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New code costs deserved in-depth look
I think the June 19 article titled “Turning Up the Heat,” concerning the new and more restrictive construction code in Florida, should have been a front page bombshell or even expanded into an entire issue. A variety of additional points need to be analyzed and addressed.
Depending on the particular submarket and property type, it has taken many years to recover from the impacts of the subprime lending debacle and the financial collapse. Most commercial real estate markets are just gaining traction, and construction cranes are being driven out of mothballs. In the background, the Q1 2015 GDP was -0.2% and a second quarter of negative GDP would mean we are back in a recession.
So, Florida bureaucrats have decided that now is the time to throw an additional 5% to 11% on top of new construction costs? The Federal Reserve has struggled for years with increasing rates by 25 basis points. Yet, Florida pushes forward with a 10% construction cost increase without a second thought. If amortized over 20 or 25 years, a 10% increase in construction costs has the same result as an interest rate increase of at least 100 basis points.
Further, initial estimates relating to government mandates are typically well below the eventual reality. So, might these new costs actually inflate to 15% or more? What will be the impact on new construction activity in Florida? Won't the additional costs chase some investors to other states?
It appears that renovation projects also will be impacted by these new codes. An increase in renovation costs without a change in the value of the renovated property results in decreased current values. How will that affect Florida's economy? Won't the increased costs deter turnaround projects? Are there any economists that think this will be great for Florida?
Further, which politicians were responsible for supporting this new mandate that was justified by the Global Warming Cult/Religion? Does the pro-business, Governor Scott support these bureaucratic costs? Meanwhile, data indicate that cooling has been occurring during the past 10 years and global warming stopped 18 years ago. Perhaps we should include snow removal facilities in the next round of new building codes. The Florida Department of Business and Professional Regulations indicated that the new codes were based on the “2012 International Codes” and the “International Code Council.” That sounds very official, but does anyone know anything about these organizations?
I wish that some of these points were addressed or will be addressed in the future.
Mark Simpson, MAI
Benchmark Valuation, LLC
Brandon, Florida
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