We’re hearing a lot lately about how Florida might never return to the good old days of booming commercial real estate values and stabilized occupancy. The experts aren’t buying any of that.
“Florida has always been very volatile in its cycles. We’ve always gone down hard, but we’ve always come back strong,” Larry Richey, senior managing director with Cushman & Wakefield in Tampa, told me for an upcoming article in Real Estate Forum. He sees absolutely no reason why the Sunshine State can’t rebound and regain as quickly as in past downturns.
Let’s compare where we’ve been with where we are now. Florida has always been seen as a good business climate because of its tax structure (which, granted, is now hurting because of the economy) and favorable office rents (around $20 per square foot in most markets for decent space). Those aspects haven’t changed.
The biggest knock Florida had against it in the past decade was housing prices, which were considered beyond the reach of new employees moving to the state. That problem seems to have corrected itself, hasn’t it? And those once-expensive urban condominiums are now reasonably priced apartments.
Apart from a few frigid weeks lately, it’s normally sunny and in the 70s down here, making us the envy of every snowbound state. Hurricanes are still our biggest weather threat, but we haven’t had one for going on five years now.
There was some talk earlier about Florida losing population for the first time since World War II, but Richey makes a good point: 58,000 people moving out is miniscule compared to the 18.8 million residents still here. (That’s why it’s a good idea to respond to this year’s Census, so we’ll have a more accurate picture.)
Want another opinion from an outside observer? Robert Bach, senior vice president and chief economist with Chicago-based Grubb & Ellis, was down here recently and says he believes Florida can become a strong growth state again in the next three years.
“The recovery here may be delayed because so much is dependent on the housing market and population growth,” Bach told me during a stop in Tampa. “But long term the prognosis is good because the baby-boom generation is aging and that’s going to provide a steady stream of relocations down here.”
That’s good news for the state’s battered housing market, but Bach also points out that those retiring boomers still have to sell their homes wherever they are coming from. He also notes that Florida remains a popular spot for international investment, but developers shouldn’t get over-excited and overbuild the way they did with condos in South Florida: ” That story line worked for maybe one building,” he says, “but not 50.”
Agree or disagree? Got your own take on this? Feel free to post your thoughts in the comments section.