Demographics Point to Healthy Real Estate Market in Florida’s Future
Moving in the right direction
Palm Coast, Florida In 2008, – August 18, 2008 – In 2008, more than 300,000 people will move to Florida, generating a demand for 150,000 for-sale and rental homes. Meanwhile, the state’s economy is likely to add 175,000 new jobs, strongly outperforming national averages. And a significant percentage of Florida’s 80 million domestic and international visitors will consider buying second homes in the Sunshine State.
“Florida will continue to lure retirees and entrepreneurs looking for a warm climate where they can enjoy an active lifestyle,” says Linda C. Loomis, sales associate, John R. Wood Inc./Realtors® in Naples. “With golf, boating, fishing, tennis, beach going, swimming and a host of other outdoor activities at their doorstep, Florida offers a healthy and appealing lifestyle.”
Economists and real estate experts interviewed by Florida Realtor® are cautiously optimistic about the state’s growth prospects for 2008. Sean Snaith, director, Institute for Economic Competitiveness (IEC) at the University of Central Florida, Orlando, expects the state’s growth rate to pick up in 2008. The institute’s recent “Florida & Metro Forecast, 2007-2010” says the state will see a distinct pickup in economic activity with a 2.1 percent increase in new jobs in 2008—nearly double the 1.2 percent projected for the United States as a whole.
“Florida continues to grow,” says Snaith, “with Orlando, Tampa Bay and Jacksonville at the top of the list in terms of employment growth through 2010.”
In the real estate sector, Snaith notes, rising prices on Florida’s coasts are shifting historic migration patterns toward the center of the state. “People are still coming to Florida,” he says, “but it’s the interior counties that are most likely to attract new residents and businesses.”
For Florida real estate professionals, understanding the trends affecting their local markets is essential to success in the year ahead, according to economist Lewis Goodkin, president, Goodkin Consulting, Miami. “The more knowledgeable you are, the more opportunities you have to profit. It’s essential to demonstrate that you have the answers that people are seeking.”
Here’s a closer look at the regional markets around the state:
Orlando
With its strong tourism sector, defense-related contracts, new medical institutions and overall commercial growth, Orlando is diversifying its economic base. In the IEC forecast, Snaith says Orlando will lead the state in personal income growth with high levels of employment and population growth as well.
Randy Martin, broker-associate, RE/MAX 200 Realty in Winter Park and 2007 president, Orlando Regional Realtor Association, points to the potential impact of a new “medical city” in the Lake Nona corridor, including UCF’s new medical school, the Burnham Institute for Medical Research, a VA hospital and a Nemours Children’s Hospital.
Anthony Crocco, director, Central Florida, MetroStudy in Orlando, says the region’s job-formation numbers will look better next year because the outflow of construction jobs has slowed.
“There are several big expansion projects that will be factors next year, producing demand for housing and bringing more people to the region, which remains relatively inexpensive,” Crocco says.
Orlando officials recently approved plans for a new performing arts center, a new basketball arena for the Orlando Magic and major renovations to the Citrus Bowl. In addition, an 18-story hotel has been proposed for the redevelopment of Church Street Station in downtown Orlando. “Those new venues add to the desirability of the greater Orlando area,” Martin says, noting the fundamental appeal of the region’s tourism sector.
“Central Florida has the benefit of Disney, Universal and SeaWorld,” adds Brian Curtis, sales associate with Coldwell Banker in Longwood. “However jaundiced you might be as a local, millions of visitors arrive with exactly the opposite view and dump a bundle of cash at [our] door.”
Tampa Bay
After analyzing unemployment rates and household income growth for 379 U.S. cities, Moody’s Economy.com recently ranked Tampa Bay 15th in the nation for business.
“The Tampa Bay area has always been a center of trade and commerce because of its location,” says Denis Romero, sales associate with Coldwell Banker Residential in Palm Harbor. “It’s historically been known to maintain a stable and affordable cost-of-living standard compared to other coastal cities. It continues to be a highly desirable place to live because of the quality of life.”
Tony Polito, director, Tampa Bay region, MetroStudy, notes that 18,000 new jobs will be added in 2007, compared with 30,000 in the prior year. “There are plenty of back-office jobs still being created, but we’re losing those construction jobs,” he says.
Next year, IEC expects Tampa Bay’s wage rates, employment and population growth to outpace the statewide average. Major businesses like Coca-Cola Enterprises and JPMorgan Chase & Co. are hiring workers, the report says. In the tourism sector, 20 hotels are planned or under construction, including a new Ritz-Carlton.
Hank Fishkind, an economist with Fishkind and Associates in Tampa, says Tampa Bay will do well, but will not match Orlando’s performance. “Job creation is strong, but Tampa doesn’t have the same strength in tourism and defense,” he says.
One demographic trend affecting the regional housing market is a change in retiree migration patterns, according to Polito. “The traditional value-oriented Midwest buyers are getting priced out of the market,” he says. “Now, the mid-Atlantic corridor is becoming more important. The prices in the Northeast also support Florida homes on the southwest Gulf Coast.”
Within the region, Polito expects Sarasota’s housing market to recover more quickly than Tampa’s. “Sellers in Sarasota were cutting their prices well before Tampa, and as a result, their figures will look better.”
