Prime 0.81-Acre Commercial Corner on US-1 for Redevelopment

Highlights:

• Our recommendation for the highest and best use of 1987 N. Harbor City Blvd is to pursue a commercial development with a strong retail/restaurant focus, potentially integrated with secondary uses (office or residential) to fully leverage the site. This recommendation is based on the property’s prime frontage on a busy arterial, the supportive zoning, and the market gap for retail/food services in the immediate area. Below we outline our specific recommendations and development program concept:
• Primary Recommended Use: Drive-Thru Restaurant or Multi-Tenant Retail Center. The site is ideally positioned for a high-visibility drive-thru establishment (fast food, coffee, or fast casual dining). We recommend targeting a national fast-casual restaurant or coffee shop for the site’s corner portion. For example, negotiating a ground lease or build-to-suit deal with a chain like Starbucks, Chick-fil-A, or Panera (as examples) would provide a credit tenant and maximize land value. The remaining portion of the site (if any after allocating to the drive-thru) could host additional retail bays or be landscaped/used for parking and expansion. Conceptual Yield: A single-tenant drive-thru building of ~3,000 SF could be built with dual-lane drive-thru capability and ~30 parking spaces. Alternatively, a strip center of ~5,000 SF (could include an end-cap drive-thru) could house 2–3 tenants. Timeline: These uses have straightforward development timelines (approx. 9-12 months for design/permitting, and 6-8 months for construction). Reasoning: This option taps directly into the site’s strengths – traffic and access – and meets a demonstrated market need (food/retail). It also likely offers the highest land value upon completion, as an investor market exists for single-tenant net leased properties at low cap rates​.
• Secondary/Complementary Use: Medical or Service Office. As a complement to the above, or as an alternative if a retail tenant is not immediately secured, we recommend planning for a medical office or professional service building on-site. This could either be on a pad by itself or as a second phase development utilizing the site area not needed by the drive-thru. For instance, a 2-story medical office of ~8,000 SF could occupy the western portion (near Guava Ave), with shared parking with the retail use. Reasoning: This diversifies the property’s income and buffers against any single-sector risk. A medical use would benefit from the traffic (for visibility) but not rely on it (patients are destination-driven), and it would serve the growing community needs. The synergy could be useful – e.g., a patient visiting the clinic could grab coffee or lunch next door. Feasibility: As discussed, parking sharing is possible (medical peak daytime vs. restaurant peaks mealtimes). The city would likely support a planned development approach combining these uses. Financially, an owner-occupied medical building (if sold or leased to a healthcare provider) could be financed via an SBA 504 loan, etc., making it feasible for a practitioner developer.
• Alternate Use (if market conditions favor): Mixed-Use with Residential. We suggest keeping the mixed-use w/ residential concept as a future option or Phase II if the developer has the appetite. If, for example, the initial retail portion is done and the remaining land is still available, the developer could later build apartments or lofts above new construction on the site. However, doing it concurrently might overstretch resources. As an alternate recommendation, if the developer’s strategic goal is long-term hold and maximizing site buildout rather than immediate return, they could go directly into a mixed-use development from the start. In that case, we would recommend a slightly scaled version to reduce risk: perhaps a three-story building with ~4,000 SF retail at ground and ~16–20 units above (instead of trying for 30 units). This would ease parking needs and could be built wood-frame over parking, simplifying construction. Incentives for including a residential component (like density bonuses or CRA support) should be pursued. Outcome: The developer would then own a unique asset producing both rent from apartments and commercial. It could be strata-titled to sell the commercial portion if desired. This recommendation is contingent on the developer’s objectives – it’s a path to maximize site utility, but not necessary for success if the focus is on pure commercial.
• Site Plan and Design Recommendations: Whichever use is chosen, certain design elements will enhance feasibility:
• Access Management: Plan for a right-in/right-out on US-1 and full access on Masterson. Work with FDOT early to determine if a deceleration lane on northbound US-1 is required for the turn into the site – given the traffic volume, this might be advisable for safety and could be constructed within the existing right-of-way by extending the shoulder. Use Guava Ave primarily for service access (delivery trucks, etc.) and possibly as an exit for drive-thru queue to avoid dumping traffic back on Masterson.
