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February 9, 2010 |
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| November 13, 2009 |
By: Mike Seemuth |
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elling the South Florida lifestyle at a discount may become an increasingly successful tactic for economic development agencies.
Lower real estate prices, in particular, are lifting obstacles to business recruitment and retention in Miami-Dade, Broward and Palm Beach counties.
“Affordable housing was the biggest impediment to economic development years ago,” said Kelly Smallridge, president and chief executive officer of the Business Development Board of Palm Beach County. But that issue has receded along with the economy.
“Companies that wanted to come into this market years ago and could not afford it are finding that the housing market is incredibly favorable right now,” Smallridge said. “It’s the same on the commercial [property] side. The prices have been dropping.”
While real estate depreciation is common in many parts of the country, “it’s clearly exaggerated in the Florida market,” she said. Some leaders of companies considering relocation to Palm Beach County believe “if they don’t come in now, they may not be able to afford to come into this market in the future.”
Economic development efforts haven’t kept South Florida’s unemployment rate from rising. The rate went from 7.7 percent in January to 10.9 percent in July and remained at that level in August and September.
Frank Nero, president and CEO of the Beacon Council, Miami-Dade County’s economic development agency, said the local unemployment rate “may still get a little worse” before easing.
But lower home prices already have given economic development agencies a tool for business recruitment and retention that was unavailable before the onset of the U.S. recession in 2007.
“We are now more affordable than just three or four years ago, particularly in housing,” Nero said. “When you have a tight labor market, 3 percent unemployment and high housing costs, it’s hard to recruit certain operations.”
Nero said the decline in the value of the U.S. dollar against the euro and other foreign currencies has made doing business in South Florida especially affordable for companies overseas.
The Beacon Council is working with about 80 companies that are interested in establishing an operation in Miami-Dade, Nero said, and “about half of those are international” companies.
One recent win for the Beacon Council was its effort to convince a gun manufacturer called Taurus to keep its manufacturing operation in Miami-Dade instead of moving to Georgia. “Quite frankly, I think the owners like living in Miami,” Nero said. “It’s a Brazilian company, and I think Miami is where they would rather be.”
South Florida’s image as a vacation destination may enhance its advantages as a business location by setting the region apart from places with lesser lifestyles. Consider the changes afoot at the Broward Alliance, which wants to work “Fort Lauderdale” into its name to broaden its marketing reach.
Bob Swindell, senior vice president of the alliance, said the organization will change its name to the Greater Fort Lauderdale/Broward County Economic Development Alliance if the Broward County Commission approves.
The Fort Lauderdale-based economic development agency conducted a survey and “unfortunately, based on the data we got back, we’re not perceived as a destination for headquarters operations,” Swindell said. “We’ve been trying to brand as Broward County and the Broward Alliance, but the reports said we really don’t have enough money to spend to generate the kind of brand equity we’ve already got with Fort Lauderdale.”
Construction job losses may finally start to ease next year
Job losses in the construction industry have remained steep this year but seem likely to start easing next year.
The number of construction companies with surplus staff to shed is expected to decline in the months ahead.
“We are seeing some light coming through the tunnel,” said Fernando Martinez, the newly elected president of the Builders Association of South Florida.
Construction employment in South Florida has continued falling by double-digit percentages in recent months, compared to the same month last year, far more than the single-digit declines in other major categories of employment.
While total payroll employment in Miami-Dade, Broward and Palm Beach counties fell by an average of 3.7 percent from April through September, versus the same months last year, local construction employment fell by a comparable average of 17.5 percent.
“Any builder, I don’t care how big or small you are, before you might have worn two hats. Now you are wearing eight,” Martinez said. “Everybody is working longer hours, wearing more hats.”
Martinez and members of his family own Caribe Homes, an idled company that illustrates the trend in its industry. The Homestead-based residential construction firm stopped building homes last year and got rid of almost its entire staff. Martinez now works mainly as a real estate agent, doing business as Caribe Realty in Homestead: “That’s what’s paying my bills.”
Caribe Homes has 10 employees now from a peak of 110. “It’s probably been one of the most painful things that we had to do,” Martinez said of Caribe Homes’ retrenchment. “We’re a small company, very family oriented, and we had a lot of employees that were family.”
As more construction companies eliminate jobs and operate with shrunken staffs, the industry’s employment will erode at a slower rate.
The Institute for Economic Competitiveness at the University of Central Florida has forecast that year-over-year job losses in South Florida’s construction industry will slow next year before ending in 2011.
The institute expects construction employment in South Florida to bottom out at 101,500 jobs in the first half of 2011 and rise to 102,100 jobs in the third quarter of 2011.
Forecasts of taller peaks in unemployment may persist
How much more will Florida’s unemployment rate rise? Not even the state government is quite sure.
The state recently forecast that Florida’s unemployment rate will rise to 11.4 percent next year before it starts descending.
But the Florida Legislature’s Office of Economic and Demographic Research, the agency that regularly updates the state’s official economic forecast, consistently has underestimated the peak level of unemployment.
In July, for example, the agency forecast that the state’s unemployment rate would peak at 11 percent next year. The rate rose to 11 percent in September.
In March, the agency estimated that Florida’s unemployment rate would peak at 10.2 percent next year. In October 2008, the peak estimate was 8.1 percent.
Next Friday, the state Agency for Workforce Innovation will report whether Florida’s unemployment rate rose further in October.
That report will include South Florida’s October unemployment rate, which may top the tri-county area’s 10.9 percent rate in September.
Temporary employment agency Manpower surveyed the fourth-quarter hiring plans of South Florida companies and found that 15 percent planned to cut their payrolls and 73 percent expected no change in the October-December period.
Preview
INVENTORIES: The Census Bureau will report the September level of business inventories on Monday. Business inventories in August were 1.5 percent below the July level and 13.3 percent less than in August 2008.
HOME BUILDING: Housing construction starts in October will be reported Wednesday, by the Census Bureau. Building permits issued in September for privately owned housing units were 1.2 percent below the August level and 28.9 percent fewer than in September 2008.
ECONOMIC INDICATORS: The Conference Board will release its October index of leading economic indicators on Thursday. The index rose 0.4 percent in September from the August level, the sixth consecutive sequential increase.
LOCAL UNEMPLOYMENT: The state Agency for Workforce Innovation will release the October unemployment rates for Florida and its metropolitan areas on Friday. The state’s unemployment rate rose to 11 percent in September from 10.8 percent in August. South Florida’s unemployment rate was 10.9 percent in September, unchanged from August.
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