Observations on South Florida business
Have you wondered how Gartner built such a big presence in Fort Myers?
You may have read the news in the Business Observer recently that the technology research firm intends to significantly grow its presence in Southwest Florida — again. Gartner already has 1,600 employees in four buildings in the Gateway area of Fort Myers.
If you live in Fort Myers, there’s a good chance you know someone who works for Gartner and raves about this generous employer. It’s the kind of company Lee County has strived to recruit to diversify its economy from housing and tourism.
Still, Southwest Florida isn’t exactly a technology hub, so you’ve got to wonder what brought Gartner to Fort Myers in the first place. The publicly traded company (symbol: IT; recent price: $134) is headquartered in Stamford, Conn., and reported $3.3 billion in revenues in 2017. A member of the S&P 500 listed on the New York Stock Exchange, Gartner is the kind of clean tech company every community would love to attract.
Chalk it up to shrewd “who-you-know” economic development.
Turns out, Manny Fernandez, the former president and CEO, purchased a vacation home on Sanibel, the barrier island near Fort Myers in 1996. He loved the area so much that in 1997 the company relocated its accounting department from Connecticut to Southwest Florida.
That initial move was the start of a 20-year relationship that has turned Gartner into one of the biggest private employers in Southwest Florida. The personal connection with the CEO helped plant the seed for this economic development success story.
Of course, just because Fernandez had a vacation home here didn’t guarantee Gartner jobs. The company considered other factors for expansion such as cost of doing business, quality of life and even friendliness, Fernandez told the Business Observer in 2011.
But you can’t deny that the CEO’s presence in Lee County gave Southwest Florida a shot. And it’s not unreasonable to think that Gartner will one day consider Fort Myers to relocate its corporate headquarters.
Because where would you rather live and work: Southwest Florida or Connecticut?
You know the answer.
If you judge Southwest Florida’s economic health by the traffic on the roads, you’d be right to say conditions are positive.
Fortunately, the Regional Economic Research Institute at Florida Gulf Coast University can provide the data to back up your anecdotal evidence. Led by Christopher Westley, an economics professor at the university’s Lutgert College of Business, the institute confirms what you’ve noticed on the highways.
Once a month, Westley publishes the Southwest Florida Regional Economic Indicators Report, a useful gauge of the economic wellbeing of the region. We’re fortunate: Not many areas of the country have their own economist gathering and analyzing these kinds of numbers.
Check out the March 2018 report . Westley singles out growth in airport-passenger activity, single-family building permits and tourist-tax revenues. These indicators are part of the virtuous cycle in Florida: tourists visit the region, they spend money at hotels and restaurants and they eventually buy a house.
Consider subscribing to the institute’s emails, which alert you to useful reports on the region’s economic wellbeing. It’ll help you make better decisions that affect your business.
If you live in Lee County, be sure to check out the institute’s quarterly Lee County Business Climate Survey. It provides insights about what your business peers are thinking and planning.
Visit the RERI website by clicking here.
The thickness of the program guide for the Outlook Conference is one indicator of the health of commercial real estate in Southwest Florida.
This year’s event on Jan. 22 in Bonita Springs, organized annually by the CCIM commercial real estate group, featured a program guide thick with 34 advertisements. Let’s just say this year’s tome was prime real estate for anyone involved in Southwest Florida’s office buildings, warehouses and retail centers.
While there were lots of new faces, the first speaker was familiar to all: Lee Arnold, the veteran commercial real estate leader who has guided his Colliers International firms through the wild swings that move the market in the Sunshine State. When Arnold speaks, everyone takes note.
Arnold never disappoints with his presentations and this time was no exception. No droning on about vacancy rates or square feet of absorption. Instead, Arnold warned his audience about the impact of artificial intelligence, big data and technology such as driverless cars on real estate.
A few examples of just-around-the-corner technology: augmented reality identifying restaurants on a street you’re traveling on, virtual reality to create model homes and using big data to determine the best sites for shops. “Everything we know about real estate is changing,” Arnold counseled.
