Will There Be Another Hertz?
Experts say the region is poised for more good news.
By Lori Johnston
The coming year in Southwest Florida has a hard act to follow. In 2013, the economy continued to gain momentum with a revived housing market, lower unemployment and strong tourism numbers. On top of that, Florida Gulf Coast University’s men’s basketball team distinguished the region during March Madness, and then last summer, Hertz announced it would relocate its headquarters to Estero. Talk about giddy times.
So how can we avoid a post-hoopla let-down? Will 2014 be another feel-good year?
Well, the Eagles certainly could repeat or better last year’s performance. And Lee County has approved a $1.48 million incentive to help lure another large corporation, which has not been identified (at least by press time). And, getting back to the nuts and bolts of the economy, experts are confident that it will continue to rebound.
Here are snapshots of what economists and local industry leaders expect to happen in the region’s four major industries—real estate, agriculture, tourism and health care—and other important business sectors.
· Traditional home sales are growing (up 16 percent collectively for Lee, and Collier) while foreclosures continue to decline.
· Home sale prices have been rapidly rising (up 15 percent for the three counties) but should slow to a more moderate increase because incomes are not growing at the same rate.
· Housing starts will remain strong (268 single-family building permits were issued in the three counties in September 2013, an increase of 42 permits from September 2012).
· Urgency among buyers is slackening, which could cause the real estate market to flatten out.
· Builders are having more difficult time finding available land, with some lot prices increasing by about 50 percent, in prime, popular locations; buyers may face higher costs as a result. “The availability of developed lots in Collier County is dwindling very quickly. The national builders are buying large tracts of land,” says Mike Langella, president of FrontDoor Communities, which builds in Naples. Large national or regional builders are developing lots their own consumption, he says, so the parcels aren’t put into a system of sales to multiple builders.
· The influx of investors means that individual buyers are finding it more difficult to find properties and are getting priced out of the market again. According to Brad Hunter, chief economist/director of consulting for Metrostudy, a Hanley Wood company: “The homebuyer market divides into two groups—the haves and have-nots. The haves possess the money, savings and good credit records, he says. The have-nots would like to buy a home but can’t seem to muster the ability, Hunter says.
· Florida’s agriculture industry continues to be a major player nationally, ranking first in 2012 in the value of production of oranges, grapefruit, fresh market tomatoes, watermelon and other crops. The state grows more than 300 products on 9.25 million acres, supporting 2 million jobs. Lee and Collier are among the top 10 in citrus jobs.
· Growers should squeeze more value out of crops. The orange crop in 2012 totaled $1.5 billion in sales, up from $1.3 billion the previous year.
· The orange crop is expected to be smaller, with 130 to 135 million boxes (compared to 146.7 million boxes for 2011-2012 and falling short of forecasts of 150 million boxes).
· Citrus greening is causing growers to lose trees (down 2 percent statewide) and produce fewer crops, which could threaten jobs in Lee and Collier counties.
· Production of citrus may continue to decline locally, although offset with high prices. “All in all, citrus growers are earning as much, if not more income in the past year, even though production is down by as much as 30-40 percent,” says Fritz Roka, an economist with the University of Florida’s Institute of Food and Agricultural Sciences-Southwest Florida Research and Education Center.
· Mechanical harvesting—which has the potential to eliminate a significant amount of production costs—has faced a setback because of the stress it causes to trees.
· Health care jobs are bolstering the region’s employment base (employment in health services and education increased by 14,000 in September 2013).
· More physician practices are popping up and growing, as new residents and baby boomers demand more health care services (and don’t want to wait for care).
· Increased opportunities for “tele-health” that allow patients and health care providers to communicate virtually.
· Uncertainty—and already significant challenges—with implementing health care reform.
· Lower Medicaid reimbursements continue to be painful for physicians and hospitals.
· The region has a major need for more physical therapists, registered nurses, medical billing and collections agents, occupational therapists, speech language pathologists (identified by studies including Workforce Now, a regional research initiative, and Robert Half’s research). But will the skilled workers come?
• Tourism has helped bring Southwest Florida out of the recession, and the
number of visitors and expenditures is expected to be strong in
2014, following an 8 percent increase in tourist tax revenue (from August
2012 to August 2013). Nationally, leisure travel grew 42 percent between
2000 and 2012, according to DK Shifflet and Associates, a tourism and
travel research company.
• More folks are more willing to fly (with destinations being added).
“Travelers are being less reluctant than they had been in the past about
making their travel plans and maybe going further distances than they
had,” says Marcia Wood, research director for Davidson-Peterson
Associates, a consultant to Lee County. Prices may not have declined but
travelers have a greater comfort level. Their mindset: “OK, this is what it’s
going to cost to do this kind of vacation, and this kind of vacation is what I
want so I’m going to do it.”
• A fantastic fall could signal a sensational season, with the region’s
beaches, arts, culture, parties and Spring Training awaiting a surge of
visitors. About 55 percent of Lee County lodging/property managers
reported that fall reservations were up over fall 2012 (the level was not expressed in percentage or dollar figures, however), according to
Davidson-Peterson Associates. It’s highest response Wood has seen in
• Like home sale prices, tourism bed taxes have experienced double digit
increases, but can those amounts be sustainable?
• Water quality, as the brown, brackish water during summer 2013 may
have turned off vacationers from returning in 2014.
• The weather. Tourism officials can’t control Mother Nature, but are subject
to rainy seasons and more severe storms.
KEEPING AN EYE ON…
Construction: A continuous stream of new residents and visitors continue to strengthen the construction industry, which commands a high percentage of the workforce in Southwest Florida compared to the state. Commercial construction companies and property management firms are hiring again, says Janie Conley of Robert Half International. The businesses, stores and restaurants under construction also are connected to the workforce gaps in professional/business services, which added 32,000 jobs in September 2013, and retail trade (such as cashiers, waiters, salespersons, and retail and food prep supervisors), which added 20,800 jobs in September 2013. Other hot jobs: customer service, office administration and receptionist positions (administrative and office support starting salaries are expected to rise 3.3 percent in 2014).
Manufacturing: Southwest Florida’s firms plan to maintain and even expand their international focus.
· From 2010-2011, Southwest Florida experienced a 19.5 percent growth in exports, to $798.9 million. From 2007-2011, Naples-Marco Island exports surged by 81 percent and Cape Coral-Fort Myers grew by 53.9 percent (Punta Gorda numbers declined).
· An estimated 40 percent of all U.S. exports to Latin and South America pass through Florida, the fourth largest export state in the U.S. in 2011.
· Companies are hiring (2,000 jobs in September 2013; position such as sales representatives are also being filled) and are reporting anywhere from 35 to 50 percent in revenue growth, according to one expert. But it’s still a challenge to find skilled employees, says Betsy Allen, executive director of the Southwest Regional Manufacturers Association and CEO of Gaining Results.
Finance/Banking: The financial industry supports growth in the region, particularly related to construction. Banks are feeling better about their capitalization although they are still being careful, says Gary Jackson, director of the Regional Economic Research Institute at Florida Gulf Coast University’s Lutgert College of Business.
· Starting salaries of accounting and finance professionals are expected to rise nationally an average of 3.4 percent, according to Robert Half International research.
· The region has employment gaps in staff accountants, insurance sales agents, and securities, commodities and financial services sales agents.