- October 30, 2024
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Economic growth in Florida has outpaced the nation, and in Southwest Florida, it is even more pronounced, according to Kevin Thorpe, chief economist and head of global research at Cushman & Wakefield US.
The economic growth rate in Southwest Florida is 6.7%, compared with 6.2% for Florida overall and 3.4% for the United States, Thorpe says.
“You can just feel the economic activity everywhere here,” Thorpe said recently, when delivering an economic forecast to the Horizon Council, a group supporting economic development in Lee County. The area has seen “explosive growth largely fueled by the influx of businesses coming to your market."
One place in particular where the region stands out is in its use of office space. The Fort Myers-Naples area ranks in the top three metros in the country when it comes to net absorption for office space since 2020, after Brooklyn, New York and Nashville, according to Cushman & Wakefield research combined with Moody’s Analytics data. It is one of “few markets” in the country that has been absorbing office space, Thorpe says.
“Office buildings in general around the country are getting emptier,” Thorpe says. “Not here.”
Office vacancy nationally is at an all-time high of 20%, according to Thorpe, who reports it is 4.6% in the Fort Myers-Naples area.
Cushman & Wakefield research indicates Fort Myers actually needs more office product. “If you can find a way to actually deliver a new office building here in the coming years, I suspect you can do very well,” Thorpe says.
The Fort Myers-Naples area has seen nearly 1.1 million square feet of positive absorption, Thorpe says, since the pandemic started. “This happened at a time when in the U.S., the U.S. has shed over 275 million square feet of office space.”
Thorpe predicts about one more year of markets in general shedding office space before “recalibrating” to the hybrid workplace. “After this year,” he says, “we’re going to see positive demand for office space nationally.”
It used to be that each job created meant a need for office space, Thorpe says, which is no longer the case due to remote and hybrid work.
Three industries in particular — legal, utilities/energy and media/telecom — all have work strategies that are about 50% office-centric, accounting for some of the demand, Cushman & Wakefield research shows.
Other points from Thorpe's presentation include:
Typically, the Southwest Florida market produces about 6,000 jobs per year, according to Thorpe, who said the area saw a spike in employment in recent years. It produced 16,000 jobs in 2021, 14,000 jobs in 2022 and 8,500 jobs in 2023. This year it looks like there will be 5,000 to 6,000 net new jobs in Southwest Florida, according to Thorpe.
Construction and office-using employment have seen the largest gains in the number of jobs created since February 2020, when compared with April 2024, according to U.S. Department of Labor data coupled with Cushman & Wakefield research.
The one sector that has not recovered since the pandemic is leisure and hospitality, which has seen a decline in the number of jobs.
Median home prices went from $250,000 before the pandemic to nearly $500,000 today in Southwest Florida.
“There are housing affordability challenges,” he says, noting people in the audience were nodding their heads. “The good news is home prices are starting to correct here finally."
In Southwest Florida, home prices are down 3%-5% this year, he adds. “This doesn’t look to me anything like a crash," Thorpe says. "This looks to me like a rebalancing.”
Cushman & Wakefield is predicting home prices in the region will flatline for a few years, from 2025 to 2027.
“In general, there’s a healthy outlook for this market,” says Thorpe. “Even though you have this housing affordability challenge, people will continue to move to this market because it’s Florida.”