This was a warning to commercial real estate brokers who still use outdated methods to help clients with site selection. Big data is here and commercial real estate professionals need to use it to help their clients find promising locations or be left out. “You’re going to have to deal with big data,” Arnold warned.
Don’t you wish there were more events like the Junior Achievement Business Hall of Fame Dinner?
Held twice a year alternatively in Collier and Lee counties, these dinners celebrate the entrepreneurs who make Southwest Florida great.
On Oct. 26, hundreds of people packed the Ritz-Carlton Beach Resort in Naples in what’s become the unofficial kickoff to the busy winter season. None would argue with the election of Ed Staros and Mark Wilson to this year’s Business Hall of Fame for Collier County.
Staros is the vice president and managing director of The Ritz-Carlton Resorts of Naples and Mark Wilson is the president and CEO of London Bay Homes. Staros put Naples on the map with two Ritz-Carlton hotels and Wilson’s homebuilding company did the same when it was named America’s Best Homebuilder.
But it’s not just the awards that make these dinners great. Because Junior Achievement teaches valuable entrepreneurial skills in schools, these Hall of Fame entrepreneurs always share nuggets that provide keys to their success. For Staros, the key to success is every employee has a mentor at the company. Wilson advises to work hard and play hard, emphasizing the importance of taking time off to recharge.
You can read more about the event in this Naples Daily News story http://www.naplesnews.com/story/money/2017/10/27/junior-achievement-southwest-florida-adds-two-its-business-hall-fame/802449001/.
And if you’re not familiar with Junior Achievement and its financial literacy programs, be sure to check out the organization’s website: http://jaswfl.org/.
Christopher Westley likes to call Southwest Florida the “bubble of happiness.”
As the director of the Regional Economic Research Institute and an economics professor at Florida Gulf Coast University, Westley is an astute observer of the economic health of the region. Westley’s institute publishes a treasure trove of local economic data ranging from taxable sales to airport activity, home sales, construction permits and employment.
He calls Southwest Florida the “bubble of happiness” because the region benefits strongly in times of economic expansion. This stands in contrast to many other areas of the country that aren’t so fortunate.
Still, as the most recent downturn revealed, sometimes economic booms are too much of a good thing. Westley recently shared his insights with the Entrepreneurs Society of America, an organization that brings together entrepreneurs in the Fort Myers and Naples areas for informative monthly meetings.
It’s worth your time to read the institute’s monthly report of economic indicators to keep tabs on which way the economic winds are blowing. The institute also publishes the Lee County Business Climate Survey and the Industry Diversification Report. All the reports are published on the institute’s web site.
How do you protect more than 53,000 acres from future development without spending any government money?
Just ask Al Reynolds, vice president and U.S. sector leader with Stantec, the international engineering and planning firm. He’s the architect of the bold Rural Land Stewardship Area, a development and conservation plan for eastern Collier County he helped create nearly two decades ago.
The program is a transfer-of-development-rights program, where landowners with environmentally sensitive land can earn credits that they can sell to developers in exchange for giving up development rights.
“This was a big experiment, nothing like this had been done before,” Reynolds told a gathering of the Real Estate Investment Society in Fort Myers recently.
Reynolds says the Rural Land Stewardship Area already has protected 53,569 acres from future development. Reynolds says a total of 89,300 acres could be protected by 2025 and 134,000 acres by 2050.
Developers in the rural areas must purchase credits from willing sellers to build homes and commercial buildings. For example, Rural Lands West, a new town in eastern Collier County that is under review, will set aside 12,200 acres for conservation by buying 32,000 credits.
For example, the Rural Lands West plan would put the environmentally sensitive Camp Keais Strand in conservation, a deal that likely could have cost the county $80 million based on current market prices. Now, with the transfer-of-development rights plan, “there’s no cost to the public to do it,” Reynolds says.
You can find out more about the Rural Land Stewardship Area by clicking here.
The economic truth is fleeting, but two experts recently provided some fascinating insights.
One of the benefits of living in Southwest Florida is that the area’s wealth attracts experts who share their insights. They often visit Florida during the winter months, when wealthy seasonal residents are eager to hear their economic prognostications.
