look more like each other so that resort buyer is becoming a powerful engine that's driving Lee County.

This engine will continue marching up from the south until the Naples market is defined by the new south entrance to the airport at Alico and Ben Hill Griffin. You'll have the Daniels Parkway entrance north of the airport and the Ben Hill Griffin/Alico Road entrance to the south. As soon as you leave the airport it's going to look like Naples because you're going to drive into Miromar Lakes and Grandézzathat have a Naples resort flavor to it.

We're beginning to see scattered examples of that already in other parts of Lee County. Worthington Communities is developing Renaissance, Centex Homes is developing Crown Colony, and they're two very similar communities.

A lot of national builders are beginning to take notice of Southwest Florida and its prime opportunities. What does this mean to the local real estate market?

As the national builders, the Centexes and the Pultes and the U.S. Homes, etc., begin to compete for land and begin to dominate the market, it pushes the independent builder out and into niches where the national builders aren't competing. When you look in the $750,000 and above range, the national builders aren't represented so there are plenty of opportunities for the building entrepreneur over $750,000. Under $750,000, the national builder will crush the independent builder. There is no room for an independent builder under $750,000 for a whole lot of reasons, not the least of which is capital.

How is this beneficial to the homebuyer?

There are mass advantages because fundamentally, it's production housing and there are all kinds of efficiencies the national builder brings to Naples that results in more value, more bang for the buck. If the national builder didn't have more bang for its buck, it wouldn't dominate.

There are a lot more pins in your Lee County map then the Collier County map.

That accurately reflects my business strategy and my current business position. It would also seem to reflect that there's more activity and more potential for activity in Lee County than in Collier County, and that would have a direct relationship with the availability of undeveloped land in Lee County versus the availability of undeveloped land in Collier County.

Obviously there's an incredible demand in Southwest Florida for developable property. Large communities are selling home sites and homes faster than expected and many are nearing build-out. Are we running out of developable land?

There's a widespread perception in the development community that we are running out of land and the argument in support of that would be the inability of the Collier County School Board to find sites. The School Board has squandered opportunities over the past decade to acquire sites, and has failed to plan or implement a plan. As a result, the School Board is now looking around and can't find 40 acres anywhere, and the only way it can get 40 acres is by eminent domain. That would seem to be evidence that there aren't any 40-acre tracts available.

On the other hand, it seems there is much vacant land, which remains to be developed even in the urban area. If you fly over our urban areas and look down, you see a lot of undeveloped areas. It's still green.

What's been the biggest surprise to you about Southwest Florida's real estate market?

The single, most astonishing thing to me is the retail prices of homes, particularly the escalation of the average price of a home. The disappearance of the $100,000 house has really surprised me. Ten years ago, we dug ourselves out of a recession right here in Collier County by building houses for $99,000 to $109,000.

You mean there was once such a thing as a $99,000 home in Collier County?

Yeah, Boca Palms. All those houses behind the wall on Airport Road were $99,000. Houses in Plantation on Radio Road were $99,000, then they went to $109,000. Then U.S. Homes had a house with a swimming pool for $99,000. What we're seeing in Collier County is the disappearance of the single-family subdivision with homes under $200,000.

Doesn't that go back to the resort buyer you've been talking about? The 50-year-old, well-off resort buyer who can afford more than the $100,000 or $150,000 home?

That's the reality that your base house has grown over a period of 10 years from $100,000 to $200,000. The high-end is really what I'm driving at. The sky's the limit. Now, we have entire subdivisions of $2 million houses. We have the $600,000 residential lot, the $15 million speculative home. The $17 million teardown.

Not only am I surprised by those numbers, but I've never met anybody who isn't. I find that a little mysterious. I used to think there was somebody who understood the housing economy. There's still plenty of us who understand the under $750,000 market. We get that. We understand how it works. But the homes above that with the $150,000 golf course memberships . Who are these people and when does it stop?

What does the future hold for Sarasota" target="_blank">Charlotte County? Some say it's the next frontier.

