Disclaimer: This is a post from 2018 that has been updated to reflect Florida’s current economic and demographic data. Some of the figures (such as current unemployment rates) will surely change in the coming weeks / months due to the effect of Covid-19 on the global and local economy.
Florida is not just a sunny paradise aligned with picturesque beaches, theme parks, and vacation destinations, but it’s also a bastion of cultural diversity with a bourgeoning economy. It serves as one of the primary hubs in the USA for travel and transportation of goods between North & South America. Its unique location and desirable climate offer a wealth of business opportunities across various sectors.
The Sunshine State also epitomizes the resilience of the American economy, as it recovered better than most states since the crash in 2007, and it will stand to tackle this current economic turbulence in 2020.
In order to illustrate this, we’ve compiled some of the economic highlights and lifestyle factors that make Florida’s commercial real estate market one of the best places to invest not only in the United States, but in the world.
1. Growing Economy
A robust economy with wide spread, consistent signs of growth is always a positive characteristic when looking into potential investment opportunities. Florida is a perennial top performer in the United States. In fact, it’s currently ranked #5 in “States with Fastest Growing Economies” by USA Today based on these metrics:
– 2018 GDP growth: +3.5%
– 2018 GDP: $917 billion (4th in the United States – represents nearly 5% of USA’s total GDP)
– Fastest growing industry: Professional and business services
– 1-year population growth: 1.8% (3rd in the USA)
Additionally, the state offers a buffet of principal commercial real estate markets, anchored by: Miami, Orlando, Tampa Bay, and Jacksonville. Miami alone has some of the most pristine and notable Florida retail real estate properties. What’s more, Tampa Bay / St Petersburg ranked in the Top 10 Fastest Growing Commercial Real Estate Markets in 2020.
2. Best States for Business
Florida is also considered one of the best states to do business in the United States based on several factors: GDP, growth of working-age adults, average salary, and tax rates.
Many media sources have Florida in the Top-10 to 20 states:
– 2nd on ChiefExecutive.com for Best States for Business
– 3rd for Small Business & Entrepreneurship Council
– 4th for TheBalance.com’s Best Businesses States List
– 10th on the Business News Daily in 2019
– 12th on CNBC’s Top States for Business 2019
– 20th according to 24/7 Wall St
3. Tax Friendly State
In the words of Benjamin Franklin, “in this world nothing can be said to be certain, except death and taxes.” This idiom helps highlight precisely what makes Florida such a desirable place for businesses and individuals financially, as tax rates are very favorable compared to most of the states in the USA.
Florida is only 1 of 7 states with no personal income tax, so investors and entrepreneurs reduce their potential tax burden by investing here. The Tax Foundation currently ranks Florida as the #1 tax climate in the southeast, and #4 in the country. Due to this, 20% of US businesses that export goods are located in Florida.
Inc.com ranked Florida as a Most Tax-Friendly State, and the same rating was given by Kiplinger.com.
Furthermore, the recent Tax Cuts and Jobs Act is seen as a positive change for both residential and commercial real estate opportunities around Florida.
4. Low Unemployment Rate
The growing economy in Florida contributes to financial stability and influences employment rates in the state. The unemployment rate has declined steadily since reaching a peak of 11.2% in 2010. According to the Bureau of Labor Statistics Florida currently stands at 3.2% unemployment, down 0.1% year-over-year and it is below the national average by .4%.
Florida is also a forerunner of the modern employment landscape and ranks 5th nationwide in high-tech employment, which is one of the fastest growing workforce sectors.
5. Population Growth
A growing population is a strong sign of confidence in the region. Competitive employment opportunitiesand an improvement of quality of life generally compel people to move across state lines en masse. In 2017, Florida’s population growth was 2nd in the nation, with Texas as the only state surpassing it.
The population grew nationwide 0.7% last year, and Florida topped the average with a 1.6% growth year-over-year. Florida remains the 3rd most populous state with nearly 21 million residents.
6. Positive Vacancy Rates
In the latest report, Miami’s vacancy rate in Q4 2019 was 4.5%, creeping up a bit from 4.4% the previous quarter. This illustrates the healthy demand there is for commercial real estate in the area.
In other parts of the state vacancy rates are also dropping: Orlando’s office vacancy rate is 10.7%, which is the lowest since 2007 and Jacksonville has recently dipped below 10%. These falling rates statewide are an indication of the increasing demand for commercial retail space.
7. Foreign Investment in CRE Market
Florida’s commercial real estate market is heavily influenced by foreign investments that arrive from allover the world, especially: Canada, Europe, Asia, and South America. In fact, Florida is ranked #1 in the Top US Destination States for Commercial Real Estate Investments. Florida offers multiple non-stop direct international flights from many key global markets in South America, Asia, Turkey, Israel and others that helps reinforce the strength and stability of the market.
Last year alone Chinese inquiries respectively went up 894% and 199% for Fort Lauderdale and Orlando on Juwai.com, a Chinese website for buyers of overseas properties.
8. Quality of Life
Climate: It’s no mystery why they call Florida The Sunshine State. It is one of the sunniest places in the USA year round, which gives people all the more reason to live here, spend time here, and inevitably spend money here.
Lifestyle: The great weather with phenomenal beaches and outdoor settings allow people to spend a lot of time outside, playing sports, shopping, and enjoying life outside the house. This is not limited to residents, as 3 of the Top 25 Tourist Destinations in the US are in Florida: Miami, Key West, and Orlando. Florida is also ranked #2 on EscapeHere.com’s most visited states list.
Education: Education is an important indicator of prioritizing where money is spent on the government level, as well as a good barometer for attracting potential residents. Florida currently ranks ranks #3 on US News & World Report’s Best States for Education, and #1 in Higher Education (college, masters programs, etc).
9. Infrastructure & Connectivity
Multifaceted connectivity and transportation lines allow Florida’s growing population (currently nearly 21 million residents), visitors, and goods to get to and from one place to another easily. Highways, railways, airports, seaports, and even spaceports allow make domestic and international travel readily available.
All of these avenues of travel and trans make Florida #14 in Best States for Infrastructure according to US News & World Report. In this report they took combined energy, transportation, and Internet access.
Florida’s ranking for Energy Infrastructure is #20, Internet #23, and Transportation #7 overall.
10. Still a Bargain
Taking into consideration all of the fundamental economic indicators, growth potential and commercial real estate fundamentals, the Florida region presents incredible value for commercial real estate investors, especially when compared with other major U.S. markets such as New York or San Francisco.
A recent report from Urban Land Magazine, Emerging Trends in Real Estate, featured 4 of Florida’s markets in their Top-20 US Markets to Watch:
– #6 Ft Lauderdale
– #11 Miami
– #16 Orlando
– #19 Tampa / St Petersburg
Reonomy.com also placed Jacksonville in their 9 Best Cities for Brokers to Get Rich from CRE.
What’s clear is that there are several regions and cities in the state that are promising for commercial real estate properties and investors to make their keep from them.
11. Global Ranking
Last but not least, when comparing Florida as an autonomous entity to other states and countries in the world, Florida Ranks 17th in World Economies. In fact in 2018 the Florida’s GDP topped over $1 trillion. There are only 3 states ranked above it: California, Texas, and New York. It also has a higher GDP than Indonesia, the Netherlands, Turkey, Switzerland, Saudi Arabia, and Poland.
When considering all of these aggregated factors, it is evident that Florida still presents many positive economic opportunities for potential investors investigating the commercial real estate market. If history is any indicator, The Sunshine State will stage a rebound leading the way for the rest of the country economically in the wake of this current public health crisis.