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Coffee Talk
Business Observer Friday, Feb. 15, 2008 13 years ago

Coffee Talk

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Lee County housing is nation's worst: Look at things on the bright side. Wachovia Senior Economist Mark Vitner does, especially when it comes to the housing market in Lee County.Real estate market on two strikes: When national housing economist Jack McCabe brought his brand of blunt analysis to a group of high-end Sarasota and Bradenton Realtors recently, he settled on a baseball analogy for one of his best zingers. StarLite adding to its fleet: One of the Tampa Bay area's oldest tourist and leisure businesses, StarLite Cruises, is adding another vessel to its dinner and sightseeing fleet.Tech group forms in SW Florida: Southwest Florida isn't exactly a bastion for high-tech entrepreneurs. Techies who toil here often do so alone.A Franchise first for First Watch: Lakewood Ranch-based First Watch, one of the Gulf Coast's most popular breakfast-brunch-lunch restaurant chains, is officially opening its franchise doorConstruction executive leaves lasting legacy: John Cox has long been highly thought of in Gulf Coast development and construction circles for his projectsGulf Coast BUILDING

Coffee Talk

+ Lee County housing is nation's worst

Look at things on the bright side. Wachovia Senior Economist Mark Vitner does, especially when it comes to the housing market in Lee County.

"Housing is no worse in the entire United States than it is right here," Vitner told a gathering of real estate investors in Fort Myers recently, drawing laughter and groans. "The only place worse than Lee County may be Charlotte County," he added.

OK, we know things are bad in Lee County. What about the national recession everyone's talking about? "There is no recession," he says, noting that there is no pronounced decline in economic activity.

Vitner also won't forecast a recession this year, though the country will skirt one. He forecasts 0.2% growth in the first quarter and 0.8% in the second quarter of this year.

Vitner says scare tactics by Democrats are fueling talk of an economic downturn because they're trying to boost spending on social programs such as unemployment benefits. But Vitner says the national unemployment rate of 4.9% means most people who want a job can find one.

However, Vitner cautioned listeners that the commercial real estate market might feel the pinch of tighter credit because banks can't sell bonds backed by commercial mortgages. Investors have stopped buying these bonds, scared by credit issues. Banks now have to keep those loans on their books, using up capital and tightening credit terms.

In addition, Vitner says the still elevated cost of housing in Florida means slower population growth. For example, he says more people moved to the region bounded by Charlotte, N.C., Raleigh, N.C., and Nashville, Tenn., than moved to the entire state of Florida last year. He blames housing costs in Florida that are 50% higher than in Georgia and the Carolinas. As a consequence of overbuilding and declining demand, Vitner expects at least another two quarters to a year of "hefty price declines" in Lee County.

+ Real estate market

on two strikes

When national housing economist Jack McCabe brought his brand of blunt analysis to a group of high-end Sarasota and Bradenton Realtors recently, he settled on a baseball analogy for one of his best zingers. Apropos, considering major league baseball teams are reporting to spring training camps across the state this month.

"I've heard a lot of people say we are near the bottom," says McCabe, who is based in Deerfield Beach. "Well, it's the top of the third inning, not the bottom of the ninth."

McCabe systematically went through the Greater Sarasota real estate market's problems during his Feb. 8 presentation at the Ritz-Carlton, Sarasota. He played off a slide presentation that only further deflated the crowd of about 100 people, a mix of Realtors, agents and clients for Sarasota-based Sky Sotheby's International Realty, the luxury real estate brokerage that brought McCabe to town.

Among McCabe's projections:

• High insurance rates and property taxes will continue to stand in the way of a rebound, despite the recent passage of Amendment 1, which is supposed to lighten residents' property tax load. The bill, McCabe says, didn't go far enough. "What we are seeing now" says McCabe, "is a Band-Aid on top of skin cancer that doesn't really address the situation."

• Not only is the amendment weak, the part allowing homestead portability, predicts McCabe, will likely be ruled unconstitutional because it doesn't apply to all of the state's property owners.

• At least 40%, and as much as 60%, of condo-buyers statewide that haven't yet closed on deals will just outright ditch the condo and either forgo a deposit or go to court to fight to get it back.

• Those customers, in addition to other buyers who claim Realtors duped them into overpaying for property in a downward market, will start going to the courts more often for a financial remedy, McCabe says. He predicts 2008 will be highlighted by an "incredible acceleration of litigation."

McCabe, a one-time Realtor who now runs McCabe Research & Consulting, did have some advice for the shell-shocked crowd. The broker who outworks and outsmarts his competitors, he says, will still be able to close deals. His suggestions included knowing not only the the seller's neighborhood, from schools to shopping, but learning the same thing for the potential buyers, too.

And for the truly glum: McCabe reported that things are even worse in Miami-Dade County, which had fewer sales then Sarasota County last month.

+ StarLite adding

to its fleet

One of the Tampa Bay area's oldest tourist and leisure businesses, StarLite Cruises, is adding another vessel to its dinner and sightseeing fleet.

Don't let the age and style of the company fool you. It has adjusted to changing tastes and times and has an eco-tour boat and books plenty of corporate meetings as well as evening diners.

The Clearwater company has bought the Calypso Queen and is remodeling it for a March grand opening and relaunch. It will have a Caribbean theme and do sunset cruises with a lower price point than the company's dinner and adventure cruise ships.

StarLite operates six sightseeing, dining, entertainment and adventure cruise services for individuals, groups and private charters in vessels sailing from Clearwater Beach and St. Petersburg.

The company is the longest-running dinner and sightseeing cruise line in the Tampa Bay area. About 60% of its business is local and includes company meetings and parties.

President and CEO of StarLite, Phil Henderson Jr., 47, is a licensed captain and is occasionally at the helm of one of the ships. His wife and three children also work in the business.

