EO-Lee/Collier: Creative Hiring

EO-Lee/Collier: Creative Hiring

By Jean Gruss

Editor/Lee-Collier

Ben Freeland's Nissan dealership business in Naples is booming. He expects to grow revenues more than 20% in 2006. But the biggest obstacle to his growth plans is recruiting new employees and holding on to existing ones.

The reason: a lack of affordable housing. In the third quarter of 2005, the median sales price of a home in the Naples area climbed to $489,200, up 32% from the same period in 2004, according to the Florida Association of Realtors. That's the highest median sales price in the state, even greater than West Palm Beach and Boca Raton, where the median sales price of a home was $399,900.

Meanwhile, Freeland says, he's also having trouble keeping long-tenured employees because they have taken advantage of the housing boom to cash out and move away to a cheaper location, sometimes out of state.

Some relief may be on the way, economists say.

"It's got to slow down," says Gary Jackson, director of the Economic Research Institute at Florida Gulf Coast University in Fort Myers. "I would be very surprised to see housing prices continue to rise as they have."

Orlando-based economist Henry Fishkind also sees a slowdown in residential real estate across many parts of the state, including Southwest Florida. He says there's a mismatch between new-home construction and household formation in many Florida markets. Miami is in the most precarious situation, with two housing starts for every new household. In Naples and Fort Myers, the ratio is also high at 1.4 and 1.2, respectively. "Is there a housing bubble? Yeah," Fishkind says, pointing to these figures.

Fishkind, however, doesn't expect the housing market to crater like it did in the mid-1980s and early 1990s. Instead, the residential sales and price appreciation will slow as mortgage rates gradually rise to 7% or so. Also, home sales have slowed in the Midwest and Northeast, making it harder for people from those areas to relocate to Florida.

For now, high housing costs combined with low unemployment is leading to a worker shortage in the booming areas of construction, health care, hospitality and retail sales. There are 861 job openings for carpenters in Southwest Florida, according to the Florida Agency for Workforce Innovation.

Employers are starting to realize that they'll have to pitch in to help with housing, whether it's providing housing allowances and down payments, says Steve Tirey, president of the Chamber of Southwest Florida. "I don't think we've seen it in an organized fashion, but we're likely to see that more in the future," he says.

At the Hyatt Regency Coconut Point in Bonita Springs, the hotel chain houses employees in the hotel and nearby apartments during the busy winter season, says Carlos Cabrera, the hotel's general manager. But even apartments are hard to come by because so many of them are getting converted to condos, he says. Only one apartment complex has been built in Lee or Collier in the last year, and occupancy rates are in the 97% to 99% range in both counties, according to a recent report by Integra Realty Resources, a Naples-based research firm.

Still, companies are finding all sorts of creative ways to recruit and attract employees as unemployment rates in Lee and Collier hover around 3%. At the urging of local builders, the Lee County school system is starting builder "academies" in three local high schools to steer young people into the building trades. At the management level, International College started a superintendent training program.

Builders also have had to pay more to compete for labor, particularly for skilled craftsmen and managers. For example, construction managers earned $41.72 per hour in 2005, up 30% from the $31.97 they earned in 2001, according to the Florida Agency for Workforce Innovation. "For years in Southwest Florida the pay scale was not up to par," says Michael Reitmann, executive vice president of the Lee Building Industry Association. Post-hurricane rebuilding in New Orleans and the Gulf Coast next year will likely push wages up further, he says.

At Lee Memorial Health System, which has 6,800 employees, top nursing executives travel around the country to man the booths at nursing conventions. That way, prospective candidates meet the top brass right from the start, says Jon Cecil, chief human resources officer. "It's all about that first impression," he says. Cecil also has helped the hospital gain national attention with awards such as AARP's best employers in the nation for workers over 50. "When you build a reputation and demonstrate the results, it's much easier to attract people," Cecil says.

