It’s been a rollercoaster year even by Florida standards, with real estate pros and investors closing their eyes and screaming in the front car.
Realtors rolled out a catchy marketing campaign to convince people it was “Time2Buy,” but customers weren’t buying it. Homes and condos piled up as economists predicted it will take two or more years to absorb the inventory. Large condo-based projects such as the high-visibility Grande Sarasotan at U.S. 41 and Gulfstream and Bradenton’s SevenShores on the northwest tip of Perico Island fell off the tracks; so did a number of builders, subcontractors and mortgage lenders. Risky loans put at least one local bank in trouble.
In early summer, just as the market appeared to be inching up, the subprime mortgage crisis hit, and many homeowners found themselves upside down. Insurance and tax relief passed in Tallahassee didn’t seem to relieve anyone.
And as if we weren’t miserable enough, London’s Financial Times pointed to Sarasota as the epicenter of an international financial meltdown caused by subprime mortgages, investor “vultures” circled and even bankers started whispering “recession.”
Those were the headlines, anyway.
Recapping this year’s top business stories would be a doom-and-gloom exercise had we not gone beyond the headlines. Long-time efforts by economic development leaders to diversify our economy started paying dividends with a number of high-tech industries opening, including Enza Zaden Research in Manatee and Rapid Pathogen Screening, a Sarasota ocular device maker. And manufacturers outside the building trade, Tervis Tumbler and Sun Hydraulics among them, added sales and workers.
While we wallowed in real estate misery, Money magazine named Sarasota-Bradenton as the top place to retire young, which makes sense when you consider that we’re also the second best place in the country to start a small business, according to Bizjournal.
Florida reclaimed its top tourist destination title from California, and Sarasota County opened a film office to snag commercial and movie work. Plans for a Waldorf-Astoria and other new hotels were announced, and Sarasota Bradenton International Airport landed new airlines and routes to bring more visitors.
Yes, it’s been a roller-coaster year. We’ve learned a hard, but old, lesson: What goes up quickly comes down just as fast. Even the most cynical prognosticators say things will level out. They always do. For all the ups and downs, this stretch of Florida still has sunshine, beaches and boatloads of baby boomers headed our way.
RESIDENTIAL REAL ESTATE MELTDOWN
There’s no way to sugar-coat the real estate market in 2007. Sales were in a slump when the ball dropped in Times Square, but by spring the market was holding steady in Sarasota—and home sales actually rose by June. By late summer, though, about 8,000 single family homes were listed in the MLS, 8 percent more than a year ago. The condo inventory was up about 19 percent, to 4,808. We had too many properties and not enough buyers, and speculators had long left the market. Relief wasn’t going to come as quickly as predicted.
By fall, Sarasota-Bradenton’s median home price was $277,700, about 12 percent lower than 2006. (Next to Punta Gorda’s 21 percent drop, Sarasota had the steepest decline in Florida, more than double the state average. (It’s worth remembering, though, that these prices were still higher than before the boom—the median Sarasota sales price was $242,900 in 2004.)
Residential construction came to a standstill, especially in ground-zero markets such as North Port, where housing permits dropped 89 percent. Manatee County’s single-family building permits declined 57 percent, and the permitting department fell $2 million in the hole and started shedding workers.
But plans for some major projects with residential components continued to progress. Despite slow sales, Pineapple Square in downtown Sarasota continued to seek residents and tenants, and Sarasota Quay came tumbling down to make way for Sarasota Bayside, Irishman Patrick Kelly’s enormous mixed-use project. Several months later, however, nothing had risen to take the Quay’s place.
National as well as local builders were hit hard. Bonita Springs-based WCI Communities shed 600 positions last year and was the target of an unsuccessful takeover by Carl Icahn. Centex Homes laid off about 150 workers in Sarasota-Manatee, Miami-based Lennar laid off about 200 workers in Southwest Florida and Levitt & Sons called for a complete Florida shutdown.
“Vulture investor” entered the local lexicon. One made offers to builders to buy hundreds of unsold new properties at 30 percent off going prices, which real estate professionals guesstimated would take about 10 percent of the inventory off the market. Those deals are in the “wait and see” department as we wind up 2007.
Entrepreneurs adapted. Horizon Realty, with offices throughout Southwest Florida, trained several hundred agents in the fine art of the short sale—finding distressed homeowners and negotiating a lower payoff with lenders to allow a quick, commissionable sale. Software developer David Moskowitz started Domuswap.com to facilitate property swaps for the Sarasota, Manatee and Charlotte markets.