Sarasota" target="_blank">Charlotte County has seen its first million-dollar waterfront home, and a waterfront lot, a big one, has sold for half a million. But we're talking about onsies and twosies.

You have to look at the numbers. The total number of units for which building permits were pulled in Sarasota" target="_blank">Charlotte County in the year 2000 was under 1,700. In Collier County, the number was almost 8,000 and in Fort Myers/Cape Coral, the number was over 9,000. So when you start talking about the appeal, people want to be where the activity is. And the activity is clearly in Collier and Lee counties. As long as there are building opportunities in Lee and Collier County-and there are lots and lots and lots of opportunities-who needs Port Charlotte when you have Cape Coral? You can live in Cape Coral and you're 15 minutes from the Edison Mall and you're not even 30 minutes from the airport. That's not true for Port Charlotte. You can get to Sarasota" target="_blank">Charlotte County in 30 minutes, but you can't get into Sarasota" target="_blank">Charlotte County. You can get up I-75 across the Peace River, but you've got another 20 to 40 minutes to get over toward the coast. The drive time from the airport to anywhere in Cape Coral is two-thirds less than what it is anywhere in Sarasota" target="_blank">Charlotte County. That's very important, I think. There's reasonable proximity to the urban area, to Barbara B. Mann, to Edison Community College, to Edison Mall, to the kind of things people think of as the Fort Myers infrastructure. It's all immediately accessible from Cape Coral. So I look at total permit numbers of 1,700 permits and I say, "Nobody wants to jump into that market."

What about 10 years from now as Naples, Cape Coral and Fort Myers gradually fill in?

In my view, there is some case to be made that growth will blow east before moving into Sarasota" target="_blank">Charlotte County. There are some pretty significant players who have made a commitment to the fact that it's going to blow east and start winding up east toward the Babcock Farm. It's almost more likely that Babcock Farm will become a new town and the growth will go there. There is available land in LaBelle if you want four miles of river frontage, past Bonita Bay and TwinEagles. Yeah, it is a stretch, but you fill that stretch with a couple of Publix stores and gee, suddenly it's not so far.

So I don't now that it's a foregone conclusion that this Southwest Florida market is going to grow into Sarasota" target="_blank">Charlotte County even in 10 years. That doesn't mean that Sarasota" target="_blank">Charlotte County isn't going to go on fine thank you very much. It's not going to stay like that. Naples prospectors are already up there sniffing around, prospecting for waterfront. What Sarasota" target="_blank">Charlotte County has got in significant supply is waterfront because of its access to Charlotte Harbor. There is also a lot of canal property in Sarasota" target="_blank">Charlotte County.

If Naples is growing north into Lee County, might Sarasota County grow south into Sarasota" target="_blank">Charlotte County?

Sarasota is coming south. The Taylor Ranch property is several thousand acres, and all the national guys are circling around this. But Sarasota has a very restrictive comprehensive plan that tends to impair growth.

Is this why the master planned community hasn't really caught on in Sarasota?

Yes, it's because the comprehensive plan doesn't let them do that, plus there's not a lot of land available. There is some on the west side of town along U.S. 41. But, again look at the numbers. There were 3,600 permits pulled in Sarasota County and 3,350 in Sarasota" target="_blank">Manatee County, which was about twice Charlotte's. Still, all three counties combined are half the rate we are.

Will these numbers continue for Lee and Collier?

We could sustain these kinds of pulls for five to 10 years.

What else has surprised you about the market?

I thought up until now there was a much closer relationship between the performance of the stock market and the performance of the housing market. That's been proven wrong lately. I was shocked. I've learned it's a myth that history repeats itself. History almost repeats itself but the repetition is sufficiently changed that your experience last time does you almost no good. So that surprised me. When the stock market began its decline and the tech bubble burst I would not have predicted that 2000 was going to be a record year. But it was, better that the one before it.

That's good new for Southwest Florida.

Yes, our demographic engine is still in place. Job formation, family formation. People will still retire to the south.