By S. Alison Chabonais

Few Southwest Florida companies have yet to feel the impact of the present slowdown in the national economy. Several local businesses seem unconcerned in the short-term and voice a wait-and-see attitude about the remainder of 2001.

“Business has been so good for so long that it will take a real wakeup call to turn that,” said Dr. Bradley Hobbs, associate professor of finance and economics for Florida Gulf Coast University’s College of Business.

“Until the stock market got hit, no one believed in an economic slowdown,” said Laura Holquist, senior vice president with ALLETE Properties.

Economists estimate that the current downturn, following an extraordinary period of growth, will continue for 18 to 24 months. The good news is that this business cycle differs from preceding cycles as far back as World War II, so effects are ameliorated. “We’ve seen major structural change and today’s economy is operating differently,” observed Florida economic consultant Dr. Hank Fishkind, president of Fishkind & Associates.

Business owners and managers report that activity continues to perk along. At present, they are maintaining expected levels of income, and in some cases exceeding last year’s numbers. Residential real estate likely will serve as a bell weather sector should the untoward economic shift blow through the region.

Real Estate Bell Weather

Overall, Fishkind predicts less buoyant markets for residential real estate. Developers can expect some slowing in sales of high-end condominiums and multi-family housing. Single family homes, because built to contract, risk little speculative inventory. With available mortgages and favorable interest rates characterizing this nontraditional cycle, homes up north should continue to sell. Retirees, having secured the bulk of their wealth in fixed investments, will continue to transfer here, undeterred by economics.

Holquist, however, foresees a dip in demand for $200,000+ single-family houses over the next two years should the economic slowdown continue. Baby boomers, invested heavily in equities, are feeling less prosperous and may pare spending to the $150,000 range. Yet they likely will continue to buy real estate, nerved by the perception that land is disappearing. According to C.J. Hueston of Corporation Dimensions placement services, the local influx of mid-career professionals has doubled in the past 12 months.

Paul Sands of Grubb & Ellis|VIP D’Alessandro reports a “rocking demand” for commercial real estate. He’s noticed that investors are diversifying by allocating 25 percent of their portfolios to commercial properties. That’s up from 10 percent. Southwest Florida’s a top pick.

Retail space isn’t as rosy a picture. With an abundance of new space, older buildings must refurbish or lower rents to compete. Downsizing of businesses is slowing the absorption rate.

Other Sectors Heed The Bell

Ben Conti, owner of Sunbelt Office Furniture, is glad he downsized staff and warehousing this past January. With costs under control, he’s holding his own. He has noticed that fellow business owners who planned to retire early are instead staying hands-on in order to maintain levels of personal income, since their portfolios have dropped in value.

“Manufacturers’ sales reps have been singing the blues in this uneasy market,” observed Conti. “No one is going bankrupt, but manufacturers aren’t as cocky as they were a year ago. They’re taking what dealer orders they can get.” Conti’s current boon is large area companies and schools furnishing new facilities.

Likewise, John Sanderson, general manager of TechServices, hasn’t seen any delay in spending on technology training budgets by Southwest Florida’s larger corporations. Lisa Davidson, regional vice president of SAMAS staffing services, said her company even benefits from economic slowdown.

Pelican National Bank concentrates its business on commercial real estate loans and hasn’t seen a slowdown yet. President and CEO Michael Surgen is alert to the national pinch on bank profits, resulting from lowered interest rates, likely to affect first and possibly second quarter earnings. He looks for improvement the second half of 2001 as banks’ cost of funds catch up. “We haven’t felt an effect of the slowdown, but we would if it continues,” he said.

Advanced Air & Refrigeration revenues were up 40 percent in 2000 with another 40 percent rise on track in 2001. New construction installations are going strong, accounting for half of sales. Owner Bill Blaze observed that last year, bids were available whenever anyone wanted them. “This year general bids are off a bit, but we don’t need the work.”

Richard Grant, shareholder in Grant Fridkin Pearson Athan & Crown, P.A. isn’t concerned, though he’s aware that part of their practice, such as real estate development and construction, is affected by the economy. He attributed the firm’s most recent “best year” in it’s six-year history to a broadening practice dovetailed with regional growth. “We’re busier than ever,” he said.

Bottomline, concluded Laura Holquist, “I don’t see the current economic slowdown lasting long enough to hurt Southwest Florida across the board.”

S. Alison Chabonais is a freelance business writer.