A Tough Forecast

Forecasts are never easy. they’re always colored by a shade

of uncertainty, no matter how accurate the numbers and how clear the trends may

appear. And last year’s sluggish economy and the attacks on America make what’s

ahead even harder than usual to see, says Michael Timmerman, president and

chief executive officer of Feasinomics Inc., a Naples-based consulting group.

“If Sept. 11 hadn’t happened, we still would be in astyle="mso-spacerun: yes"> softer economy but I would be more

comfortable in saying, ‘OK, this is what I see.’ But this throws the general

trend totally off the wall. We’ve never had this happen so we don’t know what’s

going to happen,” Timmerman says.

Faced with a slowing national economy last year, researchers

and industry observers were collating, comparing and running trend analyses on

sales tax figures, building permit numbers, occupancy rates and the various

other data used to sketch out the coming year when the work was suddenly and

irreparably altered by the Sept. 11 attacks. Since then, the economy has

continued to slide, nudged by gloom and uncertainty.

Still, some regions of Florida have fared fairly well.

Southwest Florida seems insulated in some respects, says

Dr. David Lenze, an economist with the University of

Florida’s Bureau of Economic and Business Research. “Collier is typically quite

different,” he says. “It seems to have its own momentum. It grows so rapidly

it’s hard to predict. I could imagine it growing less rapidly at the same time

the rest of the state goes into a recession.”

Although benchmarks have shifted, the experts we called on

in five different fields—tourism, real estate and construction, agriculture,

retail and technology—agreed that some

effects and trends can be foreseen for 2002.

Tourism

Dr. walter klages is owner and president of Research Data

Ser-vices Inc., which specializes in tourism research. Its clients include

Char-lotte, Collier and Lee counties, as well as the state of Florida.

What has been the status of tourism in the past year?

If you took January through August, you would find that, on

balance, both Lee and Collier were ahead of the previous year with contractions

starting in May, June, July— nothing major, but slight decreases in the rate of

change.

What might we see in the

coming year?

Starting in Pinellas and going down to Collier, the critical

season, which is January, February, March and April to the Easter holiday, has

thus far been booking solidly. There have been very few, if any, cancellations.

That’s the good news.

We did focus groups in Chicago and, yes, there’s

apprehension about flying, but not a single one of the people we talked to

indicated that under no circumstances would they be coming and visiting. Now,

was there more intention perhaps of taking a car trip? Yes. The major holdback

was not the fear of the adults, but the traumatic residual effect that they

observed in their children. They’re saying, ‘We truly hope we’ll be visiting.

(For) a getaway for the husband and (me), we’ll definitely fly; but when we

take the kids along, that may be something where we’ll be planning a road

trip.’ Incidentally, a plurality of these people felt more in need of a getaway

than they did before 9/11.

Will they be overseas or

domestic visitors?

The European market is the long-haul market, and it is

trailing, with the exception of the British and the Irish markets. It’s

probably going to come back in balance sometime next summer, which also happens

to be the high season for these people. You’re going to see some shifts in

values again for the euro. No question that the very strong dollar had a

significant impact on that market.

Will Americans choose domestic vacation spots, such as

Florida, instead of overseas?

I would expect that. There is a greater tendency to take

domestic vacations, stay close to home. The conventional wisdom is this is the

time to go after the drive market. The reality is our fly market is incredibly

important to us and the recovery of the airline industry is of the greatest

interest. This is the time when you need to maintain your presence, your image

and the awareness of your destination.

Are there other challenges for tourism in 2002?

This is a time for first things first. There always have

been challenges in length of stay, absorbing changes, expansions in

inventory—the sheer success of the industry has brought in new properties.

Right before 9/11, the new Hyatt and many other properties had come up. This

was predicated clearly on the growth of the market, so I’m sure this is a

challenge. The aging of the baby boomers has been a challenge and the emergence

of the generation behind them, the Xers, which is more a family market, that

has been a big challenge.

What is the biggest asset for Southwest Florida tourism in

2002?

The product. The ambience. This is still a very much less

turbulent and laid-back kind of experience. People tell us this is the place

where you go and take five books along and really read them.

Real Estate and Construction

Michael timmerman has 18 years of regional experience in the

valuation and market analysis of residential and commercial real estate.

What’s your outlook for real estate and construction in

2002?

Since the second quarter of 2000, we’ve seen a softening in

the marketplace—fewer homes being sold and homes being sold at a lower price

point. Since Sept. 11 we’ve seen a dramatic slowdown in the number of sales as

well as the number of permits.

We see, also, a shift in the people who are buying to a

product considerably less expensive. They’re purchasing the multifamily

products in the marketplace, of which the inventory has been built up over the

last couple of years.

What areas might accelerate

or stagnate in residential real estate?

We’re still going to have a lot of development in the Estero

area around the university and up through south Lee County by the airport.

We’re also going to start seeing a few more things happening around Lehigh

Acres now that Daniels Road is open.

What about commercial

properties?

Commercial properties over the last year or so have softened

a little bit. Retail’s off and you’ve got inventory glut. For example, in

Bonita Springs, there’s a lot of office space that’s coming on line. The

absorption rate—the rate at which it’s being leased—is going to be a lot slower

than it was two years ago. A lot of retail facilities have been purchased or

developed and occupied in the last six to nine months. If the retail market

picks up a little bit and our season is good, those retail facilities should do

OK.

Where might we see

commercial activity?

We’re going to see more activity around the airport. We’ll

see more activity along Interstate 75 because as corporations begin expanding

this is the area they’ll be looking at because the infrastructure is here—I-75,

the university, affordable houses.

Our growth over the last 10 to 15 years has been primarily

people coming down here and buying a second home. Now the infrastructure is in

place, so our growth over the next 10 to 15 years is more commerce-oriented or

corporate-oriented, where people will be coming down here and relocating their

corporations because they like living here.

What is the biggest asset the industry has going for it in

2002?

Southwest Florida can’t be replaced. It’s doing better than

all the other places in the country. That’s got to tell you that this is a very

solid real estate market. And even though we have these changes in the marketplace,

the sky isn’t falling; we’re still in a much better position than many other

places around the country.

Agriculture

Dr. fritz roka, an assistant professor of agricultural

economics with the University of Florida, has been working for six years at the

Southwest Florida Research and Education Center in Immokalee. His research

focuses broadly on farm management, agricultural labor and some related

environmental issues.

How has the economy affected agriculture in Southwest

Florida?

The advantage that agriculture has is that it’s not

influenced by the same things that other sectors are. As someone said, only 2

percent of the population is actually in the production of agriculture, but 100

percent of the population eats, so it’s kind of like a sustained thing that

will keep agricultural producers going.

What kinds of challenges will the industry be facing?

There have been some environmental issues that people have

had to adjust to, mainly the loss [due to environmental concerns] of methyl

bromide, an important soil fumigant that commercial growers use to prepare

their land. So the cost of growing has gone up while that product is being

phased out.

The overall market has been on the tough side. There’s been

some consolidation. Profit margins have gone down. But since (growers) are

controlling more acreage and more volume, they should be able to maintain their

level of overall income.

What about foreign competitors?

Brazil would be our primary competitor with respect to

citrus.

Up until last year, orange prices had been relatively good

because of the demand for (not-from-concentrate orange) juice product. Last