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BusinessObserverFL.com
BUSINESS OBSERVER | JANUARY 3 – JANUARY 9, 2014
PREDICTIONS FOR
2014
Two years ago, we made bold predictions for the new year. Although we missed the mark on a few (we didn’t call them bold for nothing), they nonetheless remained some of the most relevant topics affecting business that year. So, we did it again. The following are 10 predictions for issues, legislation and trends to watch in 2014.
MULTIFAMILY WILL TURN FROM MOMENTUM TO BUBBLE The good news is national firms once again see value in the multifamily and apartment markets on the Gulf Coast. In 2013, for instance, the top 10 multifamily deals in the Tampa region were worth more than $650 million combined. Several deals were for at least $40 million each, which is up significantly from five, even three years ago, say several commercial brokers. Other areas of the Gulf Coast are also in a multifamily resurgence. The renewed attention, which dates back to 2012, makes sense. Occupancy rates are at five-year highs in many markets. Interest rates remain low. That’s why national firms, everywhere from New York City to Dallas and Boston to Chicago, want in on Florida and the Gulf Coast. That good news, however, might also be bad news. That’s because the interest, in some cases, has been so strong that signs of a bubble, not merely momentum, have cropped up from Tampa to Naples. Multifamily bubble signs, based on recent Florida history, include an abundance of private equity money, complexes selling at deep discounts and growth in renters outpacing growth in new homeowners. Some of that has started to happen on the Gulf Coast. Another sign of a bubble looms: Research, including a September report from Freddie Mac, the government-
COSTAR
Clockwise, from top left: Berkshire Reserve Townhomes at 3539 Winifred Row, Naples; Huntington Place Apartment Homes at 3201 Huntington Place Drive, Sarasota; and Broadstone Citrus Village at 7940 Citrus Garden Drive, Tampa sponsored secondary market mortgage entity, that says bubble fears are overblown. Experts in bubble denial?
A run-up on deals? Florida real estate? That sounds, and smells, a lot like a bubble.
COURTESY
Hertz plans to build its global headquarters building in Fort Myers, consolidating its operations from Park Ridge, N.J., and Oklahoma.
COMPANIES WILL FOLLOW HERTZ TO THE FORT MYERS-NAPLES AREA Corporate site selectors can now add a new area to the list of suitable destinations in Florida: Fort Myers-Naples. Once considered a sleepy backwater for retirees, the announcement of Hertz’ corporate headquarters relocation from New Jersey to Estero signaled the area is going to give the Tampa Bay region a run for its economic-development money. In economic development hunts, Hertz is considered the Big Elephant trophy. It’s the kind of prize that rarely comes around because of the huge costs of moving a Fortune 500 corporation. So it must have stunned economicdevelopment officials in Orlando, Miami
and Tampa to learn that one of the biggest corporate relocations in the state’s history should land somewhere outside their metro orbits. Financial incentives are nice, but we don’t think they really made a big difference in Hertz’ decision to move to Estero. The $18 million in state and local taxpayer money for Hertz won’t nearly cover the estimated $100 million cost for the company to move its headquarters here. We won’t really know the full story why Hertz moved to Estero, at least not yet. Some speculate that CEO Mark Frissora’s residence in Naples had something to do with the selection.
If that’s the case, then the Fort MyersNaples area has a good shot at continuing to be a preferred destination for corporate relocations. The region has one of the highest numbers of CEOs and retired CEOs with second homes here. In fact, this has been the strategy of the Fort Myers Regional Partnership: Pitch CEOs who have second homes in the area in the hopes that they will locate some or all of their company here. It’s worked, with companies such as Gartner and Alta Resources already locating facilities here. The region’s assets include schools and roads that have kept up with growth, one of the 50 busiest airports in the country and a state university with 14,000 students. When you combine that with a population that approaches 1 million between Lee and Collier counties, we call that Dunk City.
ONLINE SALES TAX WILL MAKE ITS WAY TO FLORIDA Will Florida lawmakers finally pass a law in 2014 requiring the collection of Internet sales tax? At least two legislators, both Democrats, say the time is now right to level the playing field between Main Street merchants and online retailers, adding hundreds of millions of dollars in state revenue. Rep. Michelle Rehwinkel Vasilinda, D-Tallahassee, and Sen. Gwen Margolis, D-Sunny Isles, have VASILINDA proposed bills to require online retailers to pay sales tax. Vasilinda contends that behemoth retailer Amazon’s decision to build distribuMARGOLIS tion centers in Hillsborough and Polk counties means it won’t fight a change in the law. With a physical presence in the state, Amazon is required to pay the tax under current rules. Vasilinda has proposed a bill — for the sixth time — that would require all retailers, not just those with a physical presence in Florida, to collect 6% sales tax. Strengthening the case for online sales tax is a recent U.S. Supreme Court decision. The high court refused to hear Amazon’s challenge to New York’s attempt to collect sales tax on online purchases. The Florida Retail Federation estimates that Florida loses between $500 million and $1.5 billion annually in taxes. It’s now up to lawmakers, who are reluctant to be seen as “pro tax,” to close the loophole. And the governor, several cabinet members and numerous legislators are up for reelection in 2014. In addition to the Florida Retail Federation, supporters of the tax include Florida Tax Watch, the Florida Chamber of Commerce and Associated Industries of Florida. “Not requiring Internet sellers to collect sales tax erodes Florida’s tax base and creates an unfair advantage over ‘bricks-and-mortar’ retailers,” Florida Tax Watch says in a statement. As it is, online retailers have a 6% price break over traditional retailers, the watchdog group says.