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Business Observer Friday, Oct. 17, 2014 7 years ago

Economic forecast

by: Mark Gordon Managing Editor

David Young
Founder, DWY, Sarasota | Landscape Architecture

Company: The past year has been solid, and Young is confident it will keep on going into next year. The market for landscape architecture has improved so much that Young plans to open a second office, in Naples, in 2015. The firm also has projects in North Miami Beach and Fort Lauderdale. A chunk of the work comes from high-net-worth clients. “When the stock market is strong, we're busy,” says Young. “When it's not, that affects us.”

DWY, which Young founded in 1999, gets a lot of work from referrals. It's also active in the architecture community on the Gulf Coast and in Florida. It recently redid its website, and the firm expanded its marketing presence with the help of Michelle Esposito Young, David's wife and business partner. “I'm really optimistic about 2015,” says David Young. “We are doing everything we can to stay out and be visible.”

Industry: The landscape architecture niche has received a boost, Young believes, from people being interested in the benefits of a uniquely designed property for sales and marketing purposes. He expects that factor to aid the industry in 2015. “The more we advance as a civilization,” he says, “the more people appreciate a quality of life and with that comes quality design.”
Another positive sign Young sees is large global architecture, design and planning firms, like Stantec, for example, are in the market to buy smaller companies. “They are fully confident that things are coming back,” says Young. “The profession as a whole is pretty positive.”

Region: Young is hesitant to use the words “cautiously optimistic,” but that's an accurate assessment of where he says the regional economy is headed in 2014. He says things are better, but he's cognizant of all the threats to the economy, from weather events to global terrorism. “Everyone seems to be doing better,” he says, “but I feel like we are all holding our breath.”

Sheryl Edwards
Attorney, The Edwards Law Firm, Sarasota | Real Estate Law

Company: Edwards focuses mostly on real estate law at her firm, where she has three other employees and she's the only attorney. Most of her cases are transactions, and she does a good amount of work for clients with homes or commercial properties in foreclosure or distress. In the boom, she says, 600 cases a year was the norm. Now it's about 100 a year, but her number of cases is growing from the bottom of the downturn. “It's definitely picked up,” says Edwards, “but it's not where it needs to be.”

Edwards expects her caseload to continue growing in small increments in 2015. One reason is many mortgage modifications signed at the beginning of the downturn, in 2008 and 2009, are becoming more costly to maintain.

Industry: Technology has been a disruptive force in the legal industry, says Edwards, a trend she predicts will continue in 2015 and beyond. One paralegal with the help of powerful search engines and other legal research databases, for instance, can do what three did a decade ago, says Edwards.

Competition for clients is also a trend in real estate law that Edwards says has staying power. Part of that stems from technology, which has made work once reserved for attorneys more readily available.
That competition, in turn, has launched a shift in fee models. Many attorneys, including Edwards, have moved away from straight hourly rates to contingency and other fee structures. “I see the practice of law becoming more competitive and less lucrative, at least in this area,” Edwards says. “I'm competing with non-lawyers for business, too.”

Region: Edwards sees some signs of life in the area economy. “Rich people are still rich,” she says, “and are still spending money.”

Yet some big-picture worries cloud her enthusiasm. A segment of distressed properties in the Sarasota-Manatee region linger over the recovery, for one. There's also the matter of people who are either unemployed, says Edwards, or underemployed. Finally, Edwards says, the wealth that's returned to the area could dissipate if there's a burst in the stock market or interest rates go up.

Liz Murray
Co-owner, Influence Style, Influence Men, St. Armands Circle, Sarasota | Retail

Company: Murray runs the two boutique retail stores with her sister, Samantha Beebe. Both stores, says Murray, cater to a mix of tourists and locals. Murray says this past August and September were better than late summers in past years — a trend she projects will continue into 2015. The men's store, which the sisters opened in early 2013, has exceeded early expectations, adds Murray.

The looming challenge over the business for 2015 is The Mall at University Town Center — a sparkling new massive shopping center that opened Oct. 16 in north Sarasota County. The mall brings a host of stores that could lure away customers. But Murray is confident that Influence, going back to the old axiom that location is a trump card, will withstand the new competition. “I think St. Armands is such a destination,” says Murray. “We're not worried.”