You didn’t have to listen hard to hear the sounds of agony as mortgages reset. While inventories built up and prices went down, many homeowners found themselves with mortgages that had started to “adjust” to levels they couldn’t afford.
Many who bought at the top of the market in 2004 and 2005 discovered they owned a home worth less than they’d paid for and were unable to refinance or sell.
Some people walked away from their homes; others waited for the painful foreclosure process to begin. Desperate hand-made “must sell” signs started appearing on roadsides. Last summer, Florida’s foreclosure rate hit No. 2 in the nation, with Sarasota at 11 and Bradenton at 17 in the state; Sarasota had one foreclosure for every 258 homes and Manatee one for every 284.
Coast Financial Holdings was the first local major lender casualty. Problem loans and questionable practices by its former owners caused the bank to careen towards failure until it was rescued by a $22.1 million purchase by First Banks Inc. (which was pending at press time).
Coast was just the beginning of a nationwide meltdown in the subprime market, with big national companies such as First Magnus and American Home Mortgage closing offices and leaving thousands of workers without jobs.
As business dwindled for the construction and real estate industries, Southwest Florida’s low unemployment rate climbed to 4.5 percent—a tick below the national average. All sorts of businesses that depend on the housing industry suffered, too. Furniture retailers—the second canary in the mine—had 30 percent fewer sales in 2007, according to the Florida Department of Revenue.
Charlie Crist’s election to the governor’s office last year wasn’t a surprise, but his attack on the insurance industry caught both Democrats and Republicans off guard. The solution lawmakers came up with was to put the state in the reinsurance business. Hopes were high that insurance companies would pass double-digit savings on to businesses and homeowners. Much to voters’ discontent, that never materialized; ditto with tax reform.
Almost all year, state legislators scrambled to overhaul our property tax system, with both the House and the Senate firing off a series of compromise plans, but there was still no solution or certainty that lawmakers would be able to get a constitutional amendment on the Jan. 26 ballot to change the way property taxes are levied.
In the meantime, state-mandated cuts in the tax rate sent politicians to the cutting board. Both Sarasota and Manatee cut library and park hours and trimmed hundreds of jobs. The city of Sarasota hit the override button to get around mandated cuts, leading the Sarasota Landlords’ Association to seek a recall of all the city commissioners.
Everyone was expecting property taxes to go down, but then came the property tax notices in August. Because the law requires values to be computed based on the previous year’s comparable sales, assessed values went up by about 10 percent, enough to wipe out any tax rate cuts. A Sarasota Herald-Tribune study showed 89 percent of Sarasota’s commercial property owners and 75 percent of Manatee’s had higher assessments than last year.
Commercial real estate was the bright spot in the market, with Westfield Sarasota Square finishing up a massive expansion that included a 12-screen theater and 20 new retailers, and Benderson Development snagging both Nordstrom and Neiman Marcus for its upcoming University Town Center at I-75 and University Parkway.
New business parks, such as the 200-acre Creekwood East Corporate Park in Lakewood Ranch and a handful of new retail-office projects in Venice, kept commercial builders active and brought over one million square feet of office space to the area.
Some residential builders, such as Bruce Williams Homes and John Cannon Homes, turned to commercial construction to pick up the slack left by the residential downturn.
HOTELS ON THE HORIZON
2007 was the year for hotels, on paper at least, after the region lost thousands of hotel rooms to condo development in the first part of the decade because of the real estate boom. About a dozen marquee mixed-use condo projects were scrapped, and some morphed from condos to hotel rooms.
In Sarasota, the $1 billion Proscenium mixed-use project calls for a Waldorf-Astoria hotel and an 800-seat theater owned by Broadway’s storied Nederlander family. Several blocks away on Main Street and Orange Avenue, Benderson Development is planning a 16-story hotel next to its Bank of America building.
A LONGER SEASON
The tourist season was strong and steady in 2007. While visitors came in about the same numbers the first few months of the year compared to 2006, Florida was up 2.3 percent from April through June, with 23.5 million visitors, according to Visit Florida. The better news was that Florida was once again the top tourist destination in the country, a designation we’d lost to California last year.
