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February 3, 2008

Real estate could heat up

One expert sees 'no impediment other than people's attitudes'

By Steve Liner
BUSINESS MATTERS EDITOR

Source: Tallahassee Democrat
View Original Article

When you think about real estate in Tallahassee in 2008, you should consider two things: Look east, and it's a good time to buy.

State and national predictions are that real estate markets will be flat at best in 2008, but is that true in Tallahassee?

The answer depends more on buyer attitude than any overarching handicap to market growth. Consider: Interest rates remain historically low both for residential and commercial real estate. Willing lenders and loan funds are available in abundance, and the number of subprime mortgages is slight in comparison with other markets in Florida and the U.S., according to local bankers.

Jack Kane, executive vice president of Premier Bank in charge of lending, confirmed last week that there "is no impediment other than people's attitudes" to a good year for real estate.

"Interest rates are low, and I expect them to remain low during the year," Kane said.

To be sure, building has slowed for both new homes and commercial projects, but could heat up fairly quickly once local buyers come back to the table.

The hottest spots in Tallahassee are in the east, with more than 2.1 million square feet in new retail space under way or announced.

The "power center" at Fallschase is where Costco, Super Wal-Mart, Books-a-Million and a Dillard's store are planned. A "lifestyle center" is envisioned at Mahan Drive's intersection at Interstate 10.

The first to start coming online in the third quarter of the year is expected to be a "specialty center." Ground was just broken for the commercial component of Evening Rose, a development by K2 Urban Corp. Evening Rose is flanked on one side by Mahan Drive's Fallchase and on the other by Welaunee Plantation.

David Wamsley, K2's CEO, speaks of the mix of residential and commercial space encompassed by Evening Rose as "creating a sense of connectivity." Wamsley said the commercial portion of the development is designed to front on Capital Circle Northeast to ensure volume, since it is on one of Tallahassee's most heavily traveled roads, but also to connect to the residential development.

"If you're going to build a densely packed urban neighborhood, you need an extraordinarily high level of design," he said. "Evening Rose offers walkable distance to what residents need."

That means distances of no more than a quarter of a mile and a walker-friendly shopping environment.

Evening Rose includes more than 120,000 square feet of commercial space mixing retail shops (including a grocery store), restaurants and offices.

Already set are a day-care center, Another Broken Egg restaurant, a financial institution, a K2-created grocery/produce/ready-to-eat Town Market and, of course, K2's new corporate office complex. All are set to open in August.

Why east?

The numbers don't lie. The area boasts the highest population density of any upscale site in the city with 5,500 residents within one mile, 51,157 within three miles and 124,878 within five miles of Evening Rose. Daily traffic counts are 46,000 vehicles on Capital Circle and 32,000 on Mahan.

And populations, hence traffic, can only increase as Fallschase adds 5,000 homes, Welaunee and others begin construction, and Evening Rose continues residential development.