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Coffee Talk
+ Area construction firms look past condos
Sarasota-based construction executive John Wiseman says he's not going to leave a candle burning in the window for the dark Gulf Coast condo market.
Still, Wiseman, president of the Southeast division of CORE Construction Services, needs to light a new revenue source - just like his construction brethren that in the good times relied heavily on condos. Wiseman has settled on putting more focus and effort into the company's repair work division, something he's calling the three Rs of Commercial Contracting: Rehab, Renovation and Retrofitting.
"It's something we've been doing all along," says Wiseman, "but now we are going to be more aggressive with it."
Wiseman isn't alone in going the way of renovation. Mark Hawkins, who runs Sarasota-based general contracting firm Hawk's Nest Construction, is also opening a renovation arm, albeit on a smaller scale then CORE.
At Hawk's Nest, Hawkins and his partner, Craig Hoffman, are opening Safe Homes/Home Repair by Craig. Hawkins hopes the division will be able to capitalize on the My Safe Florida Home program, where the state is offering up to $5,000 to homeowners who add hurricane resistant features to their homes.
Meanwhile, CORE is going to actively pursue rehab jobs statewide now, Wiseman tells Coffee Talk, as opposed to just waiting for a certain time period to lapse on buildings and then going after the work. That includes marketing the service to condo associations and condo complex owners. Says Wiseman, who doubles as the president of the Florida Home Builders Association: "We are trying to create a market for ourselves."
The efforts have begun to pay off. CORE crews are already working on two rehab projects worth more than $8 million, one involving a senior condo building in Bradenton and another one in Palm Beach. The 70-year-old company, with Florida offices in Naples and Orlando in addition to Sarasota, is bidding on several other rehab projects, too.
The company has three pitches to its three Rs division: First, retrofitting might be a legal necessity, to bring older buildings up to new statewide hurricane protection codes; second, a rehab project could turn older buildings into more energy efficient models, capitalizing on the current green-building push; and third, a renovation of any commercial property, not just a condo building, can lead to new tenants and even higher rates.
In addition to Florida, CORE Construction has offices in Arizona, Illinois, Nevada and Texas.
+ Alico-Ginn deal a clue
to real estate future
To get a sense for when the real estate market will rebound in Lee County, take a look at the recent restructuring of a deal between Orlando-based developer Ginn Development and Alico, the giant agribusiness headquartered in LaBelle.
From 2001 to 2003, Ginn agreed to buy 5,609 acres near Florida Gulf Coast University from Alico for $130 million. Alico, which financed part of the deal, holds two notes totaling $65.9 million and has granted Ginn options on rest.
But because of the real estate downturn, Alico agreed to restructure the agreements so that Ginn will start making the bulk of the principal payments starting in 2009 rather than in 2008. It also pushed back by one year to 2011 a $26.6 million balloon payment Ginn must make.
Judging by the extension of the terms, it appears that both sides in this deal expect 2008 will be another tough year for developers, builders and landowners. The big money's banking on a turn in 2009.
+ And now live,
from Tampa Bay, it's . . .
With just the perfect mix of being in the right place at the right time, almost anything can happen.
For instance, Review Executive Editor Rod Thomson was in Tampa last week as part of a promotion by 860 AM WGUL and 930 AM WLSS. The Salem Network stations were hosting a meeting for nationally syndicated talk radio host Hugh Hewitt, who was also scheduled to broadcast his live program from Tampa.
Christopher Gould, general manager of the radio stations, put Hewitt and Thomson together for a short interview. While discussing Florida issues shortly before the radio program was scheduled to begin at 6 p.m., Hewitt invited Thomson on his show for a segment.
The discussion, which was in front of a live audience of about 100 people, ranged from presidential politics in Florida to the Gulf Coast economy. Hewitt seemed surprised to hear that unemployment is creeping up in Florida and just how hard the area has been hit by the housing downturn.
Hewitt's program is broadcast in most major U.S. markets and he is particularly popular on the West Coast, where his Los Angeles-based show is produced.
Thomson claims he had a blast - after all, it's not everyday that the Review gets an audience of two million.
