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Business owners might want to put plans for any extended summer vacations on hold this year.

The business cycle is taking on a year-round nature in Sarasota and Manatee counties, says Christopher Westley, director of the Regional Economic Research Institute at Florida Gulf Coast University. Year-round residents, from millennials to retirees, and the draw of the arts, beaches and sports venues are contributing to our 12-month market. In fact, the region now experiences fewer seasonal fluctuations than other parts of Southwest Florida and the state.

Overall, Florida is not a bad place to be in 2016. Starting in 2015 and through 2018, the state’s economy is expected to expand at an average annual rate of 3.2 percent, according to the “Florida & Metro Forecast” by Sean Snaith, director of the University of Central Florida's Institute for Economic Competitiveness. And retailers should feel optimistic. The recovery in the labor and housing markets and lower gas prices are factors contributing to a projected average 4.7 percent retail growth pace during 2015-2018.

For more on the local and state economy, we asked experts to peer into their crystal balls and give us the good, bad and maybes for the coming year.

What to Watch

Partisan economic strategies tied to the presidential election year always stress business owners because of their unpredictability. Chalk it up to the “political business cycle,” says Westley, a period that typically brings heightened economic activity and then a correction. “I suspect a lot of manufactured, unsustainable, credit-induced growth to take place nationally,” he says. “That’s usually what the governments do during election years.” Our area should grow at even higher levels than the nation does during the election, with construction and real estate as the leading sectors.

Positive indicators for the construction and development industry center around major projects with multiple phases that will take 10 to 20 years before build out. Among them: continued development of the University Town Center area by Benderson Development at I-75 and University Parkway, the master-planned Lake Flores community by Whiting Preston in west Bradenton and the planned $197 million IMG campus expansion.

“Right now, we look like we have some healthy growth. The housing market isn’t nutty like it was before. My concern is that we’ll turn that corner and we will become nutty,” says Westley, since Florida and our region overheat during a boom and experience a greater correction during a bust.

Now that the Federal Reserve has increased interest rates, the residential sector should brace for smaller levels of investment by homebuyers. The region is likely to take a ding, but should still have a healthy growth rate, says Michael Snipes, an economics instructor at the University of South Florida, Sarasota-Manatee.

Global issues could present challenges for businesses with an international clientele. Economic instability in Europe could have a negative effect on exchange rates, which could make visiting the United States more expensive and could impact decisions by foreign home buyers. “Some of that could be offset by some of the lower cost of living that we have here,” Snipes says.

Job Growth Ahead

Unemployment rates in both counties hit their lowest levels in several years in 2015 (4.6 percent in Manatee and 4.5 percent in Sarasota, down from a high of 12.7 percent). The job forecast is brighter for young adults, relocating professionals and semi-retired residents. Uneducated, untrained or unskilled workers will have limited options. The state’s labor force is expected to grow by an average of 1.7 percent from 2015-2018. Snaith’s report notes that wages and salaries in the state are projected to increase from $398.9 billion in 2015 to $421.8 billion this year to $467.5 billion in 2018.

Light manufacturing, “green” innovators and health care services are among the growth sectors Snipes sees as bright spots.

An analysis by the Florida Chamber Foundation shows that up to 50,000-plus new jobs could be needed in Sarasota and Manatee counties by 2020 and more than 81,000 new jobs by 2030. “Those who may have a hard time in some other part of the country finding a job certainly have some hope here,” says Jerry D. Parrish, chief economist and director of research for the Florida Chamber Foundation. Manatee is projected to create twice as many jobs partly because the county’s population growth is expected to exceed Sarasota’s growth.

One looming labor shortage economists and industry leaders are watching is in the education field. As the region’s population continues to grow and more schools are built to accommodate the in-migration of families, finding classroom teachers could be a struggle.

Professionals who can dictate their own schedules or split time between cities may find it harder to take a break. Real estate firms such as Premier Sotheby’s International Realty find that associates are spending summers here, instead of in other locations, because of the consistent client base and busy workload.

What’s Next for Tourism?

Visitor levels in Sarasota and Manatee continued to set records in 2015. Tourism will remain the backbone of the region, closely tied to general economic conditions, Snipes says. Parrish suggests that communities can diversify the tourism industry and get more dollars per visitor by catering to higher spenders, including international visitors, and expanding efforts in hot areas such as ecotourism and agritourism.

“Tourism is a pretty low-impact industry where you have people who come in and visit, but they don’t use services like schools,” he says. “It’s a good way to increase the tax yield through property taxes from hotels and through sales taxes as visitors spend their money.”

Westley is watching the growth of Punta Gorda Airport, with more flights through Allegiant Airlines, wondering how that could impact traffic volume at Sarasota Bradenton International Airport. In 2015, SRQ reduced air carrier fees to help grow passenger numbers.

Long-term Expectations

In Florida, year-over-year payroll job growth is expected to average 2.2 percent over the next three years, according to Snaith’s report. Job growth has peaked and is expected to lose momentum, he writes, but will still outpace national job growth through 2018.