• Parking Layout: Use the triangular shape efficiently by placing parking in the “angles” of the triangle. For example, a row of parking along the US-1 frontage (setback behind landscaping) and another row along the Masterson frontage can provide ample parking while the building(s) occupy the center. Ensure ADA accessible spaces are near each building entrance, presumably off Masterson (the likely primary entrance for a restaurant).
• Stormwater: Consider an underground retention system beneath the parking lot if surface area is limited. This cost can be offset by the benefit of maximizing paved area for parking. If a pond is preferred, situate it at the far west tip of the parcel (where visibility is lowest) and integrate it as a landscape feature.
• Landscaping and Aesthetics: Because this is a prominent corner, invest in good landscaping – a few canopy trees along US-1 and an attractive monument sign will add value. Additionally, since the CRA is nearby, the developer could voluntarily adhere to some of the CRA design guidelines (like pedestrian-friendly facades, maybe a small patio or public art on the corner) to endear the project to the community and city officials.
• Signage: Plan for a monument sign on US-1 (the C-2 zoning will allow a decent sized sign, but the city might have corridor sign rules to check). Also, building-mounted signage facing US-1 and Masterson will capture attention. If multiple tenants, ensure the monument sign is designed to accommodate all (or consider two separate signs if allowed, one for the main tenant and one multi-tenant directory).
• Lighting and Safety: Include adequate parking lot lighting (while shielding it from any nearby residential to the west). A well-lit, safe environment will be important especially if a 24-hour drive-thru or evening restaurant is in play.
• Financial Analysis & Phasing: We recommend the developer conduct a detailed financial pro forma for the preferred option. Roughly, Option A (drive-thru) might cost on the order of $1.2M to build and could be worth $1.6M+ leased (depending on tenant), providing a good margin. Option B (strip mall) might cost $1.5M and be worth similar or slightly higher when stabilized (with multiple tenants). Option C (office) could cost $1.5M and be valued around that or a bit more if leased (an owner-user would measure value differently, by utility rather than cap rate). Option D (mixed-use) could cost ~$4–5M and, as estimated earlier, have an end value of perhaps ~$4M or more once stabilized – which is a longer-term play possibly justified by future appreciation and rental growth. The developer should weigh these numbers against their investment criteria. It may be wise to pursue a phased approach: e.g., Phase 1 – develop the front pad with a QSR to generate cash flow; Phase 2 – once that is stabilized, use the increased property value/equity to finance a small office or residential addition on the remainder. This staggers risk and could improve overall returns.
• Engage Stakeholders: Early in the process, engage with the City of Melbourne Planning Department to discuss concept plans. Given the CRA proximity, also present to the Olde Eau Gallie CRA Advisory Committee if applicable – garnering their support could smooth approvals and maybe yield streetscape collaboration. Additionally, talk to adjacent property owners (for instance, the owner of the parcel directly north) – there may be an opportunity to coordinate or even acquire a sliver of adjacent land to square off the site’s north end, which could marginally help site design (though not required, sometimes a minor lot line adjustment can improve layout flexibility). Lastly, since Masterson Street sees local neighborhood use, ensure any residents west of Guava are kept in loop (through community outreach) so they understand the plan (e.g., ensuring cut-through traffic on Guava is minimized, etc.).
• Conclusion: The highest and best use of 1987 N. Harbor City Blvd is a commercial development that likely takes the form of a retail/restaurant establishment capitalizing on the corner location and traffic volume. This use is financially feasible (strong tenant interest and investor demand), legally permitted (consistent with C-1/C-2 zoning and future land use), physically possible (site can accommodate building, parking, stormwater), and maximally productive in terms of site utilization and value creation. We particularly see a drive-thru restaurant with an accompanying small footprint retail/office component as the optimal configuration. This would meet the market need (adding a food/beverage option and/or services in a growing area), activate the property with a steady stream of customers, and fully unlock the property’s value. In executing this, the developer should leverage the property’s strengths (visibility, access, flexible zoning) and be mindful of design and regulatory details (traffic flow, parking ratios, etc.), as detailed in this report.

