(Crystal Proenza is associate editor of Real Estate Florida.)
GAINESVILLE, FL-New research released by the University of Florida shows that annual average population increase in the state over the next two years is projected to dip down to its lowest level in 60 years. Data shows that projected growth has dipped dramatically, dropping more than 90% from the annual average increase between 2002 to 2006, which are considered "boom years." Between 2007 and 2008 the state grew by 127,000 residents, versus 331,000 between 2006 and 2007.
"The major reasons for the slowdown are two-fold," Stan Smith, director of UF's Bureau of Economic and Business Research, tells GlobeSt.com. "One is the slowdown in job creation. Earlier in this decade, Florida was adding several hundred thousand jobs per year, and in the last year has lost 350,000 jobs." Those jobs were one of the main magnets drawing residents to the state, he adds. "The second factor is the housing meltdown. When people have difficulty selling their homes, that tends to slow down their migration to growing states such as Florida."
The research confirms what many commercial real estate professionals have known for some time. "This is what has caused the slowdown that we have felt for the last 18 months, and it will continue to put pressure on the fundamentals for new development activity and leasing activity due to weakening demand," says Justin Greider, associate director with Holliday Fenoglio Fowler LP's Orlando office.
All sectors of the market are impacted by what started with declining residential fundamentals. "Residential real estate is a major driver of the Florida economy, so if there is a reduction in population growth it will have an impact on the overall economy," says Edgar Jones, vice president and regional development officer for Miami-based Rockefeller Group Development Corp. "The commercial markets will follow residential." When the residential market starts to get healthy again, commercial will come back as well, he adds.
"There are a number of positives which get overlooked by this report," says Greider, who points out that the data still projects 37,000 people are going to move to Florida each year from 2008 to 2010. "That's over 100,000 people in the worst recession in 80 years--so people are still coming," he notes. "Most states would be envious of those types of population growth in the best of times."
Experts argue that Florida's long-term fundamentals have remained sound because there was not an overbuilding of commercial space, and believe the population slowdown is only temporary. Smith's research shows that as the national economy recovers and excess supply of housing is absorbed, population growth will return to more normal levels during the next decade. "If people weren't moving here because of a jump in the number of alligator attacks, it would be more concerning long term," says Greider.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