+ WCI stock may be a treat, if it doesn't trick
Does Michael Burry know something we don't?
On Halloween, Burry acquired 5.7% of the outstanding stock of WCI Communities, the Bonita Springs-based homebuilder that is now chaired by billionaire investor Carl Icahn.
Burry is the managing member of Scion Capital LLC, a hedge fund based in Cupertino, Calif., that gained notoriety and a financial windfall this summer by betting against subprime mortgages.
According to a recent MarketWatch article, Scion Capital held about $1.7 billion worth of short positions on subprime-mortgage securities at the beginning of the year. Investors who short securities make money when the value of the securities decline.
Burry unwound his positions as the subprime market collapsed, giving his investors overall gains of between 78% and 85% after fees for the first nine months of this year.
Although Scion's securities filings don't indicate what prices Burry paid for WCI shares, the homebuilder's stock has traded in the $5 range in the last month. The stock has traded as high as $24 in over the past year.
+ Florida banking
head leaving
Susan Martinez, regional president for Region's Financial Corp. in Tampa, a banking industry veteran of 35 years in Florida and one of the few female banking presidents, is retiring at the end of the year.
She is leaving to care for a family member who is ill. Succeeding her is Brett Couch, a 17-year company veteran who formerly served as Region's Mississippi state president.
+ Engineers call a bottom
to the housing market
You shouldn't lose your sense of humor, especially when times are tough.
That's why Coffee Talk found it so refreshing to get an invitation from friends at the Fort Myers office of Heidt Engineering announcing a party to celebrate the bottom of the housing market.
So now you have it: The housing market will hit bottom at precisely 6:37 p.m. on Wednesday, Nov. 14, right in the middle of the Heidt party.
To celebrate, the invitation says local politicians plan to be on hand to give out free permits, engineers will be distributing 20%-off coupons on your next project and developers will host a swap party (put your project in a hat; at the end of the night draw a new one to take home). There will also be a raffle for a "no-interest" loan (qualified individuals only, please.)
Coffee Talk plans to join the celebration.
+ We're number nine!
We're number nine!
Drum roll please: Florida ranked...ninth in 2007, behind first-place North Carolina and seven other states on Site Selection magazine's annual business climate rankings.
Factors include a state's financial incentives, workforce, land prices and taxes.
Expansion Management magazine placed the Tampa Bay area 13th among its "economic development hot spots." The Bay area beat 16th-place Charlotte, but lost to 10th-place Raleigh, N.C.
If they aren't entirely scientific, the results do mean one thing: They are the impression, rightly or wrongly, that others have of the Bay area. And that needs to get better for the region to attract more business.
Incentives have been a longtime controversial subject because companies can get incentives from one town, then leave and go to another. If a company moves from New Jersey to Tampa, it can move from Tampa to India.
CEOs may not read these economic development publications cover to cover. They form opinions based on people they talk to. And if it's too difficult to do business somewhere for some reason, they will go elsewhere.
+ Media General
may sell TV stations
Media General, the Richmond, Va.-based company that owns The Tampa Tribune and WFLA Channel 8 in Tampa, is looking into selling five TV stations, including locations in Jacksonville and Panama City.
Will it end there?
The company said third-quarter revenue plunged 88% because of a lack of political advertising revenue.
Isn't political advertising periodic, a windfall from elections? It seems like that's a drop that a company would anticipate.
Is The Tribune or WFLA next? Doubtful, because of the giant investment the company made in building the joint Newscenter building for the TV station and newspaper, on the river in downtown Tampa.
But what about a merger with the St. Petersburg Times? The Times is locally owned and has been working for at the past 15 years or more to establish itself in Tampa and Hillsborough County.
A sale would give Media General a lot of cash to reduce debts and focus on its other properties. It laid off several Tribune staffers in the past year to cut costs.
Most U.S. cities have one major newspaper and speculation has swirled for years about the future of the two newspapers. In a down economy, both newspapers could save costs through a merger.
That's good news from a business owner's standpoint. From the customer's standpoint, it's not so clear what a merger would do to advertising rates and the quality of reporting, the sense of urgency of the one-newspaper staff.
+ Sources at Source
Interlink
Is Source Interlink about to get bigger?