Description:

High-visibility 0.81-acre commercial corner at a signalized intersection on US Highway 1 in Melbourne, FL. With frontage on three roads (US-1, Masterson Street, and Guava Avenue) and over 47,000 vehicles per day, this cleared and level site is ready for development.

Zoned C-1 and C-2, the property offers broad commercial flexibility—perfect for drive-thru restaurants, multi-tenant retail, medical/professional offices, or mixed-use projects. The parcel is ideally positioned just north of the Eau Gallie Arts District and minutes from SR-518, with city water and sewer available.

Whether you’re looking for a retail pad site, an office development, or a vertically integrated project, this is a rare opportunity to capitalize on one of the few remaining undeveloped corners in the Melbourne US-1 corridor.

Highlights:
0.81 Acres | Approx. 188’ US-1 frontage
Zoned C-1 & C-2 | No rezoning needed
Signalized corner with 3-street access
Traffic counts: 47,500+ VPD (US-1)
Ideal for QSR, medical, retail, or mixed-use
Minutes from Eau Gallie Blvd & I-95


Option A: Fast Casual Restaurant or Drive-Thru Coffee Shop (Single-Tenant Retail): Build ~3,000 SF with drive-thru, 30+ parking spaces. Likely lease to national chain. Pros: High rent, quick ROI, strong fit for site. Cons: High traffic generation, single-use only. Feasibility: Excellent – by-right use, market demand evident (no coffee drive-thru in immediate area; nearest Starbucks is ~2 miles away).

Option B: Neighborhood Retail Strip (Multi-Tenant): Build ~5,000–6,000 SF split among 2-3 tenants (e.g., small restaurant, salon, and office). Pros: Diversified income, serves local needs, still leverages traffic. Cons: Needs leasing effort, moderate intensity use of site. Feasibility: Good – fits zoning and site; would fill a gap in local services. Could be combined with Option A (e.g., one end tenant is a drive-thru).

Option C: Medical/Office Building: Develop ~6,000–10,000 SF for medical clinics or offices (1-2 story). Pros: Stable long-term use, daytime traffic only, could attract an anchor like an urgent care or vet. Cons: Lower rent than retail, requires finding the right occupant(s). Feasibility: Good – permitted use, demand present (especially vet or dental clinic demand in area), parking manageable up to a point.

Option D: Mixed-Use (Commercial + Apartments): Construct multi-story structure with ground-floor retail (~3,000–4,000 SF) and 20–30 apartments above. Pros: Maximizes site potential, aligns with city growth trends, potential CRA support, creates landmark property with long-term appreciation. Cons: Most complex/capital intensive, requires strong leasing/sales for both components, parking and design challenges. Feasibility: Moderate – possible under zoning (city would likely approve), but needs careful planning and strong market execution. Could be highly rewarding if demand for boutique apartments near EGAD is strong (which initial signs indicate, given other projects).

Option E: Specialty Use (Wildcard): One could also consider a boutique use taking advantage of traffic like a showroom or recreational facility. For example, a high-end used car dealership or RV sales (outdoor display) could use the corner (auto sales allowed in C-2 with conditions). Or a small self-storage facility (multi-story climate controlled) – those are in demand and C-2 might allow it with a conditional use. However, these tend not to maximize retail synergy or might face aesthetic pushback on a prominent corner. They are feasible but likely not the “highest and best” compared to the above options which engage the consumer market more directly.

Eau Gallie Arts District (EGAD): Located half a mile south, EGAD is a revitalized historic downtown area with art galleries, boutique shops, breweries, restaurants, and a public library. Events and the growing popularity of EGAD bring visitors regularly, some of whom travel on US-1 past the subject site.

Major Retailers & Services: While the immediate segment of US-1 near Masterson has smaller businesses, larger retail nodes exist within a short drive. About 1 mile north at the intersection of US-1 and Lake Washington Road/Aurora Road, there are several auto dealerships and big-box retailers. For example, a Kia dealership, and further north, a Walmart Neighborhood Market and other shopping centers along US-1. Approximately 2 miles to the south (US-1 and SR-518), there is a cluster of stores (including Publix grocery, Walmart Supercenter on Wickham a bit west, and various national-chain restaurants along Eau Gallie Blvd). These help draw consistent traffic through the area.

Medical and Office Hubs: The site is roughly 3 miles northeast of Holmes Regional Medical Center (the main hospital in downtown Melbourne) and 2 miles from Health First’s Holmes regional offices – meaning many medical professionals and patients commute via US-1. Closer by, on Eau Gallie Blvd and Apollo Blvd, there are medical office parks and clinics. Also, Florida Institute of Technology (FIT) is ~5 miles south and Eastern Florida State College (EFSC) Melbourne campus is ~4 miles west; while not adjacent, these institutions contribute to area daytime population and traffic patterns.

Tourist Traffic: Although US-1 is not the primary tourist route, it does serve travelers exploring the Space Coast. The property lies roughly equidistant (about 6–7 miles) from two major causeways that bring beachside tourists to the mainland: the Eau Gallie Causeway to the south and the Pineda Causeway to the north. Tourists going to the Latter-Day Saints Temple (in construction on Lake Washington Rd) or to the Brevard Zoo (in Viera, 8 miles north) might pass here.

Local Businesses: In the immediate vicinity on US-1 are various local businesses such as convenience stores, gas stations (a Circle K at Parkway Dr a bit north), niche retailers (marine supply, thrift stores), and eateries. For example, just a block south is a diner and a lawn equipment shop. These create some local foot traffic, but importantly they indicate that the area is a well-known commercial strip for locals.

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