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Business Observer Friday, Nov. 17, 2017 10 months ago

Economic Forecast 2018 - Tampa Bay

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Just call it robust in the Tampa Bay region

Commercial Real Estate

Larry Feldman
Chairman/CEO | Feldman Equities LLC, Tampa
Company:
Feldman Equities LLC says 2018 is set to be a big year as it breaks ground on Riverwalk Place, a 52-story office and luxury residential building that, when completed in 2020, will be the tallest building in Tampa and on the West Coast of Florida.

“Riverwalk is clearly our biggest project right now, but we will be developing other buildings following Riverwalk,” says Feldman, who's eyeing additional opportunities in downtown Tampa and downtown St. Petersburg. He says Riverwalk signals a shift from a redevelopment phase during the recovery to a renewed emphasis on new buildings that's been rewarded by his faith in the staying power of downtown cores.

“We're staying with the urban play and making a long-term bet on re-urbanization,” he says. “We've gotten very lucky that now everyone wants to live downtown.”

Industry: Feldman says commercial real estate developers are in a strange and unexpected place, with new construction lagging even as good times continue to roll.

“When things get to be really good, like they are right now in our business, people start to say things like, 'Oh, here we go again — we're going into a bubble like in '06, '07.' And yet I don't feel the same way [about the market] as I did in '06 and '07; that really felt like a bubble. This just feels like a really solid, strong real estate market that's being constrained from overbuilding by the restraints on financing.”

Feldman also attributes the lack of new developments to the densification of office space — more workers crammed into the same amount of space, essentially — as companies prioritize profit over capital improvements.

Region: Reurbanization, Feldman predicts, will continue to drive economic development, job growth and housing in both Tampa and St. Pete.

“In St. Pete, it's like the fourth inning of where [reurbanization] is going, whereas in Tampa, it's only in the first inning. I have an office in downtown St. Pete, and I eat lunch out almost every day for business, and I've probably eaten at only a third of the restaurants in downtown St. Pete. I can't keep up. There are probably multiple new ones opening up right now as we speak.”
— Brian Hartz

Banking

Cathy Swanson
CEO | Freedom Bank,
St. Petersburg
Company:
Swanson says the bank, with $222 million in assets through June 30, had “a pretty good year” in 2017. “We've been going through a very stable cycle and have seen much of that [stability] continue on from 2016 into 2017. I think '18 will be very similar,” she says.

Swanson says Freedom Bank in 2018 will expand its flagship location on Fourth Street by 3,300 square feet and hire three or four new employees as it seeks to continue to grow organically, as opposed to building more branches or acquiring competitors. She sees consolidation in the community banking sector as a benefit, not a threat. “We are the last community bank to be headquartered in St. Petersburg,” she says. “That gives us a little bit of notoriety within the community, because there are still a lot of people and businesses who want to bank with a locally owned community bank. That gives us a real advantage.”

Industry: “So much is dependent on what's going to happen with the tax laws,” Swanson says. “What kind of impact will tax reform have? I don't think any of us know at this point. It could be very positive, particularly for the business community.”

A long-awaited federal interest rate increase would also be welcome news for bankers, Swanson adds. “We're hopeful that we'll see some interest rate movement, if not this quarter, then certainly sometime in 2018. There's every indication that we will.”

However, Swanson is wary of the effect that continued political dysfunction at the federal level could have on the banking sector and the economy in general. “Our politicians aren't able to move forward ... I'm concerned that that dysfunction will impact the economy. That gives me pause.”

Region: In Tampa Bay, Swanson says, “consumers are very confident right now and I think that's a reflection of low unemployment ... the general business climate, I think, is pretty positive.”
She predicts continued steady growth for the regional economy. Says Swanson: “I think that the Tampa Bay market is a strong market; there's a very positive feeling about the business community here.”
— Brian Hartz

Hospitality

Jean Baudrand
Chief Development Officer | FSC Inc. (parent company of the Brass Tap and Beef O'Brady's), Tampa

Company: “We've seen continuing improvement of the economic climate, and sales have continued to grow, particularly at Beef O'Brady's,” Baudrand says, adding that he sees 2018 as a “big year for learning and refinement.”

Though FSC hopes to grow at a 20-25% rate year-over-year, Baudrand says the company is more interested in quality over quantity when it comes to enlarging the footprint of its two flagship brands. “We are going big on localization and providing venues that are adapted to the local market,” he explains.

The company will be in growth mode in 2018, Baudrand says, and will be hiring more people when it opens additional Brass Tap restaurants and when up to 20 completely remodeled Beef O'Brady's locations come online.

Industry: The restaurant industry is “hopeful that the economy will continue to deliver,” Baudrand says. “We are hopeful that tax cuts will help us with reinvestment.”

However, Baudrand says the controversy over National Anthem protests during sporting events is a source of worry for venues like Beef O'Brady's and the Brass Tap. “The political environment is of concern. We feel it's very unstable,” he says. “The country is very divided. The boycott of the NFL intrudes on our business.”