The New York Post recently quoted an anonymous source saying the Bonita Springs-based company could merge with American Media, the publisher of Muscle & Fitness and National Enquirer.
Source, which distributes magazines, CDs and DVDs recently expanded into the publishing world this year by acquiring 76 enthusiast magazines from Primedia, including Motor Trend and Soap Opera Digest.
Coffee Talk couldn't reach Source officials, but our colleagues in New York reported that one of the sticking points is who will run the combined companies. Perhaps coincidentally, Executive Vice President Jason Flegel, the son of company founder Leslie Flegel, resigned Oct. 15.
Supermarket-industry billionaire Ronald Burkle is Source's single largest shareholder, owning 33.8% of the stock, according to a recent proxy filing. The stock rose 15% the day of the New York Post report but recently retreated back to about $3.35, a few pennies below the closing price on the day before the published report.
+ New office building
to go in West Shore
The filling up of office space is reaching a head in West Shore, the Gulf Coast's largest and continually evolving business district.
That has triggered a new office building project at O'Brien and Laurel streets, land the city rezoned in September.
The developers of the 415,000-square-foot building, Pro-Ject in Tampa, confirmed the rezoning but said this week that they were not ready to discuss more details of the development.
+ Nonresidential
construction jobs grow
Nonresidential construction employment grew again in October, belying the notion that the housing slump is dragging down all construction, says Ken Simonson, chief economist for The Associated General Contractors of America.
An acceleration of hiring by architects and engineers suggests even better news ahead, he says.
Although total construction employment fell by 5,000 in October, seasonally adjusted, and 106,000 or 1.4% compared to October 2006, all of those losses occurred in homebuilding, Simonson says.
In the past 12 months, employment in the three nonresidential categories - nonresidential building, specialty trades, plus heavy and civil engineering - climbed 42,000 or 1%. At the same time, employment in residential building and specialty trades dropped by 148,000 jobs or 4.4 %.
"But that estimate greatly understates the actual difference," Simonson says. Census Bureau figures for September show residential construction spending was down 16% from a year before and nonresidential was up almost 17%. It's likely that residential employment is actually down roughly 16%. That means about 400,000 residential specialty trade contractors are now doing nonresidential electrical, plumbing and other work.
If these 400,000 workers are added to the nonresidential total, nonresidential would be up more than 10% to its payrolls, outpacing nearly every other industry, he notes. That's much closer to the 17% gain in nonresidential construction spending.
"The report shows there is more growth ahead. Architectural and engineering employment rose 3.7% in the past 12 months, triple the growth in overall nonfarm employment, Simonson says. Their output will turn into construction jobs in the next several months," he says.
Associated is the largest and oldest national construction trade association in the United States.
+ Trump halts multiple
Florida projects
While the 52-story Trump Tower Tampa condo project hangs by a thread, real estate celebrity Donald Trump has suspended two other Florida projects.
Trump has suspended work on Trump Las Olas Beach Resort, a 12-story condo-hotel in Fort Lauderdale. He also stopped work on Trump Tower Palm Beach, a 23-story beach front tower.
Trump said he could make a decision in a month on whether or not the developments will go forward.
SimDag LLC, Trump's development partner for the Tampa project, is trying to get financing from a New York hedge fund. It is also trying to persuade buyers to extend their contracts for another two years. It hopes to finish the tower by 2010. If built, it would be the tallest building on the Gulf Coast.
Gulf Coast homebuilders are still building
Housing experts and economists are nearly unanimous in at least one thought: A reduction in inventory is the surest and fastest way to a residential real estate recovery.
And that reduction is actually happening in some areas along the Gulf Coast, despite the continued market slump. For example, on a quarterly basis, new home starts in Collier and Lee counties are down 66%, according to a new report from Houston-based housing research firm Metrostudy. It's a necessary reduction, says Brad Hunter, the firm's Southwest Florida market research director.
"Although the inventory of finished vacant units remains high," Hunter says, "the number of homes under construction has dwindled, and move-ins have been outpacing starts almost two to one for the last three quarters."
