Insights on the Future of Southwest Florida Real Estate

By: Christina Martinez, Esq.

Henderson Franklin was proud to, once again, serve as a platinum sponsor of the 2025 Market Trends event, held on March 20, 2025, at the Caloosa Sound Convention Center in Fort Myers, Florida. The sold-out event welcomed over 1,300 real estate professionals, investors, developers and business leaders who gathered to gain insight into the current and future state of the Southwest Florida real estate market from speakers Justin Thibaut, President and CEO of LSI Companies; Denny Grimes, President of Denny Grimes & Team; and Matt Simmons, Managing Partner at Maxwell, Hendry & Simmons. 

While Thibaut, Grimes and Simmons each shared valuable data and perspectives in their area of expertise, the central theme of the event was identifying what would be “The Next Big Thing” for 2025 in the ever-changing Southwest Florida real estate market. The presentations were insightful and informative as they shined a light on the past, present and future of residential and commercial real estate in Southwest Florida, with a focus on the ways the market is shifting in 2025 and how to be one step ahead as the residential and commercial real estate landscape continues to transform.

Development and Land Use Trends with Justin Thibaut

Justin Thibaut’s presentation centered on the ways development, land use and real estate investment across the region are evolving. He emphasized that while Southwest Florida has already experienced impacts on the market, such as the COVID-19 housing boom, fluctuating interest rates, inflation and hurricane recovery, there are more “big things” to come in 2025. Thibaut highlighted several key factors that will shape real estate development in the year ahead:

• Institutional Investment. Southwest Florida is seeing an influx of capital coming from institutional investors.
• Developers shifting their focus. Rising housing costs are prompting developers to pivot towards delivering what the current market is demanding: smaller homes with a more affordable price tag. 
• Zoning and Public Hearings. Developers are facing heightened resistance during public hearings, particularly in tourism-driven areas like the barrier islands of Southwest Florida. Residents are voicing concerns over increased density and the zoning approvals process has become more contentious.
• Land Deals and Infrastructure. Significant land transactions, particularly those involving mines and utility providers like FPL, are laying the groundwork for future development by providing the necessary materials and infrastructure to allow for continued growth and development. In addition, several luxury condominium projects and mixed-use projects are currently underway and will be an asset to the Southwest Florida market. Thibaut noted that areas previously constrained by limited infrastructure are now opening up thanks to the ingenuity of those who identified a path to continued growth; the use of private utilities.

Thibaut also shared recent permitting trends across the region. In Lee County, Lehigh Acres continues to lead in residential permits, likely driven by the shift to more affordable housing models in the area. In Charlotte and Lee Counties combined, Babcock Ranch stands out as the top development for residential permitting activity. Lennar continues to leave its mark on the Southwest Florida market and had the highest number of residential permits pulled in 2024.

Despite market uncertainty, Thibaut cautioned home builders not to overcorrect or pause development plans. The history of the market shows that pulling back too far can result in higher costs when the market rebounds. Thibaut concluded with a couple of powerful reminders:

“There are billions of dollars sitting on the sideline right now ready to deploy but not being deployed, waiting on the next big thing to happen….Now is the time to make moves as we push for a solid 2025 and 2026.”

Residential Resale Market with Denny Grimes

Denny Grimes’ presentation focused on the changes in the residential resale market; more specifically, he discussed the current shift to a buyer’s market and his advice to anyone buying or selling residential real estate in 2025.

• Buyer’s Market. The statistics are showing that the Southwest Florida market, much like the rest of the United States, is transitioning to a buyer’s market. While the statistics could paint a bleak picture, Grimes opined that the shift is simply the reflection of a necessary market correction and cleverly stated, “the party isn’t over, we are just changing who is going to the party.” Grimes encouraged real estate agents to pivot and change their strategies to adjust to a market that this area has not seen since 2010. While prices are dropping throughout Southwest Florida, Grimes noted that the ultra-luxury segment is outperforming other markets and is an area to watch for continued growth.
• Strategies for success. Grimes discussed how sellers who purchased prior to 2022 have a “get out of jail free” card in the form of equity. Grimes’ advice for sellers who aren’t in that group, “if you don’t have to sell now, don’t”; and “if you want or need to sell now…be first.”

Commercial Real Estate Market with Matt Simmons

Matt Simmons’ presentation centered on the current state of the commercial real estate market in Southwest Florida and the ways in which each segment can evolve and thrive.

Simmons shared his thoughts on each of the markets and highlighted several items to consider in 2025:

• Industrial. The industrial market in Southwest Florida continues to grow with three large industrial sales to new institutional buyers accounting for 50% of the total industrial sales price volume for Lee, Collier and Charlotte counties. Simmons suggests that with the limited land available for industrial growth, infill industrial might be something to consider.
• The retail market continues to struggle with large retailers going out of business and rents failing to keep pace with the rising costs in the area. Simmons discussed how a shift to using retail space for entertainment venues or medical use could be a possible solution to the issues plaguing the retail market.
• Southwest Florida is not facing the same issues with office vacancies as some other areas. Rents and occupancy in the area are holding strong, largely due to the prevalence of single-tenant or owner-occupied spaces. In addition, Simmons pointed out that office spaces that aren’t currently being used for their “highest and best use” have started to be revitalized into uses that better fit the needs of the area, like housing.
• Simmons opined that the “next big thing” in hospitality is boutique-style hotels that offer an experiential element.

Takeaway

Southwest Florida’s real estate market in 2025 is defined by evolving development strategies, an influx of institutional investment, a growing focus on affordability and infrastructure, the shift to a buyer’s market and prioritizing the revitalization of commercial properties to maximize their potential and enhance their value and community impact. Developers and real estate professionals must stay informed, embrace the change required for continued growth and be ready to act as the market stabilizes and the region continues to attract new interest and investment. To view photos of the event, click here.

Photos Courtesy of Priority Marketing