A family business with longstanding community ties, the concept of StarLite Cruises began with Henderson's grandfather, Charles "Max" Anderson, who built a commercial fishing fleet in Panama City. Unsatisfied with only one successful enterprise, Anderson opened a dining cruise line as a side business, operating in Panama City during the summer and St. Petersburg during the winter.

As the dinner cruise operation grew, Henderson was asked to help manage the family business after he graduated with a business degree from the University of Colorado in 1982. In 1998, the company expanded into eco-tourism, adding a safari cruise with a biologist from the Clearwater Marine Aquarium on board.

+ Tech group

forms in SW Florida

Southwest Florida isn't exactly a bastion for high-tech entrepreneurs. Techies who toil here often do so alone.

That's why it's encouraging to hear that a technology group is forming to bring techies together to share ideas, learn about job opportunities and to create new companies. Kevin Barnhill at the Naples-based engineering firm WilsonMiller is organizing the Southwest Florida Regional Technology Partnership.

Partners include Florida Gulf Coast University, Gulf Coast Venture Forum and the Economic Development Council of Collier County. The partnership will tie into IT Florida, a statewide technology industry group. For more details, visit www.swfrtp.com.

+ A Franchise first

for First Watch

Lakewood Ranch-based First Watch, one of the Gulf Coast's most popular breakfast-brunch-lunch restaurant chains, is officially opening its franchise door - a goal the company had been working toward for several years. (See Review 9/15/06).

The 25-year-old company had been on an aggressive store-opening campaign on its own the last two years, going into new markets such as western Pennsylvania and suburban Baltimore. Meanwhile, company-wide revenues reached $72 million in 2007 and same-store sales were up for the 24th consecutive year.

But franchising, First Watch CEO Ken Pendery tells Coffee Talk, will even further accelerate that growth by finding homes for the company in more untapped markets. "There are a lot of other places we'd like to be in," Pendery says, "and we can get there faster by franchising."

Plus, Pendery and a few other top First Watch executives will no longer have to turn away the hundreds of people who regularly call and e-mail to check on when the company will start a franchising program. At one point, the First Watch corporate offices were getting at least a call a day from potential franchisees.

The company's franchise requirements include having a minimum net worth of $2 million in liquid assets.

Construction executive

leaves lasting legacy

John Cox has long been highly thought of in Gulf Coast development and construction circles for his projects, from the first commercial building in Lakewood Ranch to Sarasota County's main government building.

But it was Cox's charitable giving that dozens in Greater Sarasota were talking about after he died as the result of an illness Feb. 10. The big caveat: Cox, who was 61, was so private and attention-shy that he would most likely scoff at all the hubbub.

Indeed, Cox was so private that his own son had no idea of how deep his charitable giving went until hearing and reading about some of it after he died.

"That's just the type of person he was," says Jack Cox, who worked under his father at Sarasota-based Halfacre Construction until last month, when the elder Cox stopped working due to the illness. "He didn't want any recognition of any kind."

Still, there was a lot in Cox's life worth recognizing.

His charitable passions were directed toward children's organizations and groups, especially the Special Olympics and the Sarasota Boys and Girls Club. His donations led to a Special Olympics training facility being built in Sarasota, as well as a new Boys and Girls Club facility in Venice.

On the latter project, Mack Reid, Sarasota Boys and Girls Club president and chief executive, recalled how the project was bogged down in a bureaucratic site selection process, frustrating the board as well as Cox. But then Cox told Reid not to worry, that if the one site they were considering failed, he would go out on his own and buy suitable land for the facility.

While Reid was wowed by the offer, he wasn't surprised. Says Reid: "He really gave from the heart, especially when it came to kids."

Cox was held in just as high regard in the construction industry. He bought Bill Halfacre Construction in 1982 and under his leadership the company grew to more then $20 million a year in revenues. Over the last 25 years, its project list has included restaurants, churches, synagogues, schools and millions of dollars of expansions at Port Manatee.

In addition to the company's projects, Cox was an active voice in the Sarasota development community, speaking out often against high taxes and impact fees that could lead to a building slowdown. Cox was honored publicly for his work in the construction field at the Gulf Coast Builders Exchange annual dinner Feb. 7, just three days before he died.

Cox is survived by his wife, Cam; four sons; six grandchildren; two sisters and a brother. In lieu of flowers, the family is asking for donations to be made to the Sarasota Special Athletes Boosters, P.O. Box 2112, Venice, FL 34284.

Gulf Coast BUILDING

What the data shows: The category of taxable sales of building investment includes sales by building contractors, heating and air conditioning contractors, insulation, well drilling, electrical contractors, interior decorating, paint and wallpaper shops, cabinet shops, soil, lumber and building suppliers and roofing contractors. Every area except Tampa showed steeper declines in this category in November compared with the same month a year ago than the state overall. The Punta Gorda area had the steepest decline with a 66% drop.

What it means: It's no secret that the construction industry has suffered lately. However, the data shows some areas of the Gulf Coast are faring better than others. For example, the Tampa area has held up relatively well in part because of continued population and job growth. By contrast, the Punta Gorda area's lack of diversification has substantially impacted building investment.

Forecast: Construction industry experts forecast the market will start improving in 2009. Meanwhile, the existing inventory is likely to be consumed faster as fewer new homes are built. While painful now, the construction slowdown sets the stage for a rebound.

November taxable sales

of building investment

($ in millions)

Area sales annual CHG.

Fort Myers $65.2 ‑44%

Naples $40.6 ‑32%

Punta Gorda $17.2 ‑66%

Sarasota $59 ‑29%

Tampa $209.7 ‑9%

Florida $1,623.7 ‑13%

Source: Florida Legislature Office of Economic & Demographic Research

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