With a reputation for wild swings and frightening free falls, the Florida economy is now in a period of rapid ascent, and it seems that many Floridians cannot even imagine the next down cycle. Tourism is booming again, and a steady influx of retirees and international condo buyers has ushered the Sunshine State into an era of impressive growth.
“That’s a theme with Florida throughout our history—boom and bust,” says Steven Abrams, county commissioner in Palm Beach County in south Florida. “In the recession, we suffered as badly as any part of the country. But we have caught up, and it’s exciting for us because we were so far behind.”
Florida’s tourism industry and real estate markets have rebounded, and government initiatives intended to diversify the economic base by attracting new businesses have paid off, Abrams says.
Florida’s unemployment rate, which soared to 11.4 percent during the Great Recession, has declined impressively in recent years to 6.2 percent at midyear 2014, according to the U.S. Bureau of Labor Statistics.
Florida gained more than 208,000 new jobs over the 12-month period that ended in July, placing it third behind only Texas and California.
Recent job growth statistics ranked Miami as the number-three job-creating metropolitan area in the nation, behind only the Texas juggernauts of Houston and Dallas/Fort Worth.
“We’re a growth state right now,” says Jesse Panuccio, executive director of the Florida Department of Economic Opportunity. “We’ve had a remarkable economic turnaround in Florida.”
Florida’s residential markets have been recovering from a catastrophic burst of one of the nation’s most infamous real estate bubbles. The state’s all-important vacation-home market—along with all Florida residential markets—unraveled at dizzying speed during the Great Recession.
“Our home prices were devastated. The median price fell 48 percent from the peak in 2006,” Panuccio says. Housing hit rock bottom in 2010, before rising from the dead. “What’s happened in the last four years is amazing. Home prices are up, and foreclosures are down.”
The statewide median home price dipped to almost $120,000 at the end of 2010. With its noteworthy recovery, the median rose to reach $185,000 this past summer, according to Florida Realtors, the statewide realty association.
People are coming back to Florida these days. The migration is vital for a state dependent on a strong influx of retirees, vacation-home buyers, and tourists. Now, the state’s net population growth is averaging 500 people a day, the Florida Department of Economic Opportunity reports. During the recession, the influx of newcomers had dried to a trickle.
The Miami area alone gained 64,909 new residents in 2013, a 1.1 percent gain over 2012, according to the U.S. Census Bureau. That was enough to be ranked eighth in the nation in population growth and put Miami ahead of markets such as Seattle, San Francisco, and Denver.
The influx of permanent residents is not the only surge. Tourists who come for only a week or a weekend have been on Florida-bound binges lately.
With exceptional showings in the first half of the year, Florida is expected to easily surpass 100 million tourist visitors this year, which would be a record. That represents a significant increase over the 93.7 million tourists who visited the state in 2013. Five years ago, only 81 million people came to visit, according to Visit Florida, the state’s tourism agency.
As far as tourism goes, the economic reversals and the petroleum-stained beaches from the Macondo oil spill in the Gulf of Mexico are fading memories today. Many in Florida pin a lot of the credit for the economic turnaround on the magic of the wildly popular Harry Potter novels for children. Universal Orlando Resort tapped into the phenomenon by building Wizarding World of Harry Potter districts in its theme parks. The first Wizarding World attraction opened in 2010, and families responded in droves. Universal’s attendance shot up 50 percent in the 12 months after the Potter opening, and has been exceptionally strong ever since.
“Harry Potter was a game changer, that’s for sure,” says Michael Terry, an instructor at the University of Central Florida’s Rosen College of Hospitality in Orlando.
Universal responded to the Harry Potter success by constructing new hotels to serve its Orlando parks: the new 1,800-room Cabana Bay Resort and the 1,000-room Sapphire Falls Resort, which is expected to be completed in 2016.
The entire hotel market in Orlando—which received 59 million visitors last year—has improved, with the market’s midyear hotel occupancy rate reaching an extremely high 80 percent, Terry says.
“We haven’t had a hurricane in three or four years. Gas prices are down, and may go down below $3 a gallon by year-end. It’s going to be a good year,” Terry says. “By next summer, it’s going to be incredible.”
Orlando’s growth in tourism shows promise beyond the confines of Disney World, Sea World, and other theme parks.
