SEBASTIAN — Although the economy is continuing its slow recovery and the residential real estate market is seeing a modest uptick, the local retail and commercial market is still attempting to shake out of the slump as an unprecedented number of commercial properties remain vacant in the Sebastian area.
The current picture is “not atypical of having reached the bottom of the market,” said Sebastian broker – and Vice Mayor – Don Wright, who handles only commercial properties. “We can expect a gradual improvement. The construction industry is cyclical. Florida real estate has always gone through swings. It has a pattern of slowdown and growth, often huge upsurges. But this is the most severe downtown Florida has experienced.”
Wright says the situation is pretty much the same across the state. In Florida, the commercial real estate market typically trails the general economy, which is fueled principally by tourism and agriculture.
Rents are down and it is difficult to obtain financing in “the absence of rent money.”
As a local real estate investor, Wright finds that, “most banks won’t even lend unless you’re an owner- occupied business.”
Virginia Heeter is a Sebastian Realtor with Coldwell Banker Paradise Ed Schlitt Realtors, whose properties include medical condos convenient to the Sebastian River Medical Center as well as Old South Plaza, both of which have units available.
Although aware of the numerous vacancies, Heeter expresses optimism about the market, going forward, and feels recovery for retail and commercial properties will happen soon.
“Housing is booming. This is going to be great (for commercial property). Come and look at Sebastian,” she urges potential tenants.
Others say opportunities are available.
“While commercial real estate properties have been challenged,” said Chamber of Commerce CEO Beth Mitchell, “values continue to slowly increase, and there continue to be opportunities for the savvy investor. During the height of the recession, several properties along the waterfront were foreclosed and then purchased by new owners, with positive results. The Tiki Bar and Grill and Mulligan’s turned out to be new successful ventures.”
“Like everybody else,” Mitchell continued, “business owners need to be creative in their approach and do their research. And property owners need to be reasonable in their price expectations, because there are so many choices out there to pick from. The city has done a great job of investing in infrastructure along the waterfront and on U.S. 1 to help develop the commercial district.”
Mitchell and Wright agreed a rough estimate of about 100 vacant commercial properties in the Sebastian area, although no official records are kept. Using that figure, vacant commercial properties would account for about 10 percent of registered local businesses.
A drive through the city, north and south along U.S. 1 and along Indian River Drive to “eyeball” commercial vacancies illustrates the depth of the local commercial property situation.
Heading north on U.S. 1 from the south end of Indian River Drive: the Carnival Confections building is for sale; across from the strip mall’s tax collector office is an uncleared commercial lot; in the mall itself, three locations are for lease.
In addition, just south of the city limits, the River Grill building is vacant and undergoing renovation, with plans to open as an Italian restaurant.
Next door, the new owner of River Park Plaza is addressing the parking lot issue, and offers eight units for lease. At the northeast corner of U.S. 1 and Cleveland, a vacant bank building is for sale.
The Pool and Spa Shack has been vacant for a long time. The Mel Fisher Treasure Museum building has space for rent; a new business, Treasure Coast Coffee, is going into the former Smoothie location.
Past Jefferson Street, a vacant lot is for sale and a commercial building is for sale next to Oyster Point Bay; space is available in Anchor Village and the old fire department remains vacant.
On the east side of US 1, approaching the Roseland intersection, several uncleared commercial lots are for sale.
They include Century Plaza with 15,000 square feet which is for sale and its units are for rent.
The large Eckerd drug store building has been empty since Hurricanes Jeanne and Frances in 2004 and is for sale.
In Roseland Plaza, all units are full; six units are available in the Bay Street Plaza; near the Sebastian River Medical Center, which is currently expanding, several medical condos as well as vacant commercial lots are available.
Empty units are available in the North County Medical Plaza.
Heading south: the former Hallmark store is one of several vacant units for rent in the Riverwalk Plaza and the former bank building is currently unoccupied.
Near Wal-Mart several units are available in the Sebastian Medical Suites building. A couple of units are available in the Sebastian Corners Mall, and, to the south, a commercial building is vacant.
A development plan has been submitted for property at the corner of U.S. 1 and Jackson; at Davis Street and U.S. 1, five units are for lease in the Old South Plaza.
In the Sebastian Center, quite a number of units are for lease. Just to the south, a freestanding medical building is for sale or rent.
Next to ReMax, there is space for rent at Buena Vista Eyeland, and an undeveloped commercial lot for sale to the south.
The former Clark Water building, between Truman and Central, is for rent; there are several vacancies in RH Plaza, and next to that is an office building for sale or lease.
Just north of Schumann Drive, a number of units are available in the Fischer Building.
In spite of the disconcerting number of empty commercial properties, there remains a strong base of healthy businesses which are already seeing the results of a recovering economy.
Wright points to the riverfront area as an encouraging example.
The Chill and Grill restaurant is moving from its location at Indian River Drive and Jefferson Street to a location about five miles south on U.S. 1, and there is interest in that vacant location.
The Riverview Apartments are for sale. The Fisherman’s Landing property is in the development process via a Florida Inland Navigation District grant.
Next to Fisherman’s Landing, the currently vacant exhibition building “has a new operation coming in,” says Wright.
All along the waterfront district, the restaurants, shops and nightspots are open to visitors.
Bob Bruno, owner of the Village Shops in midtown on U.S. 1 also sees a positive picture ahead. Two of his 17 units are currently available, and he just signed a new business into a third.
Bruno says many visitors from Vero Beach and other communities are delighted to “discover” the shopping and dining opportunities in Sebastian and often comment on the city’s charm.
The Sebastian River Area Chamber of Commerce does not directly promote private business, says Mitchell.
City support comes in the form of making the permitting process and other related city requirements as efficient and streamlined as possible, says City Manager Al Minner.
Rental rates vary by location, building condition, cost of fix-up and, of course, supply and demand, Wright explains.
“Rates at this time range from about $8 per square foot per year to as much as $25 per square foot per year.”
“There is (beginning to be) more activity in the market,” says Wright. “Prices are being negotiated to try to bring in new tenants. Although this encouraging activity “has to increase substantially to fill the existing vacancies, generally, we’ve seen the worst.”