Optimism in the Florida Real Estate Market?
At Miami economic forum, a sense of cautious optimism
MIAMI – Jan. 16, 2012 – Condo Vultures founder Peter Zalewski sees more confidence in the real estate market this year, as high-rise towers return and prices for luxury real estate inch off a bottom. That could be a problem. “My biggest concern for 2012 is bravado,” he told an audience during a Friday morning panel discussion on the development industry. “You are starting to see some egos return. You’re starting to see some optimism in pricing.” Optimism – or what passes for optimism in the post-bust South Florida – set the tone for the Greater Miami Chamber of Commerce’s second annual economic forum. Bankers said they had money to lend, but few businesses profitable enough for safe loans. Builders said they were almost certain housing prices have finally hit a bottom. Trade and tourism watchers said foreign buying power continues to shield South Florida from the full impact of domestic economic woes. Zalewski, who started his Vultures brokerage six years ago in anticipation of a historic real estate bust, specializes in distressed real estate. With condo towers in pre-sales once again and some going vertical, he warned that developers may once again be over-estimating demand for pricey apartments. “There’s been a lot of hoopla. If these things stall in their tracks, it could create some bad buzz that I think would take us a long time to recover from,” said Zalewski, who also writes a monthly column for The Miami Herald’s Business Monday magazine. Several speakers at the daylong event at Jungle Island shared an outlook that conditions have improved enough to make 2012 a turning point, with growth slowly gaining steam toward normalcy. But memories of past optimism tempered some of the rosy comments. Ramiro Ortiz, a Miami banker turned consultant, opened a finance and retail discussion by reminding the audience that, in the same room last year, speakers were bidding good riddance to 2010 and expecting a strong 2011. “Here we are a year later,” he said. “I would say good riddance to 2011.” Among the highlights from Friday’s forum: • Miami-Dade’s retail industry is performing well. Allen Morris, CEO of the Allen Morris Co. commercial brokerage, said retail vacancies were a fraction of the office sector. Only about 4 percent of Miami-Dade’s retail space is available, compared to about 14 percent for office. Industrial space falls roughly in the middle at 8 percent vacant. • Bank executives insisted they want to lend money, but that demand from small businesses is too low. “Whoever wants it, come and get it,” said Adolfo Henriques, president of Gibraltar Private Bank in Miami. “We are flush with cash.” He said his staff rarely hears from stable businesses looking for a loan to fund growth. Instead, most loan requests come from marginal companies needing cash to survive. • Don’t expect a housing rebound to spark a big return to hiring in the building industry. Carlos Gonzalez, head of the Southeast Florida division for Lennar, said the national homebuilder expects to expand in 2012. But its payrolls won’t, at least not locally. “I don’t see any hiring this year,” he said. “I am growing my business.” • The construction industry shakeout continues. Ed McNeil, head of Florida operations for Turner Construction, said the widespread failures of contractors in commercial building did not materialize in 2009 and 2010, despite a nearly idle industry. But in 2011, firms began to go bankrupt and he expects more in 2012. “How long can you hold your breath in this distressed market?” • Presidential politics looms large in predicting the future of finance. Ken Thomas, a local banking consultant, said he expects the Federal Reserve to continue pumping cash into the financial system by launching a third effort called “quantitative easing” or “QE3.” Thomas said the influx of cash should help the economy in the short term, boosting President Barack Obama’s reelection chances. The president appoints the Fed chairman, currently Ben Bernanke. “Ben Bernanke wants to keep his job,” Thomas said. “No Republican will keep him. The only one who will is Obama.” • Corporate America seems extremely poised for major hiring and spending. James Glassman, an economist with JPMorgan, presented data showing national business profits were up at levels far above past recoveries. He expected that to spark more hiring, particularly among younger workers, who have been hit hardest by the unemployment crisis. As younger workers feel secure in their careers, first-time homebuyers should surge after years of delayed purchases. He compared the current dynamics to the 1950s, when homebuying soared as an entire generation of young people made up for lost time. “The recession is doing to our young people what the war did to the baby boomers,” he said, referring to the generation born after World War II as the country returned to normalcy. “Young people are seeing their situations improve the most.” Copyright © 2012 The Miami Herald, Douglas Hanks. Distributed by MCT Information Services.