Another question mark is the rising demand for restaurant food to be delivered directly to consumers' homes — depriving restaurateurs and their service staff of additional revenue potential — but Baudrand believes FSC's brands are somewhat insulated from that trend.

“We want to make delivery a valuable option for our guests, but the bar business is a destination business,” he says. “If you want to enjoy the football game in a bar environment, you can't really get that at home.”

Region: Baudrand says Tampa Bay will continue to thrive for restaurants and hospitality businesses because of its demographic diversity and its ability to attract new residents from all over the world.
“You look at the demographic, it's a little older but it allows us to test things because of the diversity,” he says. “It's a great market to be embedded in ... there are many opportunities to really grow the brand. We love to be a part of Tampa Bay and see it continuing to grow.”
— Brian Hartz


Manufacturing
Viggo Nielsen
General Manager | Mettler-Toledo Safeline Inc., Tampa
Company:
For Viggo Nielsen, it's tough not to be optimistic about 2018. Mettler-Toledo Safeline Inc., which makes food inspection equipment, is set to open a new facility in Lutz, north of Tampa, and will be hiring 100-150 new workers and moving several hundred more from a factory in Ithaca, N.Y., that the company plans to shutter.

“It's tough to see how 2018 can go wrong,” he says. “However, our plan is not to rely on the economy. Our plan is to improve relative to our competitors and develop new and better food inspection products.”

Industry: Nielsen says the global outlook for manufacturing is positive, adding that the only thing that could derail progress is a trade war. As unemployment has dropped, however, manufacturers have had to pay higher wages.

Nielsen views that in a positive light. “You want to see the people who work for you do well,” he says. “You're all pulling in the same direction.” Also, the higher wages and salaries are attracting better, more qualified job applicants and reducing turnover. “It can be very expensive to hire people,” Nielsen adds.

Region: Mettler-Toledo is high on the Tampa Bay area. “The climate is a big draw,” Nielsen says. “It's a driver. Tampa is an easy place to live. Also, the county governments, they all want to have businesses locate in their counties, so they're competing with each other and that means they're upping their game.”
— Brian Hartz

Tourism

David Price
President | Bok Tower Gardens, Lake Wales
Company:
Bok Tower Gardens saw dramatic increases in attendance and membership in 2017, and Price expects that success to continue in 2018. “Lately, people are getting more interested in the environment, health and wellness, and authentic cultural tourism. They're looking to do something different, and that's played really well for us,” he says.

Price is particularly heartened by Bok Tower Gardens' 107% increase in family memberships. He believes that's an indication that the nonprofit's focus on cultural and educational programs is having a positive effect on its bottom line. “The Lakeland-Orlando-Tampa area continues to grow,” says Price, “and we see a big untapped market out there in terms of local attendance and membership.”

Industry: Price sees some wild cards in the mix for tourism in 2018, such as political instability and tax reform. The latter could have devastating consequences for nonprofits like Bok Tower Gardens, which could suffer from drastic reductions in charitable contributions.
“There's been some talk about taking away, or changing, the exemption for charitable giving, and that would have a grave impact on all sorts of charitable giving across the country,” says Price.

Region: Price is upbeat about the Tampa Bay region's appeal — not only to tourists, but individuals and businesses that choose to relocate to the area. “We have this momentum going, and I think that momentum will continue,” he says.
“Tampa Bay area is an authentic place. It's got the history, nature, arts, water ... it's got some cultural spice to it. Particularly St. Petersburg — it's done a wonderful job of growing its cultural attractions. It's got that authenticity that people are looking for, similar to Ybor City, which has some grittiness and realness to it.”
— Brian Hartz

Technology

Linda Olson
President | Tampa Bay WaVE, Tampa
Company:
Olson says Tampa Bay WaVE, a nonprofit co-working and business accelerator that nurtures tech startups from launch to growth, wants to double the number of companies it works with in 2018.

“Across all of our programs, we support about 70 to 80 companies at a time, but if you look at our core accelerator program, that's usually about 40 to 50 companies at any one time,” she says. “I want to be able to support 80 to 100 companies within 12 to 18 months.”

Olson says she and her colleagues will also focus on encouraging Tampa Bay companies to do more businesses with startups, which in turn will make those firms more attractive to investors. “Hopefully the news of the funding flowing here will attract more talent,” she says.

Industry: Talent, Olson adds, is the part of the equation that's toughest to satisfy in the tech sector.

“Tampa Bay can benefit from a greater critical mass of tech startups and tech talent. The two go hand in hand. It's hard for us to build a tech workforce here if there isn't a visible tech startup community, and vice-versa,” she says.

Region:
Olson says she's “extremely bullish” when it comes to the Tampa Bay regional economy.

“I see tremendous momentum,” she says. “Many of our companies have gotten funding this year, many more than in prior years, and we expect that to continue. And I think you're going to see more companies moving here. At the end of the day, your dollars go farther here than in other markets. Give us five years, maybe less, and I don't see why we wouldn't be at an Austin level or above. I honestly don't see a reason why we can't.”
— Brian Hartz

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