DIVERSIFYING THE ECONOMY
Building has long been the backbone of the Southwest Florida economy, and economic development leaders in both counties have been trying hard to diversify it. Between 30 and 40 percent of jobs come from construction says Kathy Baylis, Sarasota EDC president.
From 2000 to 2006, jobs not related to construction grew from 20 to 26 percent, says Baylis. “We’re not where we’d like to be, but it’s getting much better,” she says.
The creative industry is one of five “clusters” the EDC has targeted for job growth, and to that end they brought the county’s film office under its wing.
The new Sarasota County Film and Entertainment office, headed by Jeanne Corcoran, has already brought in 100 film and commercial producers who have spent an estimated three-quarters of a million dollars in Sarasota County.
In Manatee, tomato seed company Enza Zaden Research opened a 46-acre research park, and in Sarasota County, United Natural Foods Inc. opened a 352,000-square foot-distribution facility in the mammoth former Winn Dixie distribution center off Clark Road, adding 150 jobs its first year.
STUCK IN TRAFFIC
Florida’s roads, already among the most crowded in the U.S., are getting worse. Traffic is growing at four times the rate that new lanes and roads are being built, according to a Sarasota Herald-Tribune report. Southwest Floridians waste about 3.4 million gallons of gas and $97 million annually because of congested roads, according to the 2005 Urban Mobility Report.
At the same time, the state is facing a $45 billion shortfall in its road budget. A study from the University of North Carolina at Charlotte shows that Florida has six major cities, including Sarasota-Bradenton, rated as congested—more than any other state except California. The Florida Legislature approved leasing toll roads to private companies to fund some of the needed construction.
Sarasota City Manager Robert Bartolotta, after a surreal hiring process that included candidate Susan/Steve Stanton in the national limelight and a delay while the city investigated unsubstantiated abuse allegations.
New Sarasota city commissioners Richard Clapp and Kelly Kirschner.
Jeanne Corcoran, director of Sarasota County Film & Entertainment Office.
Green building, which went mainstream as businesses saw the economic value in energy efficiency.
What’s old is new again, and developers continued to push New Urbanism—those features we love about old cities such as sidewalks, above-the-store living and connectivity—in plans from Englewood’s Northern Anchor to Bradenton’s downtown master plan.
Jade Homes, one of the first local homebuilders to close its doors in 2006, managed to regroup and finish most of its homes instead of file for bankruptcy.
United Natural Foods, a national organic food distributor, filled up a 352,000-square-foot distribution facility in Sarasota to serve the Florida market, and estimated it would bring about 250 jobs within three years.
About a dozen roundabouts are planned throughout Sarasota and Manatee counties. Not everyone is a fan; the city of Venice is fighting the county over plans for one at Jacaranda and Venice Ave., one of the city’s busiest intersections.
Fractional condos were announced for the Hyatt Residence Beach Club on Siesta Key and Tidemark Resorts Beach and Marina Residence Club on Anna Maria.
Dog lovers can make a date with Fido now that Sarasota County and the city of Sarasota permits doggy dining.
The Sarasota City Commission resurrected the idea of downtown parking meters for a “trial period.”
Pineapple Square Properties started free valet parking in downtown Sarasota.
Sarasota’s new fertilizer rules limit use in the rainy season and create a fertilizer-free buffer near waterways.
After closing for redevelopment, popular Siesta Key restaurant The Summerhouse reopened as a clubhouse for the adjacent condo community and received historic designation from the Florida Trust on Historic Preservation.
A $4.3 million Venice Boys & Girls Club opened in October after years of planning and fund raising.
The Hyatt Sarasota will remain a hotel instead of luxury condos after the Blackstone Group, a New York-based private equity fund, purchased it from Charles Githler and Hotel Associates. A $10 million-plus renovation is under way.
Touch screens. Sarasota County residents voted them out, but not soon enough. A 15 percent under vote in the District 13 Congressional race gave Republican Vern Buchanan the seat by 369 votes, which led Democrat Christine Jennings to the courts to unsuccessfully fight for the source code and a new election.
Wal-Mart in Newtown. The company allowed a land contract on contaminated land to lapse and both the city of Sarasota and the retail giant are no longer pursuing a relationship.
Katherine Harris. Our two-term U.S. Rep. for District 13 and the former Florida Secretary of State, who became a household name for her role in the 2000 presidential recount in Florida, lost her bid for the U.S. Senate.
