The Prospects for 2007

The fallout from the skidding housing market, layoffs in the automotive industry and exotic locales vying for tourism dollars are just a few of the reasons why those in the know are reserved when discussing Southwest Florida's economy in 2007.

"Cautious, but optimistic," sums up Tammie Nemecek, president of the Economic Development Council of Collier County.

Fundamentally, the area's economy is strong, says economist Hank Fishkind, with Orlando-based Fishkind & Associates. Among the positive aspects: Hurricanes stayed away in 2006, allowing the rebuilding from storms Charley and Wilma to continue and luring visitors back to create what Fishkind and others believe will be a sunny tourist season. Employment growth is still a plus, and commercial is a bright spot in the grim real estate market. Fishkind adds that the area's economy is diversifying, with more professional services and healthcare, for example. "All of that, I think, is encouraging," he says.

On the negative side: While Southwest Florida International Airport and Florida Gulf Coast University are major attributes, the inadequacy of I-75 is becoming a liability. Fishkind says it is affecting local economic officials' ability to attract companies that provide equipment and services to The Scripps Research Institute on Florida's east coast. The business generated by that facility is going north to spots such as Port St. Lucie, which is much closer and unencumbered by I-75, he says.

"Traffic is dreadful. It's bad or worse on I-75 than it is on the east coast," he says. "That's a real longerterm issue that needs to have some attention or it will throttle the [west] coast's economic activity."

Regina Smith, executive director of the Lee County Economic Development Office, notes that the county's low unemployment rate and labor shortage present a hurdle for some employers. "While it's great that most people have jobs, from a standpoint of looking to attract companies, that sometimes can be a challenge," she says.

In October, Lee's 2.5 percent unemployment rate was the fourth lowest in the state (Collier's was 2.9 percent; Charlotte's was 3.2 percent). While population growth is a plus, Smith points out that they need to be able to show employers the workers will be available.

The closing of automotive plants in the Midwest and bankruptcies in the industry are going to have a dramatic impact on Southwest Florida's growth in the next couple of years, says Ray Kest, a professor at International College in Naples. Population in particular is not likely to meet growth predictions, as folks from the Midwest who lose their jobs, find their pension plans in jeopardy or can't sell their homes decide not to retire here.

"We're down the road getting the ripple effects of what's happening in the country, particularly in the automotive sector," says Kest.

Tourism

An uneventful hurricane season in 2006 renewed activity among people planning to spend the holidays in Southwest Florida and committing to holding meetings here during season.

"The images are out of their heads, hopefully, that the trees are down and there are blue roofs out there," says Mark Crabb, deputy director of the Lee County Visitor and Convention Bureau. "We're letting people know we're healed up and better than ever."

Captiva's South Seas Island Resort and the Marco Island Marriott Resort were expected to finish their renovations by early 2007.

Collier County tourism officials expect results similar to 2006, projecting only a 2 percent increase overall in visitor spending and the number of visitors to stay the same, says Jack Wert, executive director of the Greater Naples Marco Island Everglades Convention & Visitors Bureau. In fall 2007, Naples Bay Resort is slated to add 85 rooms to the market (cottages for weekly rentals are expected to open in early 2007), which will generate an annual economic impact of a little more than $1.1 billion. Last year it lost 147 rooms when the Vanderbilt Inn was torn down to make room for a luxury condo and 278 with the closing of the Radisson Suite Beach Resort, which is slated to be rebuilt as a Marriott Vacation Club International timeshare resort.

In Lee, where the tourism industry has a $2 billion annual economic impact, officials say they hadn't yet forecasted a percentage increase or decrease. Crabb, however, predicts an increase due to the slow summer, calm storm season and early arrival of cold weather up North.

The industry felt the effects of less-than-favorable economic trends up North, including the auto industry woes that might change vacation plans, as well as increased competition from other destinations, Wert says. Those include coastal destinations within Florida, as well as the Caribbean and even international spots such as Dubai, Cyprus and Turkey, which Crabb says are "spending some big, big bucks to get people there."

