February 6, 2023

2019 Economic Outlook

Affordable housing, wages and transportation dominate Central Florida's challenges

Jason Garcia | 12/27/2018

Forecast | DEVELOPMENT

RASESH THAKKAR
Senior Managing Director, Tavistock, Orlando

“The state of Florida and Orlando are at a pivotal inflection point with the recent change in several powerful political offices after eight years. In one decade, Orlando has achieved what takes most cities several decades. The question is can the new leadership add its own visionary initiatives and collaborate masterfully whilst innovating new ways of filling the gaps that may hold us back from continued, explosive growth. Orlando enjoys being a world-class brand as the most visited destination in the country and has earned its place as one of the state’s most significant assets. Will this region’s leaders solidify Orlando’s graduation on the tech frontier? Or will they add another world-class civic institution? Or will they ensure one of the best multi-modal and autonomous transportation systems in the nation? My belief is yes, yes and yes, propelling us into the next decade of advancing a city where dreams come true — and Florida will be better for it.”

Forecast | REAL ESTATE

SHELTON GRANADE
Vice Chairman, CBRE, Orlando

“I’ve probably never seen this much interest in the Orlando and Tampa and greater Central Florida markets ever in my career. From a rental standpoint, all of the apartments are virtually full. The average occupancies are in the 95% to 96% range. The rent growth has been between 5% and 7%, depending on the location in the submarkets. We expect the momentum to continue into next year. We should see really strong rent growth and occupancies in 2019. That should lead to a lot of investment also — projects being built but also projects that are selling.

Across Orlando and Tampa, we’ll probably end up the year in 2018 with about $6- billion worth of multifamily transactions. Those are just sales. So will we top that? It’s hard to say, but (2019) should be another really active year, where I would expect another $4-billion or $5-billion worth of apartment sales. The development pipeline actually goes down a little bit, though. It’s just getting tougher for these guys to find good sites, to find sites that they can build at a return that makes sense because costs have been going up a lot on the construction side. So it looks like one of the other trends we’ll see is still pretty steady activity on the development side, but we are seeing the new supply of units kind of taper off a little bit.”

Orlando / Orange, Seminole, Osceola counties Issues ...

  • Affordable Housing: Skyrocketing rents are frustrating efforts to help Central Florida’s chronic homeless population. A recent report by the Central Florida Commission on Homelessness found that people making less than $35,000 a year “have virtually no option for rental housing” in Orange, Osceola and Seminole counties.
  • I-4 Ultimate: State transportation officials and their private contractors must keep the seven-year rebuild of I-4 through the heart of Orlando — one of the most important infrastructure projects in the region’s history — from spiraling out of control amid early indications that it is behind schedule and over budget.
  • SunRail: Ridership on Central Florida’s 4-year-old commuter rail system has fallen short of estimates but many local leaders are convinced it’s still an important long-term investment. They still have to figure out how to pay for it: The state will stop picking up the roughly $30 million-a-year operating tab in mid-2021, forcing the region’s counties and cities to find the money to keep the trains running.
  • Wages: Though Orlando has one of the nation’s fastest-growing economies, the tourism-heavy region also remains one of the lowest-paying. There’s hope that Walt Disney World’s decision to pay its union workers $15 an hour may push overall wages higher — but Disney wages won’t reach that level until October 2021.
  • Lightsabers vs. Magic Wands: This could be another seismic year for Orlando’s tourism industry, as Walt Disney World plans to open a new Star Wars-themed land by the fall — the most highly anticipated addition to the Orlando theme-park market since Universal Orlando opened its second Harry Potter-themed land in 2014. Not to be totally outdone, Universal plans to expand its Harry Potter attractions in 2019.

Melbourne / Brevard County Issues ...

  • Water Quality: The Indian River Lagoon, one of the many major Florida waterways affected by algae blooms, has become a local environmental catastrophe. County leaders are spending tens of millions of dollars, from both sales and hotel taxes, to clean it up.
  • Rebuilding: Economic development leaders are trying to nurture a nascent commercial space industry into a big and sustainable business. With nearly three dozen launches forecast along the Space Coast in 2019, the efforts so far seem to be working but still have a long way to go.

Daytona Beach / Volusia County Issues ...

  • Sea-Level Rise: With 47 miles of coastline, city and county leaders are increasingly focusing on long-term sustainability planning. A 2017 report prepared by the East Central Florida Regional Planning Council found that in Daytona Beach Shores, for instance, the ocean could rise anywhere from 0.82 feet to 5.15 feet over the next 80 years.
  • Leadership: Volusia County’s $900-million county government has been operating without a permanent manager since the previous county manager was forced out amid controversies six months ago. The first task for a newly elected county council will be picking a new chief executive.

County Business Briefs

LAKE COUNTY — County leaders are banking on an economic boost from the $4.2-million Center for Advanced Manufacturing, which opened in 2018 at Lake Technical College in Eustis. The 24,000-sq.-ft. facility includes 40 welding stations, a large fabrication area, grinding center, computer lab for blueprint reading and programming and a machine shop with specialized equipment. Boosters say it will triple the county’s capacity to train skilled machinists and welders and help meet shortages within the manufacturing industry.

SUMTER COUNTY —The Villages remains the 800-pound economic gorilla — the county commission recently approved plans for a fourth town center at the Villages south of State Road 44. Sumter County’s fastest-growing job sectors remain construction and health care, but county leaders are trying to diversify by offering cash incentives to subsidize research and development work by manufacturers and agribusinesses.

Read more in the January issue.

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