Mary Anne Servian and Danny Bilyeu, Sarasota City Commissioners who were unseated by slow-growth candidates Richard Clapp and Kelly Kirschner. Servian is now a lobbyist for the government consulting firm of Marlowe & Company, and Bilyeu became a field representative for Congressman Vern Buchanan.
Tony Souza, the former chief executive of the Downtown Partnership of Sarasota, left to become the new development director at Sarasota Habitat for Humanity.
Cohen Way. The dilapidated public housing project was demolished to make way for 75 mixed-income condos developed by Sarasota Habitat for Humanity.
Kevin Daves as a Ritz-Carlton partner. After winning one of the longest, most expensive local civil trials against Ritz co-owners Robert Buford and Daniel Buford, Daves turned around and sold them his 20 percent stake in the project.
The Flanzer Jewish Community Center. Financial troubles forced its sale to the Sarasota YMCA, but the Y was no more successful in increasing membership and closed the facility.
Interim Van Wezel Executive Director John Wesley White resigned in August after a contentious relationship with the private Van Wezel Foundation and public advisory board.
Major condo-based mixed-use developments. Enough said.
Honeywell International, a manufacturer of speed and direction sensors, announced it would close its Sarasota plant and lay off 87 people; Wellcraft Marine eliminated 70 jobs; CFI Manufacturing–Carter Grandle Furniture laid off 100; and Cooper Industries’ WPI Interconnect Products cut 99 jobs.
Sarah Pappas, president of Manatee Community College for 10 years, says she’ll retire in June 2008.
Erik Vonk, CEO of Gevity for four years, is replaced by Michael Lavington.
Manatee Chamber was named the 2007 National Chamber of the Year and, for the third time, Florida Chamber of the Year.
High-end shoppers, now that Benderson Development has pulled in a Nordstrom and Neiman Marcus to its University Town Center.
Charlie Murphy, president of Bank of Commerce in Sarasota, is named Banker of the Year by the Florida Bankers Association.
Bargain home hunters, who are finding deals on new homes as inventory continues to climb. They might even get a plasma TV or new car thrown in to sweeten the transaction.
Asolo Repertory Theatre. The musical A Tale of Two Cities premiered in Sarasota before heading to Broadway.
Gemesis Corp. The Lakewood Ranch cultured diamond producer is doubling its 30,000 square foot headquarters.
Sarasota Bradenton International Airport added USA3000 flights from Chicago, Detroit and Cleveland, joining AirTran, JetBlue and US Airways with new flights.
Lake Erie College of Osteopathic Medicine opened a pharmaceutical college.
Consumers, as Verizon and Comcast battled it out and offered lower prices, bundling phone, TV and Internet into one high-speed package.
Motorists, with the seemingly endless construction on Venice Bypass.
Homeowners, who saw home values plummet 30 percent or more and taxes remain about the same.
Homeowners, who also had adjustable rate mortgages that adjusted higher, leaving many at risk of foreclosure.
Condo owners, who lost protection under a new state law that allows developers to circumvent association covenants requiring 100 percent resident approval to sell.
Ex-NBA referee and Lakewood Ranch resident Tim Donaghy, who pled guilty to charges that he bet on games he officiated.
Sarasota Herald-Tribune staff, as they lost their jobs to the down economy and a brave new world of Web-based media.
Southside Village businesses, which continue to suffer now that Epicurean Life has closed down some of its stores and put up a for sale sign.
AeA, a national trade association for the tech industry, ranked Sarasota-Bradenton No. 7 in overall employment in the tech sector in Florida and No. 2 in high-tech wages.
Inc. magazine ranked Sarasota-Bradenton-Venice No. 8 on a list of 393 "boomtowns," and No. 3 among mid-size cities.
Money magazine named Sarasota as one of the top places to retire young. The Feb. 16, 2007, Forbes list of the top 100 cities for jobs placed the Sarasota-Bradenton MSA at 11th place, or the third best in Florida, one step above Tampa.
BizJournal named Sarasota-Bradenton the second best market to grow a small business.
Relocate-America.com named Sarasota among the top 100 places to live.
Sarasota-Bradenton ranked No. 15 among the best places for business attraction in Expansion Management’s May-June issue.
For the third consecutive year New College of Florida was ranked one of the top five public liberal arts colleges in the nation by U.S. News & World Report in its 2008 annual survey.