Cecil acknowledges he has lost an arrow in his recruiting quiver: Fort Myers and Cape Coral's affordable housing. The median sales price of a home in the Fort Myers-Cape Coral area surged 44% to $286,700 in the third quarter of 2005 versus the same period in 2004.

Real estate outlook softens

Despite the predictions of a slowdown, no one is forecasting a drop in home prices or a screeching halt to new construction. That's because builders and Realtors say demand will continue to be strong through 2006.

Alan Smith, president of the Southwest Florida division of homebuilder Taylor Woodrow, says he expects to sell 650 new homes next year, a 44% increase over the 450 homes he expects to sell in 2005. "I don't think it's abating," he says.

What may slow the new-home market is not slacking demand but shortages of materials such as roof shingles, aluminum and concrete, Smith says. "We're working very hard to maintain [supplier] relationships," he says.

Still, Smith and others say there won't be as much froth in the market as interest rates rise. "There's definitely going to be a downturn in investment activity," says Lee Building Industry Association's Reitmann.

Fishkind says speculators will start bailing out of condominiums first, canceling their contracts on new construction. Because of that, Fishkind says, some of the condo towers planned for downtown Fort Myers may not be built.

"We do see somewhat of a slowdown in 2006," says Heidi Colgate-Tamblyn, president of SunTrust Bank of Lee County. Still, mortgage activity will continue to be brisk, she predicts. "It's all relative; what may be a slowdown in our area is a boom somewhere else," she says.

Realtors say Southwest Florida is not likely to see price declines, but slower price appreciation. Home values could continue to rise from 9% to 12% in 2006, predicts Tom Bringardner, general manager of Premier Properties of Southwest Florida, a Naples agency with 225 agents. He attributes some of the slowing appreciation to the increased number of listings on the market. For example, Premier Properties had 20% more listings in November 2005 than the previous year.

On the commercial real estate side, Fishkind says, the market is more in equilibrium than the residential side. He says investors have been more cautious lately, and banks haven't been as eager to provide financing.

Next year, Fishkind says, you're likely to see capitalization rates return to more normal levels as interest rates rise. Cap rates, roughly figured by dividing the property's income by its price, are a quick way to determine commercial real estate values. "Cap rates change in concert with the 10-year Treasury note," says Fishkind. He expects 10-year Treasuries to yield between 6% and 6.25% next year, up from the recent yield of 4.5%. Cap rates in the Southwest Florida area have hovered between 5% and 7% in the last year depending on the property type, brokers say. If Fishkind is right, that means cap rates will return to more normal 7% to 9% range.

Growth moves from the coast

As land prices rise and affordable housing becomes scarce, development is headed into more inland counties such as Hendry and Glades.

For example, a person making $30,000 a year can only afford a $100,000 home, says Russ Weyer, an economist with Fishkind & Associates. That means people who are priced out of the Lee and Collier housing market will look east. "The growth is moving inland," he says.

Developers and homebuilders have expected the move. Bonita Bay Group, bought 4,700 acres of land in LaBelle from the Bob Paul family, for example. The Bonita Springs-based developer plans to create master-planned communities on land that is now farmed for citrus.

Frank D'Alessandro, a managing partner of D'Alessandro & Woodyard in Fort Myers, says he first stepped foot in Glades County 18 months ago after more than 25 years in the Southwest Florida commercial real estate business. He says clients are scouting sites all over inland counties such as Glades.

Economic development officials in inland counties are scrambling to meet the projected demand by building roads, sewers and schools. What's more, these counties will have to help agriculture workers train for new jobs. "The ag market is changing dramatically," says Janice Groves, director of the Hendry County Economic Development Council in LaBelle. She hopes Edison College will break ground on its new LaBelle campus next year.

Tourism up, but hurricanes loom

Hoteliers report the pace of booking for next year is looking better than 2005, though the hurricane season is a constant worry.

"We're seeing an 8% or 9% increase in bookings," says Cabrera, who recently was promoted from general manager of the Hyatt in Bonita Springs to senior vice president overseeing 15 Hyatt hotels in Florida and the Caribbean.

