Florida's largest landowner, St. Joe Co., has begun to redevelop parts of the Panhandle, including Port St. Joe, a town of 3,600 people. Though a planned development of 2,000 area homes could double the town's population, the company says it wants to keep the small town flavor of the beach community intact.

“We aren't out to transform the town beyond recognition,” says Joseph Renfro, vice president and general manager of the Gulf region for St. Joe Co., who is overseeing the company's initiatives for Port St. Joe. “My challenge is to enable the town to grow, but not to change it for the worse.”

The St. Joe Co. (NYSE: JOE), based in Jacksonville, has started six resort-style projects on the Gulf Coast. It also donated 4,000 acres of land for a new, $330 million Panama City-Bay County International Airport in Panama City, slated for completion in 2010. Located about 30 miles northwest of Port St. Joe, it is being built by the local airport authority and will have two runways instead of the current one.

Port St. Joe is positioned to take advantage of an influx of real estate buyers, particularly retiring baby boomers attracted to the town's location near beaches on the Gulf of Mexico.

Two miles from Port St. Joe, the company is also developing a 2,020-acre residential and resort community called WindMark Beach. Some houses in the area have sold for well over $1 million. Resort plans call for a village center, shops and a 3.5-mile boardwalk.

But only a fraction of the planned 1,662 residences have been built; sales have been sluggish in the face of the nationwide housing downturn. “We had low expectations for WindMark Beach early this year — we weren't expecting any sales, actually — but we sold a lot and a house,” says Renfro.

The company plans to foster job-promoting real estate projects and worker housing, Renfro says. St. Joe Co. donated about 34 acres to Sacred Heart Health Systems for a 25-bed hospital and emergency room, the first in town. The company plans to partner with a developer to build a 13-acre mixed-use project nearby, The Villages at Bayview. It also plans 96 apartments on a six-acre site in town.

Some new houses will sell for $250,000 to $300,000, a bargain, Renfro says, given their location near the Gulf Coast.

Over the past 10 years, St. Joe Co. has transformed itself from a timber company to a real estate company. It owns 638,000 acres in the state, and has developed a number of coastal projects. The company began an internal restructuring program in late 2007, and in June announced the departure of chief strategist and executive vice president Chris Corr, a proponent of the airport development.

St. Joe Co. has downsized, laying off 750 people, roughly three-fourths of its previous workforce, and streamed its operations. It will steer away from building homes and resorts in the future and partner with developers, executives say. Its stock closed at $34.53 on July 25, down from a 52-week high of $47 per share.

Despite the changing policy, the company will continue to oversee the Port St. Joe projects, says Renfro. “Development in Port St. Joe will span a good many years, and probably a few real estate cycles as well.”