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(Carl Cronan is editor of Real Estate Florida.)

FORT MYERS, FL-The local office sector may be the first to emerge in an economic recovery, with brokers sensing that the losses seen over the past year are starting to slow down and may even reverse course in the next few quarters. They add that the nationally popular vacation market is getting greater recognition from businesses looking to expand to Southwest Florida.

Research by Cushman & Wakefield of Florida shows that office vacancy in the Fort Myers/Naples market reached 17.6% in the first quarter, up nearly a percentage point from the end of 2008 and two full points from a year ago. Full-service asking rents are currently just above $20 per square foot, down a few dollars over the year, with class A rent reaching nearly $26 per square foot.

“We are starting to see some velocity,” says Gary Tasman, executive director of Commercial Property Southwest Florida LLC, Cushman & Wakefield’s affiliate firm in Fort Myers. “The fundamentals of our market are still intact.”

Despite facing the same doldrums as other major office markets in Florida as they relate to the ongoing credit freeze, Fort Myers appears to still have advantages in population growth. More than a million people already reside in Lee, Collier and Charlotte Counties, with as many working adults moving into the area as retirees, according to local leaders.

At the same time, Southwest Florida is coping with the same problems as other metropolitan areas in terms of job losses. All three counties have a combined unemployment rate of 11% through March, up several percentage points over the past year, according to the Florida Agency for Workforce Innovation.

Colliers Arnold, which has offices in Fort Myers and Naples, says it has noticed two consecutive quarters of positive absorption in the local office sector for the first time since tracking the market in 2006. The most active space users are government, medical and education, the firm says.

“We remain confident that office will enter recovery first,” says Andrew Falde, investment specialist with Colliers Arnold in Fort Myers. He adds that medical will be the most active in the next few quarters as doctors seek to position themselves in the expanding hospital corridor along Daniels Parkway.

The retail sector may follow closely behind office into a recovery after the recession, led by discounters replacing high-end retailers, Falde says. Industrial is deep into the down cycle and may have a longer road back, he says.

Tasman notes that other core service providers are seeking office space to serve the area’s affluent residents, particularly those who make their home on Sanibel Island. Some prospective tenants are looking to return to the US after offshoring operations in recent years to places like India, adding: “We’re a mecca for job growth now.”

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