If you’ve ever attended a ceremonial groundbreaking for a school, restaurant, corporate headquarters or other new building, you understand the symbolism of that first turn of the dirt. The groundbreaking ceremony signifies the physical start of a construction project. In most cases, however, months or even years have already been spent preparing the land for future growth, as planners and developers work behind the scenes to make the property “shovel ready.”
Attempting to market a property that is not shovel ready can be a significant barrier to making a commercial property sale. In fact, it’s hindered some significant transactions where our company is based in Southwest Florida. But what does it mean to have a shovel-ready property, and why is it so important?
What Does Shovel Ready Mean?
The term “shovel ready” became popular during the Great Recession as part of the American Recovery and Reinvestment Act of 2009. The legislation placed funding priority on projects that could begin construction rapidly, in hopes of jumpstarting the economy by providing investment and employment opportunities quickly. The phrase became an important buzzword, and an even more important strategy, in commercial real estate.
Although there’s no standard definition for shovel readiness, the term typically refers to commercial sites that are entitled/permitted and ready to be developed. All the front-end planning and due diligence has been completed: Environmental studies and soil analysis have been conducted and approved environmental permits are in hand, infrastructure is in place (or at least in process), and planning and zoning processes have been completed. In other words, the site is compliant with local, state and federal regulations and prepared for the quick start of construction. A shovel ready site also has a clear title, with no questions as to its ownership to make the transfer of ownership simple.
Many states and municipalities support shovel readiness through a site certification program – in fact, more than two-thirds of U.S. states have a site readiness certification, although there are inconsistencies between them and no national standard to follow. While Florida does not have such a program, some public-private partnerships are working to fill the gap. Utility providers Duke Energy and Florida Power & Light both partner with Enterprise Florida on site readiness initiatives. Enterprise Florida also offers site preparedness grants to rural communities looking to expand and attract business.
While getting a large property shovel ready can require a significant investment in both capital and time, the benefits to the seller and the buyer both outweigh the disadvantages.
Why is it Important for Land to be Shovel Ready?
Having a shovel-ready site offers differentiation for property owners seeking to market their land for sale, particularly in a hot market like Southwest Florida. While a shovel-ready site is not exactly turnkey for a buyer, it will reduce their start-up costs, risk and the time it takes them to get to market. Businesses and builders looking to ramp up quickly and establish their presence in the market will seek out shovel-ready sites to hit the ground running.
Consider this: In Southwest Florida, it is not out of the ordinary for a commercial project to take up to two years to obtain all of the necessary land use and civil engineering permits. While permitting requirements and other regulations obviously vary from county to county, similar timelines can be expected in many metropolitan areas. For a business seeking to relocate its headquarters quickly, a two-year wait on top of the actual construction timeframe can make even the most desirable location unattractive.
In addition to reducing time-to-business, prospective buyers also want to reduce up-front costs and mitigate risk. Having all of the entitlements completed in a shovel-ready site creates less chance of a surprise that will delay construction or require additional financial outlay.
When sites are targeted, selected, and prepared for economic development before going to market, they are more attractive opportunities for buyers. Those that attempt to sell a site without first making it shovel ready may struggle, particularly in a competitive commercial real estate market.
Case Study: Lee County Port Authority’s Skyplex
An excellent example of this can be found in Florida’s Lee County, with the property designated for Skyplex. Skyplex is a 1,800-acre property located on the north side of Southwest Florida International Airport property that includes more than 900 acres targeted primarily for office sites: corporate headquarters, office complexes, and science and technology companies. The remaining land will be targeted for aviation-related uses, open/green space, wetland preservation and storm water management.
The Port Authority-owned Skyplex property is ideally located for commercial development. Situated at one of the nation’s largest airports in terms of land mass, Skyplex is convenient to Interstate 75, Daniels Parkway, Alico Road, and Colonial Boulevard. The site is located within a Foreign Trade Zone, which offers numerous cost-saving benefits. Finally, a large workforce is located within a short distance, as recent development and transportation corridor improvements have shortened the commute for those in Lehigh Acres, Fort Myers, and South Lee County.
The first tenant to move into Skyplex was Sky Walk, a Publix-anchored shopping center that opened in 2017 and proved the site’s value to builders. That same year, one of Lee County’s largest employers, Gartner, announced that it would build a new 143,000-square-foot campus on a 19-acre Skyplex parcel. Since then, Alta Resources has constructed a $21 million facility at the Port Authority-owned commercial property. Neither Alta nor Gartner were strangers to the area – both already had a large footprint in the Gateway area, so Skyplex was a natural progression for them.
The key to continuing this momentum at Skyplex is shovel readiness, according to Don Schrotenboer, real estate consultant and managing partner of Realvizory.
“Headquarters that want to relocate don’t want to wait the two to three years that it takes sometimes to get through the entitlement process to reposition a property,” Schrotenboer said on the most recent episode of our “What’s Developing in Southwest Florida” podcast. “That’s the ultimate goal: getting it to shovel ready, so that it can be put into the marketplace that allows someone to come in, in very quick time, and build their… end use without having the risk and the time involved to take it through.”
The Port Authority began concentrated efforts to make the site appealing to builders and business owners more than two years ago. At a 2021 Lee County Port Authority (LCPA) Joint Board Workshop, LCPA staff revealed its work to eliminate hurdles for future tenants. Their efforts included establishing a vision plan, implementing planning and zoning requirements, completing environmental permitting, and initiating backbone infrastructure – all important facets of establishing shovel readiness.
At Cushman & Wakefield | Commercial Property Southwest Florida (CPSWFL), we are proud to be part of this exciting project. In November 2021, we were named the Port Authority’s consultant and broker of record in conjunction with the operation, maintenance and development of Skyplex. As part of this responsibility, we are working with the Port Authority to execute their vision by providing development analysis, strategic and land planning, market and submarket analysis, and feasibility analysis, as well as real estate consulting and brokerage services.
We are honored that the LCPA selected us for this endeavor, one of the most significant development projects in our region. To help make the Port Authority’s vision for Skyplex a reality, we have enlisted best-in-class partners, including Realvizory, MXD Development Strategists, and Stantec. Together, we will continue the vital work of invigorating Southwest Florida’s economic development.
“The opportunity to look back at this five and 10 years from now, it’s going to be extremely gratifying for all of us as a community,” said Schrotenboer.