Do you wonder what it takes to get a lease signed in Southwest Florida these days? More important, do you have a handle on pricing? Values? The competition? What it all means to your bottom line?

Lately, I've been amazed to see not only how much prices have corrected, but that so many people have yet to grasp this reality. Basically, landlords and brokers fall into two camps: those who understand current values and those who think we're still in the go-go years of 2003-2007. The latter group seems to believe they can keep their properties priced at $20 per square foot and someone is going to come along and pay it.

They're in for a rude awakening! Prices for every type of space - retail, office and industrial - are vastly different from what they were just a year or two ago in every Southwest Florida submarket.

Office

I just signed a letter of intent in which the landlord and tenant have agreed to a two-year lease on a single-tenant, signature office building in a highly visible location off College Parkway. Two-and-a-half years ago, it took me just five days to find a tenant eager to lease the space at $18.50 per square foot. This time around, it took more than six months to find a tenant for the same space, even though the price had plummeted to $7.50 per square foot triple net.

Here's another example: In Cape Coral, I'm leasing a 50,000-square-foot, Class-A, multi-tenant, signature office building at one of the city's busiest intersections. At the top of the market, the building would have rented for $14 to $17 per square foot. I'm now in the process of negotiating a lease in the single digits.

When it comes to garden offices, World Plaza (off College Parkway on New Brittany Boulevard) exemplifies how far prices can plunge when a commercial/ rental market corrects. When the market was at its peak, we were routinely leasing space in World Plaza in the $14 to $16 per square foot range, triple net. Today, we're signing leases ranging from $5 to $7 per square foot triple net.

Industrial

Industrial space also is faring poorly. Currently, I'm listing an industrial/distribution building containing brand new, first-generation space with complete tenant build-out. At the top of the market, this space would have rented for $7.50 per square foot triple net. We have just agreed to rent it for $4.25 per square foot.

I represent another industrial property (industrial/flex space) where we had a signed lease agreement for $10.50 per square foot. Again, that was at the top of the market. Unfortunately, the lease expired recently and the tenants moved. Now the owners say they would welcome a tenant willing to pay the current list price of $6 per square foot. But that may be a bit optimistic, given the current glut of available industrial flex space marketwide.

Retail

When the market was hot, there was an abundance of very nice, non-anchored retail space throughout Lee County that routinely rented for upwards of $23 per square foot. Now, most space on the market in non-anchored retail strip centers is priced from $9- $14 per square foot.

Many of the grocery-anchored strips are faring no better. For instance, two years ago, space in a Cape Coral Publix-anchored retail center had been commanding $20 per square foot. Recently, a tenant hired us to bring in any offer for a sublease for 3,000 per square foot.

I'm not trying to scare people, but they should be aware of the severity of the correction. Accordingly, I want owners and tenants to understand the realities of making deals in a down market.

Plan of Action

As rent prices reset, so will commercial property values. And while I haven't seen the fallout from rents affect sale prices yet, it will. In fact, I see a major decrease in property values over the next three to five years.

That's why owners should be trying to sign three- to five-year leases at any price and tenants should be locking in these bargain rates for as long as possible. In a few years, when market values rebound, rents will start to rise and landlords' operating statements should begin to improve.

If you're an owner who currently has quality tenants locked in at above-market rates, this is a great time to sell. When those rents roll over, chances are it will be at a much lower rate, making your property less appealing to investors.

From a buyer's perspective, this may be the perfect time to buy, but beware. If your purchase is predicated on yesterday's leases, you're going to get stung at renewal time. That's why it's so important to stay current on market conditions.

Whatever side of the contract you're on, remember that properties must be priced right - by today's standards - in order for owners and landlords to get signed leases. Owners must realize that they're competing against a huge selection of similar properties for a modest number of tenants, which is why deals are very few and far between. But unless landlords and owners realize as much, the best commercial broker in the world won't be able to make deals on their behalf.