A new dental laboratory in Bradenton, a film studio in Sarasota and a biofuels company in Fort Myers are bringing new jobs to Southwest Florida. Other economic signs of life include a strong and steady healthcare sector, a better winter hospitality season and increased demand for luxury homes and condominiums.
“The worst is behind us,” says economist Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida in Orlando. “But the economic recovery will continue to be tepid for the next year.”
On a statewide level, Snaith projects an increase of about 63,000 new jobs in 2011. That would be a welcome change from the job losses of the past four years, but not enough to reduce Florida’s double-digit unemployment rate.
The same holds true for two other key barometers: population growth and housing starts. Florida’s population will grow by 140,000 in 2011, compared with 100,000 this year. That’s semi-good news for the real estate, construction, banking and retail industries, but a long way from the 300,000-plus annual growth in the 2000-2004 boom years. Snaith expects Florida’s housing starts to triple in 2011, from about 20,000 to 63,000, but again, those numbers are far below those of a decade ago.
“Southwest Florida has been hit particularly hard by the housing bubble,” Snaith says. “That points to the need to diversify the region’s economy and look for new ways to add jobs here.”
That process is already occurring, at least on a small scale. Sanborn Studios (see story on page 28) recently opened a new 30,000-square-foot production facility in Sarasota’s Lakewood Ranch community and plans to hire more than 100 people in the next three years. An even larger TV and film complex could be constructed in the future.
In Fort Myers, Algenol Biofuels Inc. opened a plant off Alico Road to produce low-cost ethanol and “green” chemicals from algae. To date, the company has invested more than $40 million in R&D and plans to build a team of more than 100 scientists and engineers.
Algenol is the first tenant in Florida Gulf Coast University’s Innovation Hub (iHub), a 241-acre site adjacent to Southwest Florida International Airport designed to attract “green energy” companies. “It’s going to be a key piece defining Southwest Florida,” said FGCU president Wilson Bradshaw at the April groundbreaking. “It will not always be about construction and tourism. Certainly, those will be there, and agriculture will be there, but now this is a new dimension.”
Snaith says the new Fort Myers research park presents an opportunity for the region to attract new investment in 2011. “A university-related research park has been a successful model in many places, and it could spur innovation and job creation in Southwest Florida as well.”
As the region looks ahead to 2011, healthcare will continue to be a positive contributor to economic growth. In Sarasota County, RFMS Inc., an Illinois company, plans to build a $26 million assisted-living center off Desoto Road. The new center is expected to create 175 jobs in the next two years.
“People always need healthcare services,” says Pernille Ostberg, president and CEO, Matrix Home Care, which has offices in Bradenton and Venice. “We’re already seeing the seasonal influx in population here, which is increasing demand for home healthcare services at all age levels.”
Naples-based Kraft Construction Inc. is building a new Veterans Administration Outpatient Clinic in Cape Coral with completion expected in late 2011. The 220,000-square-foot clinic will eventually replace the VA’s current Fort Myers facility and have about 400 positions.
Manufacturing is another promising economic sector, according to Snaith.
“For the first time in a decade, our state will see job growth in manufacturing,” he says. “A weak U.S. dollar is making it easier to export Florida products to international markets.”
On a regional level, Natural Prosthetic Dental Lab Inc. in Bradenton recently announced plans to expand its facility and hire 283 employees in the next five years. Through a partnership with 3M, NPDL has invested in a digital technology scanning system that will bring the production of dental crowns, bridges and implants back from China. Announcing the $10 million investment, Eric Grimes, president and CEO, says, “We are on the leading edge of ushering in the digital revolution of dentistry.”
Housing and real estate
While foreclosures and distressed sales will continue to put downward pressure on Southwest Florida’s housing market, there may be a comeback in the luxury segment. That’s because most buyers of $1 million-plus homes and condos have the cash resources and the high credit rating needed to complete the transaction.
“The luxury market is picking up steam again, as savvy investors recognize the opportunity,” says Michael Saunders, CEO, Michael Saunders & Company. “That includes international buyers who are still flocking here for the quality of life and investment opportunity. We are cautiously bullish about the prospects for 2011, as many upper-end prospects who did not buy in 2010 have scheduled return visits next year.”
In the retirement market, Snaith says most “snowbirds” are not yet able to sell a home “up North” and make the move to Southwest Florida. “Retirees have recovered some of the wealth they lost in the stock market in 2008, but there hasn’t been a rebound of housing values nationally.”
On the commercial side, new construction is expected to be minimal throughout the year. “There is an abundance of distressed office, retail and industrial properties on the market today,” says Ross W. McIntosh, a Naples real estate broker. “I expect those markets to remain flat throughout 2011.” Apartment communities have attracted the most attention from investors, he adds.
A flat year
It’s not just real estate that is facing another flat year. Banking, retailing, services, distribution—most other economic sectors will simply be holding their own, according to economics professor Gary Jackson, director of FGCU’s Regional Economic Research Institute. “Nationally, the recession ended in June 2009, but Florida and our region are lagging behind,” he says. “We will see a gradual recovery, but unemployment rates will stay high for several years.”
