A Visit to Mercato in North Naples

On a trip to Naples last week I found myself at Mercato for dinner on a warm March evening (a nice break from the Midwest winter this year). The project is a joint venture of The Lutgert Companies and The Barron Collier Companies. While the project is still struggling to lease up the commercial space, the restaurants were buzzing with traffic. By an informal sampling of cars on site (plenty of Bentleys, Porches, Ferraris, Rolls-Royces) the crowds in North Naples are still visiting malls to dine. Like everywhere else in America, they are still avoiding the retail stores.

Sitting on top of the half-vacant retail spaces are 92 condos (also half-sold after two years). I don't think that is too bad to have 2 sales per month in 2009 and 2010 anywhere. Starting today at $419,000, it's still among the priciest off-beach living in Southwest Florida. While I found the urban design of the place lacking a lot in comfort, I suppose its attraction is that its the only option for buyers that crave anything resembling urbanism. Being able to walk to a Whole Foods will always sell some condos, too. This visit got me thinking about other condo deals located at malls and what their futures will be like. Mercato and Coconut Point (just up US 41 in Estero) have been nightmares for their developers due to timing in the market, but more importantly what is the real long term viability (price appreciation at or above market) of condo living in such suburban, mega-retail locations? Is there just too much uncertainty in the first floor spaces for most condo buyers to commit to the upper floors? Apartments are an easy answer, but does it apply everywhere? Will people buy condos at a suburban mall again and what needs to be different about the living experience to entice them to do it?