International Drive, which runs past Orlando’s Orange County Convention Center, is becoming a tourist destination in its own right. In addition to new hotels, retail space, and restaurants, new attractions under development include a 425-foot-high (130 m) Orlando Eye Ferris wheel and the “world’s tallest roller coaster,” a 570-foot-tall (174 m) monster.
“International Drive is booming. It’s become a prime resort destination,” says Maria Triscari, president of the International Drive Resort Area Chamber of Commerce. “It’s been developing for 40 years and we’ve come into our own.”
Florida’s tourism industry is not just about fun and games. Tourism accounts for 1.1 million jobs in the state, and tourists spent $76.1 billion in Florida in 2013, the Visit Florida agency reports.
The cruise ship industry, a key piece of the tourism picture in Florida, suffered a setback after the Costa Concordia capsized in 2012 off the coast of Italy with 4,300 people on board. The tragedy decreased consumer demand for cruise ship vacations.
But the cruise business in Florida, a state that serves as the headquarters for Royal Caribbean International, Norwegian Cruise Line, and Carnival Cruise Lines, bounced back this year. Midyear reports show that more than 2.8 million passengers passed through the Port of Miami during the first six months of 2014, up 27 percent over the first half of last year. So far this year, the ship passenger count is the highest in more than a decade, according to the Greater Miami Convention and Visitors Bureau.
Hoteliers have responded to the tourism revival with scads of new construction. The Miami convention bureau reports that 19 new hotels, comprising a total of 3,035 rooms, will open in 2014. Another 17 new hotels are expected to open next year.
Construction jobs in the Miami/Fort Lauderdale area were up 7.1 percent in August, compared with the previous year, according to the U.S. Department of Labor. Construction cranes dot the skyline of south Florida, where the condominium business is booming.
Cranespotters.com, a Miami-based firm that tracks the south Florida condo market, reports that 18 condo towers have been completed so far this year and another 70 are under construction, with even more proposed.
International buyers account for 90 percent of condo sales, and over the past two years the sales prices of Miami condos have increased 75 percent to an average of $400 per square foot ($4,300 per sq m), according to a study by the Miami Downtown Development Authority and Integra Realty Resources.
Sales are strong, but some people have begun to question whether another real estate bubble may be developing, says Miami real estate broker Matey Veissi, president-elect of the Florida Realtors association.
“Condos are going berserk. There’s not a piece of land in downtown Miami, or any place on the water, that they don’t slap a condominium on,” Veissi says. “On the other hand, even though condo sales are doing great, you can see—you can almost smell—the tide beginning to turn. We may be passing that mark where we say we’ve got too many units for sale.”
In a state where residential real estate is considered one of the key economic drivers, along with tourism and agriculture, the pop of a realty bubble could be one thing that could debilitate the regional economy.
But Abrams, the Boca Raton–based county official, says this time will be different. “With our economic plans, we have tried to make great strides so we are not so dependent on real estate and tourism for our economic future. So we can try to hedge against big fluctuations in the real estate market.”
Diversifying the economy has meant trying to develop sectors like biotechnology, health care, aerospace, and financial services. Some notable progress has been made.
The state’s economic development department touts several big corporate relocation scores. For example, earlier this year, Bristol-Myers Squibb opened offices in Tampa, creating some 600 jobs. The Navy Federal Credit Union created 1,500 jobs with a recent expansion in Pensacola and the development of two new buildings totaling 342,000 square feet (32,000 sq m) to house them. And Deutsche Bank recently created an international finance office in Jacksonville, creating 200 new jobs.
The relocation of the headquarters of rental car giant Hertz Global Holdings is bringing 700 new jobs to Estero, located on the Gulf Coast. Hertz is leaving Park Ridge, New Jersey, to occupy a new $70 million building in sunny Florida, not far from Naples. On top of that, Lockheed Martin, Northrup Grumman, USAA, Verizon, and Amazon have all chimed in with meaningful Florida expansions and new facilities.
The Florida economy has moved beyond the dark days of failure and the lingering malaise of the collapse of the real estate market, says Palm Beach Gardens, Florida–based economist Brad Hunter, chief economist of the Washington, D.C.–based Metrostudy housing research firm.
In fact, if the Florida economy were getting a report card, it would be getting pretty good marks right now, Hunter says. “The housing market did take it on the chin quite hard, but we’re beyond that. Job growth is much better, and I expect it to be good next year,” Hunter says. “So I’d say we are a solid B and headed toward an A.”
Ralph Bivins is a Houston-based freelance writer and editor of Realty News Report.