Ronald Ryan, the CEO of Ryan ALM who designed many of the Lehman bond indexes, spoke to the CFA Society Naples about the U.S. pension-fund crisis. David Jones, the president and CEO of DMJ Advisors, spoke to the Real Estate Investment Society about the impact of Donald Trump’s election on the markets.
Want to attend events like this in the future? To view the CFA Society Naples’ website, click here. The Real Estate Investment Society’s website is here.
Alex “Pete” Hart knows all about technological disruption.
As the former CEO of Mastercard International, Hart helped make credit-card transactions commonplace. He continues to serve on high-profile corporate boards in Silicon Valley where he’s privy to ideas from some of the sharpest technology minds in the world.
Speaking to a gathering of the CFA Society in Naples, Fla., recently, Hart says digitization is changing every industry, even some you might not expect. “Every business is up for grabs,” Hart warns.
For example, Uber has transformed transportation and Airbnb has upended the hospitality sector. Health care, retail and many other industries will see transformations in automation that will be disruptive, too. “I think we’ll see the robotization of everything,” Hart says, pointing to Amazon’s army of warehouse robots.
The “staggering challenge,” Hart says, will be to figure out how people can continue to work and earn a living despite those changes. “The more technologically facile you are, the more likely you are to work,” he says.
On the financial technology front, Hart says Apple Pay is a precursor to the use of smartphones to pay for goods and services. The biggest challenges facing the electronic-payment industry now are reducing fraud and transaction delays from identification checks.
Governments have an incentive to encourage electronic payments because they can track money for revenue generation. “Mastercard and Visa have been enormous beneficiaries of that,” Hart says.
In addition to his insights on technology and financial services, Hart shared career lessons that started early in humble circumstances in small-town Ohio. Among them:
•Get past your fear of failure. “I’ve failed at so many things,” Hart says.
•We learn the most when we lose. Losing a job or a marriage are learning experiences.
•Things can always get better. Consider: The New England Patriots won the Super Bowl in one of the biggest comeback games in the game’s history.
•Never give up.
If you want to keep up with Randy Henderson, you’d best be flying.
The mayor of Fort Myers and avid pilot recently rattled off the number of private-sector projects underway or on the drawing boards at a recent meeting of the Real Estate Investment Society.
Projects include new residential buildings such as Allure and The Place on First, a Marriott-flagged convention center hotel and a regional technology hub. Henderson says the city will issue a request for proposals soon for the City Pier on the Caloosahatchee River.
In all, Henderson estimates there is $600 million to $700 million worth of private investment in the pipeline. “That’s more in the next four years than in the past 10 years,” he says.
Developer Mainsail is planning build the 12-story convention hotel downtown. “They want to turn some dirt in the second quarter of this year,” Henderson says, noting that Harborside Event Center is also scheduled to be renovated.
The hotel will bring 240 parking spaces, welcome relief for the growing number of visitors to downtown shops, restaurants and events.
Scarcity of parking is a good sign despite the challenges, says Henderson. “We begged for a time we’d have a parking problem,” Henderson chuckles.
A jobs recovery in Southwest Florida brings its own challenges.
Shelton Weeks, the chair of economics and finance at the Lutgert College of Business at Florida Gulf Coast University, recently spoke about the regional economy to the CFA Society Naples, the association of money managers in Southwest Florida.
First, the good news: Nonfarm employment in Southwest Florida is now above the peak in 2006. Wages in construction and hospitality have been rising. What’s more, the share of volatile construction jobs is lower now than it was during the boom. And in Collier County, financial-service employment has surpassed the peak 10 years ago.
“Our markets have really recovered,” Weeks says.
But jobs in leisure and hospitality have surged ahead and an economic downturn could have negative consequences for the area because tourism is highly sensitive to economic cycles. “Our exposure to leisure and hospitality, particularly in Lee, is getting larger,” Weeks warned.
Still, barring an economic downturn, we’re likely to see issues such as housing affordability return to the forefront, especially in Collier County. “It’s a good problem to have,” Weeks says.
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