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Coffee Talk
Repeat: The Gulf Coast is booming
The Gulf Coast is once again home to some of the nation's boomiest of boomtowns, at least according to Inc. magazine. The May issue lists the country's best areas to have and run a business, focusing on job growth, which the magazine says is "the best measure of economic vitality."
The overall top 10, before the breakdown into city sizes, has a Gulf Coast stamp: Fort Myers is ranked fourth, Naples is ranked sixth and Sarasota is ranked eighth.
The Tampa-St. Petersburg-Clearwater area gets high scores, too, ranking 11th on the list of cities with an employment base of at least 450,000.
Just like in past years, the magazine uses U.S. Bureau of Labor statistics to measure current-year employment growth, average annual job growth over the last three years and compared job growth in the first and second halves of the last 10 years.
+ Forecast: Slower population growth
The fuel of population growth that has propelled Florida's booming economy is slowing, at least according to one prominent economist.
Mark Vitner, Wachovia Corp.'s senior economist, told a group of executives in Fort Myers recently that Florida will grow by 600 to 700 people per day for the foreseeable future. That's a drop from the 1,000 people a day who have been moving to the state in recent years.
As evidence, Vitner says Florida saw the smallest increase in school enrollment last year since 1982 and moving companies reported shipping more belongings out of Florida than into it.
Speaking to the Greater Fort Myers Chamber of Commerce, Vitner says more companies are moving out of Florida because it's become a high-cost state. Rising home prices, insurance and taxes are slowing the state's population growth.
Still, Vitner says population growth won't come to a halt. He estimates the state welcomed 320,000 new residents in 2006 and forecasts another 280,000 in 2007. In particular, Vitner says half of the state's new residents in 2007 will come from overseas.
Meanwhile, Vitner says residential real estate will continue to suffer, noting that new-home construction has been falling at a 70% annual rate. But there's a silver lining: "The steeper the fall, the quicker the adjustment."
What's more, he expects home prices to continue to fall before bottoming out in the middle of 2008. Historically, homes in Southwest Florida cost 30% below the national median-home price. Today, they cost 20% more. "Housing was probably overvalued for a long time," Vitner says.
Vitner is not overly concerned about the subprime mortgage market, noting that most borrowers in that category were speculators, not homeowners. He expects the subprime mortgage woes to work themselves out within a year. "The problems in subprime are not going to spread," he says.
Watch out Silicon Valley
Yes, it's true. The nation's largest technology trade association, AeA, says Florida - the land of sunshine and low unemployment - is the fourth largest and second fastest growing cyberstate by tech employment.
Florida's high-tech industry added a net 10,900 jobs for a total of 276,400 tech positions in 2005, the latest year available. Tech manufacturing added 2,100 net jobs in 2005, driven by a 1,500-job increase in the defense electronics sector.
Among the tech services sector, engineering added 4,600 jobs, computer systems design and related services added 2,500 positions and Internet services added 1,100 jobs.
"While other states are only now beginning to recover from the bursting of the tech bubble in 2001, we have seen two straight years of some of the fastest growth in tech industry jobs in the country," AeA's Florida Council Chair Amjad Shamim states in press release.
Despite those two years of tech growth, most people still don't think of Florida as a high-tech state, states Todd Rader, vice chair of AeA's Florida Council.
Shamim points out how important the tech growth is to the state economy: The average tech industry wage pays 70% more than the private sector. And the state ranked third nationally in three industry sectors, telecommunications services, engineering services and Internet services.
Of course, California led the nation in job creation, Florida has a long way to go to catch up with Silicon Valley. Other Florida data from the study:
• High-tech firms employed 41 of every 1,000 private sector workers in 2005, ranked 30th nationwide.
• High-tech workers earned an average wage of $61,100 (29th ranked) or 70% more than Florida's average private sector wage.
• The state's high-tech payroll of $16.9 billion in 2005, ranked sixth nationally.
• Ranked third nationally, the state had 21,000 high-tech establishments.
• Venture capital investments of $304 million ranked 15th nationally.
• R&D expenditures of $5.7 billion in 2004 (latest available) ranked 16th nationally.
BY THE NUMBERS
By High-Tech Employment (2005)
1. California 919,300
2. Texas 445,800
3. New York 299,900
4. Florida 276,400
5. Virginia 261,000
By High-Tech Wages (2005)
1. California $95,300
2. Massachusetts $89,700
3. New Jersey $84,200
4. Washington $83,700
5. Virginia $83,600
By R&D Expenditures (2004)
1. California $60.5 billion
2. Michigan $16.7 billion
3. Massachusetts $16.3 billion
4. Maryland $14.8 billion
5. Texas $14.4 billion
Total Venture Capital Investment
1. California $12.2 billion
2. Massachusetts $2.8 billion
3. Texas $1.4 billion
4. New York $1.3 billion
5. Washington $1 billion
Source: AeA 2007 Cyberstudies
+ Florida focuses on the financial services industry
With property insurance and taxes occupying a majority of Gulf Coast executives' worry bank, Coffee Talk doubts many area leaders were sitting by their computers and phones waiting for Florida to announce that it has created yet another economic development organization.
Yet that's exactly what the state is doing. Sort of.
Financial Florida, an economic development arm devoted to recruiting and retaining non-depository financial services firms for the state, held a kick-off event in Tallahassee April 25. The group has already existed in some form though, as it had been a branch of Enterprise Florida, the state's umbrella economic development organization, for the past several years.
