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In Louisiana, the effects of Katrina linger even though the hurricane was five years ago.
That's why Florida developers and builders like Rick Miller spend so much time traveling to the Bayou State. Miller's Fort Myers-based company, National Development of America, is building its fifth affordable-housing project in that state and it has four more on the drawing boards.
The hurricane left so many people homeless in New Orleans that 100,000 of them showed up in Baton Rouge after the storm. And Louisiana's real estate market never experienced the spike that occurred in Florida. “They had no real estate boom,” Miller says.
But the lack of housing in Louisiana could keep Miller busy, perhaps long enough so that he can return to development in Florida. Every two weeks, Miller drives to Tampa to catch a Southwest Airlines flight to New Orleans. “I'd much rather develop in Florida,” he says.
In May 2009, National Development completed a $16 million, 80-unit affordable housing rental subdivision in Baton Rouge and broke ground on another $11.5-million project in the same region. Local Louisiana banks that emerged relatively unscathed from the financial crisis are funding many of these projects. “SunTrust won't do a deal in Louisiana,” Miller says.
Besides the hurricane, Baton Rouge has other advantages. These include state government, Louisiana State University, oil companies, traffic on the Mississippi River and a new 781,000-square-foot Coca-Cola bottling and distribution center.
Miller, 58, built his company on the twin pillars of affordable housing and commercial construction, two of the least correlated sectors of the industry. When one of those sectors falters, the other generally picks up the slack.
Still, Miller says this downturn is unlike past ones. “We all look like superstars when the economy is doing well,” he says. “We're worse off this time.”
Some of Miller's commercial developments in Fort Myers include the UBS building in Reflection Lakes Commercial Park and the Royal Palm Corporate Center at the corner of Summerlin Road and Royal Palm Square Boulevard. Last year, it completed Pueblo Bonito, a 120-unit affordable-housing community in Bonita Springs.
Miller says it could take as long as four to five years before commercial development begins anew in the Fort Myers area, perhaps less for residential. “Until we use the inventory, there's not going to be a need for new product,” he says.
Miller says investors buying commercial real estate today must expect to hold properties five to 10 years before achieving meaningful returns.
Now, all the development Miller is doing in the Fort Myers area is buying and renovating some foreclosed homes in Lehigh Acres. Under a separate company called NDA Housing Partners, Miller has renovated and sold a dozen single-family homes and is working on another eight.
Miller says Lehigh homes are selling at about $60,000 in foreclosure. That nearly 30% less than what foreclosures are selling for in Cape Coral, another area of Lee County hit hard by foreclosures.
For working-class people, Lehigh Acres presents a better value. “It's affordable,” Miller says. “That's one thing our company understands.”
Recently, the company sold a home to a single father who works for Publix, helping him obtain a mortgage using a combination of loan guarantees from federal and local housing agencies.
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