Naples/Fort Myers
Another hot spot in the state’s economy will be the Naples–Marco Island metro market. “This area will experience very strong growth in average annual wage, and it will be one of few areas to experience positive housing starts,” says Snaith.
Throughout southwest Florida, job gains in healthcare, education and government have largely offset the downward effect of construction, notes Fishkind. Florida Gulf Coast University, Fort Myers, remains a major driver for the regional economy.
From the real estate perspective, Loomis says, “The area’s phenomenal job growth will stimulate net migration and long-term demographics, which in turn, will positively impact the housing market.”
Jacksonville
For 2008, Jacksonville’s population, employment and wage growth are expected to be significantly above the statewide average. “Jacksonville’s economy is very well balanced,” says Fishkind. “The total growth numbers won’t be as big as Orlando, but there will be significant job creation.”
Commercial activity remains strong in the city’s Southside market, which is seeing new office, retail and apartment development. To the south, Northrop Grumman’s manufacturing facility in St. Augustine recently received a U.S. Navy contract to upgrade the EA-6B Prowler aircraft with the latest electronic attack system.
“The Jacksonville economy has always been very stable with a large military presence,” says Dane Leslie, managing broker of Watson Realty’s Mandarin South Office. “People are still moving here because it’s a great place to live and raise a family, with very affordable housing.”
Northern Florida
Looking at prospects for the state’s capital, IEC expects the Tallahassee market to see employment and population growth just below the state average. However, the area continues to attract manufacturing and distribution facilities. For instance, FedEx recently began construction on a new $3 million cargo facility there.
To the west, the new Panama City Regional Airport will be an important stimulus for economic and housing growth when it opens in a few years. In addition, the central Panhandle’s home prices are low relative to other parts of Florida and beach communities in other states, says Fishkind.
“The region’s assets include its Southern hospitality and charm, expanding military bases as well as the overall lifestyle,” says Debby McKinney, sales associate, Roebuck Auctions in Destin.
With new manufacturing and healthcare projects under way, the Pensacola region is expected to achieve moderate wage growth in 2008. Among the economic drivers: Sacred Heart Health System is expanding into Gulf Shores, Alabama and Port St. Joe in the Panhandle, while a new manufacturing facility will open in 2008 producing specialty tire compounds for ExxonMobil Chemical Co.
Miami–Fort Lauderdale
With its dynamic business climate, the Miami–Fort Lauderdale–Miami Beach metro area ranked first in the nation on the 2007 Kauffman Index of Entrepreneurial Activity, an annual study that measures business startup activity across the United States.
In the coming year, IEC expects the Miami-Dade/Broward County area to rank near the top of the state in per capita personal income level, average annual wage and gross metropolitan product.
“Outside of the new housing sector, Miami’s economy is in very good shape,” says Fishkind. “New jobs are being created in tourism, healthcare and especially trade, thanks to the strong economies in Latin America.”
With its international business orientation, Miami–Fort Lauderdale continues to attract multinationals, such as Touchbase, a British voice and data communications company that plans to hire 30 people over the next three years for its new Miami regional office.
“Miami’s easy access to Latin America, Europe and elsewhere makes it an ideal hub for those whose lives keep them on the move,” says Michelle Cremata, sales associate with Coldwell Banker in Coral Gables.
Alicia Cervera, chairman and CEO of Related Cervera Realty Services in Miami, says Miami-Dade’s multicultural, multilingual environment makes the region “very welcoming” to international buyers. “Miami is a convenient port of entry from South America and Europe, and offers major cultural, sports and recreational events,” she says. For instance, the December Art Basel show on Miami Beach attracts affluent Europeans who tell family and friends about south Florida, she adds.
Although Broward County is almost entirely built out, the Fort Lauderdale area continues to attract new commercial investment, says Fishkind. Redevelopment projects are under way in many Broward cities, and new office buildings are under construction in downtown and suburban Fort Lauderdale.
Palm Beach/Treasure Coast
One of the state’s most dynamic submarkets is northern Palm Beach County, which is beginning to enjoy the benefits of a growing biotechnology cluster focused on Scripps Florida in Jupiter.
“We’re beginning to see significant job-creation activity,” says Brad Hunter, director, South Florida region, MetroStudy in Boca Raton. “It’s not the cavalry coming over the hill, but the biotech corridor will grow and create a solid foundation of high-wage jobs northward into St. Lucie County. That will definitely enhance the long-term value of residential properties.”
Also stimulating commercial development are new St. Lucie interchanges on the Florida Turnpike and Interstate 95. Fishkind says more than 15 million square feet of commercial space is planned along Becker Road in Port St. Lucie, including a 2 million-square-foot regional mall.
“If you look at the big suburban office nodes on I-95—Fort Lauderdale, Cypress Creek, Boca Raton, West Palm Beach and PGA Boulevard—you’ll see the next one will be in Port St. Lucie,” he says. “Some of the residential builders got ahead of themselves, but the strength of demand and a drop in new construction will help absorb the excess inventory in 2008. This is a market to watch for the future.”
Along with new jobs and development, the region will also benefit from the timeless appeal of its warm-weather lifestyle. As Marc Blasi, sales associate with Luxury Homes Florida, Palm Beach, says, “Unless people stop boating, fishing, playing golf or just lying on the beach, I think we’re pretty safe down here real estate–wise.”
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