The next year could also see a more stable political climate that encourages increased investment. After the November election results, the U.S. Congress appears less likely to enact new regulations, and incoming Gov. Rick Scott is perceived as a pro-business executive.
“Now that the election is over, the psyche of the consumer in Southwest Florida is also a little more clear,” says analyst Michael Timmerman, senior associate, Fishkind & Associates, Inc., in Naples. “The stock market is up, and people feel more comfortable in buying real estate and making other major purchases.”
Timmerman expects the winter season to be stronger than the past few years. “We will have a greater influx of visitors than last year, which means more traffic for restaurant owners, retail stores and real estate brokers. We’re also seeing developers start a few new residential projects.”
Of course, there are still a few wild cards that could throw off the predictions. Take the Gulf oil spill, for example. That environmental disaster dropped out of the headlines after BP finally shut down the well last August. But there are millions of gallons of oil still lurking in deep water. A change in currents or a 2011 hurricane could bring those oil plumes back into the news, and perhaps onto the Southwest Florida coast.
But as Southwest Florida moves through the year, it appears likely there will be more business opportunities ahead. “Many companies have had to re-evaluate their business models during the recession,” says economics professor Jackson. “Now, they can focus very clearly on how best to create value for their customers. This is a great time to be creative and retool for the future.”
Top Business Opportunities
If you’re looking to start a new business or grow your company in 2011, here are six opportunities to consider.
1. Temporary staffing
In today’s climate, many businesses want to expand their operations without necessarily adding permanent staffers. Therefore, they turn to temporary staffing firms as an interim solution. “The temporary help industry should move ahead in 2011, because employers often hire temps before permanent workers,” says Rebecca Rust, chief economist, Florida Agency for Workforce Innovation in Tallahassee.
2. Healthcare technology
Regardless of the ultimate fate of federal healthcare reform, the electronic medical record (EMR) is on the way. But integrating separate information systems is a major challenge for hospitals, physicians’ groups and other healthcare organizations—and that’s just one of the opportunities in healthcare technology. “There are opportunities within the healthcare industry for IT specialists with forward-thinking skills,” says Michael Timmerman, senior associate, Fishkind & Associates, Inc. in Naples.
With new residential construction at a standstill for the past three years, many homeowners are adding new bedrooms, re-doing the kitchen or embarking on other improvement projects. Foreclosure buyers also need remodelers to repair the properties before offering them as rentals or moving in themselves.
4. Sales support
Most Southwest Florida businesses would love to see an increase in sales from a commission-based sales force. That creates opportunities in the sales and support sector. As financial planner Phil Couture, president, Couture Financial, Inc. in Sarasota, says, “Whatever your product, you have to sell it to someone. If you don’t have customers, all you have are stockpiles of assets on the shelf. It’s your sales team that brings in the revenue.”
5. Career training
In a difficult job market, many Southwest Florida residents are going back to school to improve their skills. That provides opportunities for computer training, foreign language and trade schools. “Our one-stop career centers are very busy providing training and retraining services,” says Rust. “Many have added satellite offices or extended their hours.”
6. Custom homes
Affluent residents are taking advantage of market conditions to build the homes of their dreams, according to Michael Saunders, CEO, Michael Saunders & Company. “We are also seeing a number of high-end luxury homes taking shape on numerous infill parcels throughout the city,” she says. “This shows that both builders and individual homeowners have the confidence to not only buy property but to build homes now.”
Three Ideas to Turn Your Business Around
1. Beef up your marketing. If your competitors have cut back on their advertising programs, you may be able to increase your market share. “While everyone has to be careful with their financial resources, you do have to spend money to make money,” says financial planner Couture. “That’s how you increase your sales, grow your revenue base and bring in new customers.”
2. Invest in your people. In a slower-paced market, employers can send their workers back to school to learn new management, sales or production skills. It’s also a good time to bring in experienced people who may have been laid off by a previous employer.
3. Bring in new capital. If your business is running short of funds—or if there are new market opportunities that could be tapped—it may be time to bring in a new equity partner. While that can be a hard decision for an entrepreneur, ask yourself whether it’s better to have a 50 percent share of a dynamic, growing business or 100 percent of a company that goes under. In this market, having adequate capital can make the difference between success and failure.
Biggest Business Challenges
Southwest Florida businesses face three major challenges going into the new year.
Credit. It’s still difficult for a small or mid-size company to get a new line of credit to support its ongoing operations or a loan to finance new equipment or the opening of a new office. “My personal experience is that money is still hard to get, especially for small businesses that need operating capital,” says planner Couture. “I’m hopeful the credit markets will improve in 2011.”
Health insurance. In addition to the rising cost of health insurance premiums, the region’s businesses are concerned about the long-term impact of national healthcare reform. “That’s a big issue for employers,” says Gary Jackson, director of FGCU’s Regional Economic Research Institute. “Everyone is wondering what the new Congress will do next year.”
Market uncertainty. Many Southwest Florida businesses have put their growth plans on hold until they feel more confident that the economic recovery has picked up steam. Couture adds that uncertainty about the nation’s tax climate, as well as national healthcare reform, contributes to a wait-and-see attitude.