What's more, people are booking rooms further in advance. After the terror attacks of Sept. 11, 2001, people booked hotels only a few months out. Today, some are booking as far out as one year. That's important because hotels don't have to discount rooms to fill them at the last minute.

Meanwhile, traffic through Southwest Florida International Airport will continue to increase. The Lee County Port Authority forecasts nearly 4 million people will board a plane at the airport in 2006, a 6% increase over 2005. Low-fare giant Southwest Airlines inaugurated service to Fort Myers in 2005 and the airport opened a new 798,000-square-foot terminal.

Despite the promising outlook, the hurricane season is creating uncertainty. "In the meetings business, we've had the luxury of saying 'last year it was a freak thing,'" says D.T. Minich, executive director of the Lee County Visitor and Convention Bureau. "Now we've got two years of hurricanes in a row, and it's going to be a little bit of a harder sell," he says.

Minich says Southwest Florida can expect to see better than 3% increase in the number of visitors if hurricanes don't threaten and the 700-room South Seas Resort on Captiva island reopens this spring.

Tourism officials in Collier County echo the concerns about hurricanes. The group meeting business accounts for 10% to 15% of the travel business in Collier and losing a chunk of that business during hurricane season is a big concern, says Jack Wert, executive director of Naples, Marco Island, Everglades Convention and Visitors Bureau. Wert projects growth in visitation and spending of 2.5% in 2006.

Trends to Watch in Lee and Collier

• Workers will continue to have trouble finding affordable housing.

• Labor markets will continue to be tight.

• Residential real estate sales volumes and price increases will slow.

• Development will spread to inland counties, such as Hendry and Glades.

• Hurricanes threaten group-meeting business, but hoteliers are upbeat.

• Southwest Florida International Airport's new terminal will boost the region's economy.

HOUSING STARTS

Annual Single-Family Housing Starts

Collier Lee

2004 2,740 5,344

2005 2,848 6,632

2006 2,700 7,400

Source: American Metro Study. 2005 starts through third quarter. 2006 starts are projected.

SW FLA.INTERNATIONAL PROJECTIONS

Estimated Estimated

Passenger Freight and

Enplanements Mail (lbs.)

2005 3,769,644 41,371,746

2006 3,995,736 44,474,627

2007 4,177,360 48,254,970

2008 4,386,218 52,839,192

Source: Lee County Port Authority

EMPLOYMENT

November 2005, figures not seasonally adjusted.

Labor Force Employed Unemployed Jobless Rate

Charlotte 63,433 61,329 2,104 3.3%

Collier 145,905 141,560 4,345 3.0%

Lee 265,271 258,100 7171 2.7%

Source: Agency for Workforce Innovation

FASTEST GROWING OCCUPATIONS TO 2012

The table includes Charlotte, Collier, Glades, Hendry and Lee counties.

Rank Occupational Title Annual Percent Growth Average Hourly Wage

1 Tile and marble setters 6.26% $17.34

2 Medical assistants 6.21% $12.60

3 Physician assistants 5.84% $35.47

4 Network systems analysts 5.17% $23.54

5 Medical records technicians 5.16% $13.44

6 Cement masons and concrete finishers 5.09% $15.32

7 Surgical technologists 4.83% $17.43

8 Home health aides 4.77% $10.20

9 Medical and health services managers 4.50% $40.84

10 Kindergarten teachers 4.48% $29.48

Source: Agency for Workforce Innovation

INDUSTRIES GAINING MOST JOBS TO 2012

Industry Title Annual Growth

1 Employment services 1,218

2 Elementary, secondary schools 508

3 Full-service restaurants 472

4 Building finishing contractors 418

5 Building equipment contractors 374

6 Offices of physicians 371

7 General medical, hospitals 308

8 Services to buildings, dwellings 267

9 Local government 266

10 Contractors 259