The Lee County Visitor and Convention Bureau hired a sales and marketing representative in France and already has staff in Germany and the U.K.

"Competition has grown in so many ways that we didn't even imagine. Now there are so many choices," Crabb says. "Florida used to be the place to go, see and do, but there's a lot more competition out there."

Charlotte County continues to rebuild after Hurricane Charley destroyed many of its properties. "We've been at a disadvantage because of the storm," says Betty Williams, the county's economic development manager.

"It's going to be five years; it's not an overnight fix. [We'll] take time to build better projects."

If gas prices rise again, that, along with auto industry job losses, could impact visitor numbers. Crabb notes that the area tends to attract more affluent guests who are still likely to take vacations, but might not stay as long or go out to dinner as often.

Given the outlook, it's important for the tourism bureaus, hoteliers and others relying on the tourism industry to spend promotion dollars wisely. Wert notes they're continuing with a Paradise Coast branding campaign, and updating its TV and print advertisements with new photography and images to lure visitors. Another crucial step: shifting resources from print advertising to online efforts.

Adventure-seeking baby boomers also are a tough crowd to attract. Instead of spending two weeks in Southwest Florida, some are splitting vacation time between Sanibel and Vail, Colo., for instance, or taking a break from Southwest Florida one year. "They're seeing different parts of the country and different parts of the world," Crabb says. "We have our work cut out for us."

AGRICULTURE

The region's $1 billion-plus agriculture industry is regaining ground after suffering at the hands of hurricanes and diseases.

"A lot of the trees are being destroyed because of the citrus canker [and citrus] greening. The ones that have made it through this seem to be OK," says Robert Halman, director of the Collier County UF/IFAS Extension Service. "All the vegetables are looking good this year."

Agriculture lands comprise about 40 percent of the acreage in the five-county region that includes Collier, Lee, Charlotte, Glades and Hendry.

The industry is going to continue to face significant challenges, especially on the citrus side because of pricing, Brazilian competition and disease. "Certainly the vegetables are doing a little bit better than citrus," Fishkind says.

Probably the biggest influence in the agriculture industry is the value of the land, says the Collier EDC's Nemecek. "It's profitable to do agriculture, but the value of the land is so [high] that it makes it very attractive to change that land over [for development]," she says.

"Agriculture's changing in the county because of all of the urban growth there, but it's still a very strong economy in the county because of the citrus and vegetables," says Halman.

Development is encroaching on agricultural land, but Halman says one of the results is a more diversified economy. Instead of having vegetables grown mostly in the southern part of Collier, for example, growers are beginning to move north in the county. "It's getting shifted around," he says.

Halman says businesses, especially start-ups, should focus on niches, from organic foods to goat production to horse stables.

"The livestock industry [is] starting to get more small part-time farmers in the county that are producing specialty animals, such as goats," he says.

"With the urban influence, we're getting a lot more horses; pleasure horses more than anything else," Halman adds. As a result, he's received inquiries about starting new stables for pleasure riding to serve the residential population.

Fishkind suggests that, to prosper, agricultural businesses focus on products relating to population growth, such as sod farming, landscaping and horticulture.

REAL ESTATE

As on TV's Survivor, homebuilders need to outsmart, outwit and outplay the resale market. Ross McIntosh advises that homebuilders deliver redesigned products-simply offering more amenities and features at a higher price or fewer at a lower price-and he believes some will do so in 2007. Even with those changes, sales rates and housing production are going to remain very low relative to those in recent years, the real estate broker says.

Although high prices and a glut of new homes are the problems, McIntosh points out that the region continues to create jobs and to be a desirable place for people to vacation and retire.

"By the usual measure of the health of the economic context within which housing markets operate, we're in pretty good shape," he says. "Our problem is that our prices have risen to a point where the market is resistant-either unable to or unwilling to pay the price."