Still, inventory levels are high enough that it looks like a significant reduction will not take place until halfway through next year at the earliest, Hunter and other Metrostudy experts say.
And it's not as if homebuilders have stopped building. Part of the latest Metrostudy report shows that overall, in the eight Gulf Coast counties, there have been more than 5,000 housing starts this year, through September. The leader is Hillsborough County, which has more than 100 starts in eight of the 10 fastest-growing communities of the county.
BY THE NUMBERS
Annual new home starts, 2007, through September
Sarasota-Bradenton
Community Starts
South Gulf Cove (Charlotte County) 448
Burnt Store (Charlotte County) 216
Rotonda (Charlotte County) 161
Lakewood Ranch (Manatee County) 155
Riverwood (Charlotte County) 142
Harrison Ranch (Manatee County) 127
Venetian Golf & River Club (Sarasota County) 113
Palmer Ranch (Sarasota County) 110
Heritage Harbour (Manatee County) 109
Island Walk @ West Villages (Sarasota County) 81
1,662
Lee-Collier
Community Starts Lely Resort (Collier County) 300
Sail Harbour Townhomes (Lee County) 257
Bella Terra (Lee County) 200
River Hall (Lee County) 162
Botanica Lakes (Lee County) 154
Amberton (Collier County) 144
Valencia Golf & Country Club (Collier County) 136
Paseo (Lee) 132
VeronaWalk (Collier) 128
Ave Maria (Collier) 117
1,730
Tampa Bay
Community Starts Meadow Pointe (Pasco County) 255
Panther Trace (Hillsborough County) 182
South Fork (Hillsborough County) 159
Bay Park (Hillsborough County) 155
FishHawk Ranch (Hillsborough County) 153
Kingsway (Hillsborough County) 149
Seven Oaks (Pasco County) 148
Wexford (Hillsborough County) 146
K-Bar Ranch (Hillsborough County) 145
Asbel Estates (Hillsborough County) 144
1,636
Source: Metrostudy
BY THE NUMBERS
Gulf Coast Airport Traffic for August
Aug. Aug. YTD YTD
Total Passengers 2006 2007 change 2006 2007 change
Tampa International 1,428,203 1,553,184 8.75% 12,932,231 13,308,899 2.91%
Southwest Florida Int. 446,415 488,539 9.44% 5,374,979 5,784,209 7.61%
Sarasota Bradenton Int. 80,173 99,695 24.35% 981,117 1,114,483 13.59%
St. Pete-Clearwater Int. 25,908 61,134 135.97% 389,997 523,073 34.12%
TOTAL 1,980,699 2,202,552 11.20% 19,678,324 20,730,664 5.35%
Aug. Aug. YTD YTD
Cargo/Freight 2006 2007 change 2006 2007 change
Tampa International 18,773,123 18,635,840 -0.73% 145,928,230 133,232,713 -8.70%
Southwest Florida Int. 3,416,340 3,306,823 -3.21% 26,897,747 26,619,570 -1.03%
Sarasota Bradenton Int. 35,324 35,107 -0.61% 220,795 357,756 62.03%
St. Pete-Clearwater Int. 5,156,659 5,164,632 0.15% 35,999,157 39,964,436 11.01%
TOTAL 27,381,446 27,142,402 -0.87% 209,045,929 200,174,475 -4.24%
Restaurant chain goes sans trans fats
Those bad fats just get harder and harder to find.
For instance, breakfast and lunch is about to get even healthier at the 76 daytime-only restaurants operated by Lakewood Ranch-based First Watch. The company is eliminating all artificial trans fats from its menu items.
It's a move other restaurants across the country have made recently following customers attempts to be more health-conscious when eating out. A recent survey conducted for the American Heart Association, for example, shows that American's awareness of trans fat is up 8 points over the past year, from 84% to 92%.
The non-trans fat transition at First Watch has been relatively easy, executive chef Kevin Hall says, since the menu already contained several non-trans fat items and has never used fryers. The company did look at every ingredient for each item on the menu though, and as of Nov. 1, Hall says it will have completely eliminated trans fats. One example of the replacements is in margarine, the company says. After testing more than 10 alternatives, it selected a whipped-European blend as a replacement.
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