Over the next 15 years, Manatee County is expected to grow faster than the state average, partly because government is allowing for more growth and density than in Sarasota. Approximately 45,000 apartments, condos and houses are planned to be developed in Manatee over the next decade.

Parrish, meanwhile, is concerned about fewer 50- to 64-year-olds living in the region over the next 15 years, which could impact tax revenue and markets, such as second homebuyers. He doesn’t have an explanation for this expected trend. Manatee has a loss of 3,402 people aged 50 to 60; in Sarasota, it’s 12,623 people aged 50 to 64, between 2015 and 2030. Meanwhile, a growth in individuals ages 65 and up (see charts on page 45) could mean those residents will be spending more on services, which typically are not taxable, compared to goods, which are taxable.

“When you lose people in this age category, you may lose a lot of spending power,” Parrish says.

Job Growth

8,128 to 26,575 new jobs in Manatee County by 2030

18,666 to 54,603 new jobs in Sarasota County by 2030

SOURCE: Jerry D. Parrish, chief economist and director of research, Florida Chamber Foundation

We’re Getting Older

Most of the projected population growth by 2030 is in the 65-plus age group.    

Manatee County
Ages Percent increase Number of people Cumulative
60-64 18.4 4,608 4,608
65-69 41.0 10,177 14,785
70-74 66.2 13,673 28,458
75-79 94.3 13,457 41,915
80-84 49.6 6,069 47,984
85 and up 29.1 3,353 51,337
SOURCE: University of Florida Bureau of Economic and Business Research (BEBR)

 

 

                                                   

Sarasota County
Ages Percent increase Number of people Cumulative
60-64 -3.2 1,042 -1,042
65-69 27.3 9,293 8,251
70-74 42.9 13,255 21,506
75-79 73.6 16,636 38,142
80-84 38.7 7,631 45,773
85 and up 26.5 5,363 51,136
SOURCE: University of Florida Bureau of Economic and Business Research (BEBR)

RETAIL: Mark Chait

 

Executive director of leasing, Benderson Development, whose University Town Center project includes  the 800,000-square-foot mall and shops, restaurants, entertainment district and hotels under development

 

“Our occupancy rate is over 98 percent in the University Town Center area. We expect that next year, demand will keep increasing. Housing starts are way up. We have a growing population that’s affluent, and it’s certainly in an area that people want to be. Our demographics are getting younger, so that appeals to certain retailers. As our population grows, retailers are looking forward. We’re continuing to build and add space and add great new tenants.”

 

REAL ESTATE: Judy Green

 

President and CEO, Premier Sotheby’s International Realty, a division of The Lutgert Companies with more than 800 associates and employees in 26 locations along the Gulf Coast and in the Carolinas

 

“There is so much new construction going on. That’s really increased the availability of properties. We’ve had an increase in buyers in the higher price range ($1 million and up); $400,000 to $600,000, that’s your sweet spot in the market. While we’ll stay strong, I don’t think we will see the price increase that we’ve seen over the past couple of years. It’s got to level off to be secure.”

 

CONSTRUCTION: Mary Forristall

 

President, Forristall Enterprises, a general contracting firm based in Palmetto, and 2015 chair of the Gulf Coast Builders Exchange

 

“Our construction industry will continue to see growth well past 2016. The challenges are the same as they were nine to 10 years ago during the boom: a shortage of affordable worker housing and good employees who are able to pass a drug test and have a clean license and be a legal resident of the U.S. A new challenge is going to be financing. Our banking restrictions have loosened up somewhat, but are still not exactly easy.”

 

BANKING: Mike Moschella

 

Market president, Hancock Bank, a Mississippi-based institution with branches in Sarasota and Manatee

 

“In 2016 we expect the lending businesses to continue to increase, both in residential and commercial lending. To take advantage of this trend, we have expanded our Sarasota Business Financial Center by adding a mortgage lending team, an additional private banker and an additional commercial banker. When interest rates rise, we could see the growth rates slow.”

 

TOURISM: David Teitelbaum

 

President, Teitelbaum Developers, a developer, manager, marketer and realtor in the Anna Maria Island real estate, hospitality and tourism market

 

“Our bookings in place for 2016 are on track to make 2016 even better than 2015, which was a great year. The main challenge and opportunity for our sector are to keep the business pace that we have experienced in the last few years. We have to make sure that we are handling the increase in tourism to the island and area in a way that we don’t negatively impact the old Florida feel of the island and the great laid-back atmosphere.”

 

MANUFACTURING: Jennifer Behrens Schmidt

 

President, Atlantic Mold & Machining Corp., based in Venice, and immediate past president of the Sarasota-Manatee Manufacturers Association

 

“Florida manufacturers may see growth at a slightly higher rate than the U.S. average due to an increasingly manufacturing-friendly business climate. There is still a skills gap. Many manufacturing employers have high-paying, rewarding career opportunities available that go unfilled due to a shortage of qualified and skilled workforce.”

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