The major change now is that the group will officially be on its own, with its own 18-person volunteer board, designating the financial services industry as being a "high impact sector," which means it can offer coveted tax incentives to companies looking to relocate to or expand in the Sunshine State.
Florida's economic development honchos have given this designation to other industries in the past, including biotech, and Financial Florida board members are happy they will have a piece of the action. "It's an industry that deserves our full attention," board member Justin Conrad tells Coffee Talk.
Robin Ronne, another board member and a veteran Tampa-area economic development advocate and consultant, says competition is so intense between states for financial firms - which usually come with high-tech and high-paying jobs - that the high impact designation is akin to a life preserver in the ongoing battle. Even that might not be enough, Ronne tells Coffee Talk, as states such as Texas have much bigger resources in what's known as a "closing fund" to make sure a pending deal gets done. Says Ronne "It's a pretty competitive process we are involved in here."
Sullivan named free enterprise champion
One of the Tampa Bay area's most successful and best-known entrepreneurs, who brought the bloomin' onion and the first Aussie-themed Outback Steakhouse to the world in 1988, looks like a spring honoree.
Earlier in April, OSI Restaurant Partners Co-founder and Chairman Chris Sullivan was one of 10 business people to receive the 2007 Horatio Alger Association of Distinguished Americans award, which is given to those who overcome adversity and humble beginnings to achieve great success through the American free enterprise system.
About a week after Sullivan received that award, the California Restaurant Association gave him its Lifetime Achievement Award.
Sullivan, who grew up in a large family in Detroit, began his restaurant career in 1972 as a manager trainee with the Steak & Ale restaurant group. He became founding stockholder, director and vice president of Sunstate Restaurant Corp. in 1982. During his five years there, the company developed 17 Chili's Grill and Bar Restaurant franchises in Florida and Georgia.
In 1988, Sullivan and his partners opened the first Outback Steakhouse in Tampa. The company went public in 1991, growing to more than $4 billion in revenue and more than 1,400 restaurants.
Other 2007 Horatio Alger award winners include Tom Brokaw, retired Bank of America Chairman/CEO Richard Rosenberg and Darden Restaurants Chairman/CEO Clarence Otis Jr.
The casual dining chain, renamed OSI Restaurant Partners, now operates Carrabba's Italian Grills, Lee Roy Selmon's, Bonefish Grill, Flemings Prime Steakhouse and Cheeseburger in Paradise.
Company shareholders are scheduled to vote May 8 on a $3.2 billion deal to take the company private. If approved, Sullivan, Robert Basham and Timothy Gannon, along with Bain Capital Partners LLC and Catterton Partners, will pay $40 for each outstanding share.
Diamond company scores two for credibility
Steve Lux is true to his word: In an interview with the Review earlier this year, the recently hired chief executive of Lakewood Ranch-based cultured diamond manufacturer Gemesis Corp. said his game plan was to raise the credibility of the finished product, which is sold directly to jewelry designers. The company, with annual revenues in the low millions, had already doubled its workforce to 50 employees and increased manufacturing capacity by 800% over the past year.
Lux and Gemesis scored twice on the credibility front in recent days. First, it signed women's golf star Morgan Pressel to a long-term endorsement deal; the 18-year-old Tampa native has long been a fan, as she wore earrings with Gemesis stones last summer on the Late Night with Conan O'Brien TV show. Gemesis followed up that announcement by bringing in Joan Parker, a former marketing executive with international diamond giant De Beers, to serve as an adviser to the Gemesis board.
Lux tells Coffee Talk the moves are part of a "constant stream of reinforcing our place in the industry."
That place, and the credibility it brings, has been an on-going challenge for Gemesis. The technology of making diamonds by machines has been nearly perfected - to the point where the trusted Gemological Institute of America has christened the diamonds as worthy of its top-tier four Cs grading system - but industry and society acceptance of the product has been more muted.
That makes the Parker hiring even more important, as De Beers as long been a vocal opponent of Gemesis and other manufactured diamonds as not being the real bling. And while Lux says the Parker hiring was made simply on her merits as a top marketing and branding executive, he concedes that bringing in someone from De Beers is "definitely very satisfying."
The Pressel deal was satisfying, too. Aside from her growing celebrity, Lux and other company executives noticed that the young golfer cares about the product: Pressel was seen her tightening her earrings seconds before she jumped into a golf course pond April 1 to celebrate winning her first Major tournament championship.
+ Corrections:
WH International, profiled in the April 13 edition of the Review, has three Florida offices, including Tampa, but the firm is not affiliated with other career advisement franchises. In addition, Jerry MacDonald is managing partner of the Tampa office. He is not managing owner as he previously stated.
A real estate brief in the April 20-26, 2007 issue listed an incorrect mortgage amount. Gary and Melba Schmidt mortgaged the former George F. Young building, at 78 and 88 Sarasota Center Blvd., Sarasota to Bank of America NA for $1.485 million.
+ What's Ahead
May 8 - The Real Estate Investment Society will host State Rep. Trudi Williams who will discuss property insurance and taxes. The luncheon begins at 11:30 a.m. in the Magnolia Room of the Pelican Preserve Town Center in Fort Myers. Cost is $25 for members and $35 for guests. To reserve, visit www.reis-swfl.org or call Sharon Heston at 239-410-1253.
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