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Developers bank on Lake Nona with new town center project

ORLANDO - An acclaimed golf course and exclusive homes in the $900,000 to $6 million-plus price range have characterized an area of Orlando that at one time was deemed more suitable for a county landfill, a state corrections facility and a coal-fired power plant.

But the Lake Nona development in east Orlando is poised today to be perhaps better known in the future for innovative retail and as a thriving medical and scientific research center.

Officials of Lake Nona Property Holdings, a subsidiary of the owners, The Tavistock Group, recently announced plans for an open-air retail town center of more than 1 msf.

"There's really nothing like it in existence in Central Florida," said Jeff Mason, director of commercial development for Lake Nona Property Holdings.

Before it acquired the Lake Nona Country Club and surrounding high-end developments, Lake Nona's uses as designated by the country were limited to areas such as landfills. But Taivstock acquired a 7,000-acre tract in the eastern part of the county and led it through a Development of Regional Impact process in the early 1980s. The property was among the last remaining large-scale areas for development in Orange County.

Until Lake Nona came along, the lightly populated town of Narcoossee (believed to be an Indian word for bear) was little more than a two-lane road that hosted junkyards, cow pastures and occasional trailer parks.

With an acclaimed golf course that recently was named the site of the 2010 USGA Senior Amateur Championship, Lake Nona now has sold several dozen houses worth upwards of $60 million each year.

The man behind Tavistock is British millionaire Joe Lewis. He is something of an enigma because he never gives interviews. His net worth, undoubtedly high, is a matter of speculation.

Despite the success of Lake Nona in the housing market, Lewis has not had a string of successes as a developer of other projects. He donated 50 acres and pledged $60 million in buildings to the Scripps Research Institution a few years ago when the firm considered competing sites of Lake Nona and Palm Beach. The later won, despite Lewis' long-standing friendship with Scripps Chairman Richard Lerner.

That has apparently not deterred Lewis from continuing to branch out beyond the housing market. Tavistock turned over $20 million in cash and land and led a group of donors to become the location for a planned UCF Medical School at Lake Nona. The campus is south of SR 417 at a new interchange between Boggy Creek and Narcoossee roads.

The school will be bordered by shops and restaurants to the north and a scenic wetland to the south. A boulevard with wide sidewalks and fountains will connect apartments and condominiums on the east-side of the campus. The first phase, UCF's Burnett College of Biomedical Sciences, is expected to be open in 2008.

Meanwhile, Tavistock is also courting the Burnham Institute for Medical Research, a sister to the Scripps Research Institute. The competition this time is Port St. Lucie's Tradition development. The details of financial offers are not known, but estimates are that incentives including state help could total $245 million, according to various reports.

With Burnham expected to announce a decision this summer, the biggest news from Lake Nona was its recent announcement of a 1.5 msf retail center that will resemble a town hall. The center is directly across the street from the planned medical facility.

The open-air Lake Nona Town Center is a lifestyle facility with big boxes and department stores.

"We're negotiating with major retailers. We expect to have four, with one of them hopefully making an announcement soon," Mason said.

He said there was nothing like it in Central Florida, but the closest project may be the Winter Garden Village at Fowler Groves in Winter Garden. That is a 1.15 msf open-air center at the northeast quadrant of CR 535 (which is being extended and widened to six lanes) and the new Western Beltway (Toll Road 429 in the city of Winter Garden). The project, due to open late next year, is within easy access of much of West Orange County, with a location that is also near Florida's Turnpike and SR 50.

About 100 stores are projected, and interested tenants include Starbucks, Target, Pier One Imports and Old Navy. The developer, The Sembler Company, says the population there within three miles is approaching 27,000, but that number is projected to almost double by 2010. Within five miles, the population by 2010 is expected to surpass 161,000. The average income is in the $80,000 range.

The Lake Nona project sounds feasible to David Marks, an Orlando-based retail consultant, who sees Lake Nona as a clearly emerging area. Lake Nona itself has about 3,000 households, compared with only 300 six years ago.

"Most retail concepts work within two to five miles. The real question is what is their trade area," he said.

The Lake Nona project could also face physical barriers - the airport to the east and the Beeline to the north.

"The airport's flight path could be a noise issue, and I don't think people waiting for a plane - unless they have a long layover - are going to take the time to leave the airport to shop there," Marks said.

Mason said the Lake Nona demographics are good because there are 200,000 residents within a 20-mintue drive. "We've also got good income levels in our area, and they're rising," he said. The Lake Nona facility should also draw from the Hunter's Creek area.

Mason said the very concept of the new center will help sell it.

"All across the country, the open-air concept is really the preferred model for both developers and shoppers. You'd be hard-pressed to find a new enclosed mall," he said. "In an open air concept, they can go directly to their store instead of in the old enclosed malls where there's a sea of parking and shoppers walk miles looking for their store."

Open-air malls are favored by developers because they can be more profitable.

"The construction costs change. You do have to put up more roads, but you don't have to put a roof over everything," he said.

Mason also says the mall's site will also make it profitable.

"Right now, the choices for the Southeast area are Waterford lakes, which is a bit of a trek, Millenia and the Florida Mall - and you have some major barriers to get to either one of those two," Mason said.

The Lake Nona area continues to be popular with other builders as well. Beazer recently announced development of 485 home sites on Narcoossee Road south of SR 417.

The location is a major part of its attraction, said Don Daos, Beazer's director of land acquisition and development.

"It's near the airport, near major arteries," he said. Daos believes a key to Lake Nona's success has been the fact it was the last major growth area in Orange County that was still undeveloped.

For commercial development, it's not only Lake Nona itself that has shown an interest in new projects. The Virginia-based Van Metre Cos. is expected to break ground soon on Lake Nona Village, a mixed-use development on a 14-acre site in Narcoossee that will include multifamily and service-oriented retail.


Sidebar

Lake Nona by the numbers

There are about 5,000 acres left to develop from Lake Nona's original 7,000 acres. Of that amount, however, about half is dedicated to green space or lake areas, according to Jeff Mason, director of commercial development for Lake Nona Property Holdings.

The Lake Nona area represents only about two square miles of Orange County's 1,004 square miles, but its demographics are highly attractive to retailers.

Some 87% of its households are owners, compared to less than 70% in the county, according to research by Beazer Homes.

Even more attractive to retailers: About 20% of the households in Lake Nona earn $150,000 or more a year, compared to less than 5% in the county overall.

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