When it was called the Panhandle, northwest Florida was considered a sleepy, rural part of the state. Today the area — which runs roughly from Pensacola to Tallahassee — is sprouting large, planned unit developments aimed at upscale home buyers.

The architect of this transformation is Jacksonville-based St. Joe Co. (NYSE:JOE), the largest private landowner in the state. Launched roughly 80 years ago, St. Joe's main businesses were timber, paper and railroads, followed by sugar. In 1997, however, the land baron embarked on a plan to transform its timber and coastal lands into residential developments and resort towns as well as planned rural developments.

With holdings of roughly 855,000 acres, mostly in northwest Florida — 346,000 acres within 10 miles of the Gulf of Mexico — the company is sitting on a gold mine. Nearly 35,000 residential dwellings are in the pre-development stage, and many will be built by third-party developers, who buy land from St. Joe.

St. Joe also is having a major impact on the commercial side. The company recently sold 90 acres in Panama City Beach to the Indianapolis-based Simon Property Group. The nation's largest shopping center REIT plans to build a 1 million sq. ft. retail/entertainment center on the water that will be known as Pier Park. Another 125 acres are under contract or optioned by Simon for the same project. Groundbreaking is slated for this fall.

“The scale and prestige of the Simon development will clearly further validate the region as a resort destination and seed a commercial hub on Joe land in the area,” noted Banc of America Securities analyst Karin Ford in a research report.

St. Joe is reshaping northwest Florida in yet other ways. The company is spearheading plans for a new airport. In March, the Panama City airport authority approved the relocation of the Bay County International Airport to a site in western Bay County that St. Joe owns.

“Currently, St. Joe's customer base is confined primarily to the Southeastern U.S. because transportation into the area by air is limited by short runways,” notes Ford. Though still awaiting final government approvals, the airport will improve access to the company's property and increase land values, she says.

Two hours north and east on the outskirts of Tallahassee, St. Joe is building a virtual town called Southwood, designed to attract as many as 15,000 residents. It is being carved out of 3,370 acres, which were predominantly pastureland.

Enhancing the community concept, St. Joe set aside acreage for office, retail, industrial, recreation, educational institutions and even donated land for a state office complex adjacent to Southwood. When complete, Southwood will feature 4,700 residential units, 2.2 million sq. ft. of office, nearly 800,000 sq. ft. of retail and 2.7 million sq. ft. of industrial space.

Not surprisingly, the land magnate's most profitable unit is its towns and resorts division. “Joe's towns and resorts segment is expected to continue to drive the majority of the increase in earnings for 2005 over the previous year,” says Anthony Corriggio, St. Joe's chief financial officer.

In the quarter ending June 30, 2005, this business division sold 553 units and generated revenues of $190.9 million, compared to 540 units and $158.5 million in revenue in second-quarter 2004.

In fact, some rural communities around Tallahassee are welcoming St. Joe's development, which is stimulating development by other landowners, some of whom bought their land from St. Joe, says Keith McCarron, senior planner with the Apalachee Regional Planning Council located in Blountstown, Fla.

On the downside, there have been dislocations as a result of St. Joe closing the St. Joe Paper Co. in the 1990s, says McCarron.

Only time will tell whether the transformation of the Panhandle from a paper manufacturing economy to one focusing on tourism will make up for the loss.