Industry: The retail buyers Murray talks to and works with are hot on next year, which wasn't the case in the past few years. Buying shows and the fashion industry in general, she says, are mostly upbeat places these days. “Retail in general has been down a little bit,” says Murray, “but everyone I talk to in the industry says next year will be a great year.”

Region: Murray, 27, says her friends and fellow 20-somethings are in better shape financially than the general perception in the national media. Her contemporaries, she says, have more disposable income and are willing to spend it. “Everything keeps getting a little bit better,” says Murray, “because it was so bad.”

Murray says the recent past being so bad plays a big role in the economy looking ahead. That's because even though things are better, people are cautious of what's around the corner. Says Murray: “I feel like everyone around me is lucky to have jobs.”

Derek Nelson
President, Nelson Homes/Arthur Rutenberg Homes franchise, Sarasota-Bradenton-Lakewood Ranch | Homebuilding

Company: A homebuilding executive in the area for more than 25 years, Nelson says several signs point to a stellar 2015 for his company. “I've seen an uptick in the amount people are spending,” Nelson says. “I'm optimistic that will continue. I'm very bullish on next year. I'm excited about it.”

One budding trend this year is Nelson has sold fewer units, but at a higher average price. The average price now of a Nelson Homes house is at least $1 million. About half of Nelson's home sales are for second-home buyers, usually snowbirds with another property up north. Another 25% are for third homes. That market somewhat depends on a strong stock market. “I'm very optimistic,” says Nelson. “I'm looking forward to a really solid 2015.”

Industry: The biggest issue homebuilders across the region will grapple with in 2015, says Nelson, is the same one from 2014: the labor shortage. It impacts every aspect of the business. For example, a 4,000-square-foot house that once took seven months to build now takes eight or nine months, says Nelson. That impacts that customer and future customers. “They want to see someone on the job every day,” says Nelson. “But there's just not enough (labor) to go around.”

Another trend that will impact the industry, says Nelson, is the cost of land has risen significantly. He expects prices to continue to rise in 2015.

Region: The labor shortage is something Nelson encounters all around his business and life, not just with customers. It's one threat to the regional economy that Nelson will watch closely next year. “I'm not sure when that will loosen up,” says Nelson. “It could get worse before it gets better.”

Nelson says one aspect of the shortage worth focusing on is at least there's work again. That beats three or four years ago, when the market was at a near standstill. “Everyone I know is working hard,” says Nelson, “but at least they have jobs.”

Janet Robinson
Director, Sarasota/Manatee/Charlotte Region, Coldwell Banker Commercial NRT | Commercial Real Estate

Company: Robinson says morale of the dozen agents who make up her three-county commercial real estate unit at Coldwell Banker is at a high point going into 2015. She recently hired three new agents, and the entire staff has been going through an enhanced sales training program with one overarching goal: to capitalize on a market rebound in 2015.

“The momentum we have built is very exciting,” says Robinson. “I think we are on the same (positive) bell curve that we are seeing nationwide.”

Industry: Robinson says one of the best aspects of commercial real estate going into 2015 is there are actual sales of a variety of buildings. That wasn't the case in the past few years. “At one time there was nothing to talk about because there were no comparables,” she says. “It's nice to have some comparables of sales to look at for the last 18 months.”

Robinson sees some other good points going into 2015 in commercial real estate. For one, it remains less expensive to lease in many sectors than it is to build, which could help drive up rates. “To the best of my knowledge,” says Robinson, “there are no spec office buildings coming out of the ground right now.”

One possible downside: The multifamily boom in the region might show signs of a slow down. Robinson says she especially hears that worry from bankers.

Region: The economy is on the upswing in the area, Robinson says, and she expects that to continue in 2015.

A telling point for Robinson is friends and colleagues are buying cars, going on vacations and generally spending more money than in the recent past. “It's definitely much better than it was,” says Robinson. “People can afford to go shopping and eat out again.”

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