Orlando Overtaking Miami as Florida´s Fastest Growing Metropolis

As Orlando's booming economy leads Florida out of recession, US economy experts are citing the metropolis as "the new Miami" for the US rich list and international investors alike. Best known for being the tourist attraction capital of Florida, Orlando is now pushing Miami aside as the state's fastest-growing area for a generation.

This article outlines Orlando's ongoing rise, including above average jobs growth, multi-million dollar regeneration schemes, boosts to the health sciences industry and more. First though, let's take a quick look at Florida's economy as a whole.

Two tax cuts to paradise?

Florida enjoys one of the strongest micro-economies in the USA and is the 18^th largest economy in the world.

Since 2006, Florida has maintained its position as having the 5^th best business tax climate in the USA (after South Dakota, Alaska, Wyoming and Nevada) and also ranks as the state with the 4^th highest Gross State Product (GDP). It is worthy of note that numbers 1 - 4 in the best tax listings fall significantly lower than Florida in the GDP stakes, ranging between numbers 31 and 47 (out of 50 states countrywide).

Florida's Governor Rick Scott has still requested an additional $1 billion in tax cuts to corporate income and property taxes. The argument is that Florida's "high tax burden" is a disincentive to business and that making these tax cuts would attract further business to Florida.

"Policy carrots" help achieve goals

Dr. Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida (UCF), writes in the April 2011 edition of the Florida & Metro Forecast: "As an economist I am in favour of these incentives, the policy carrots that help elicit desirable behaviour on the part of individuals and businesses and help achieve goals."

However, Snaith comments that he is "always puzzled" by the opinion that the state's taxes are too high and isn't sure of the "necessity" of the cuts. He continues: "Should we cut taxes to improve our ranking? There is not much room for improvement as far as the tax climate in Florida is concerned and trying to be the cheapest date in the country is not going to bolster the number of suitors Florida has."

What does this mean for investors considering a Florida property purchase? It means favourable business and property taxes (whether the further cuts happen or not), coupled with the strong (and continuing to strengthen) local economy.

Latest data from the heart of the Sunshine State

Snaith's report, which covers the period 2011 - 2014, certainly heralds good news overall. Recovery is set to build momentum throughout 2011, before getting up to full speed in 2012 and accelerating further through 2014.

Florida's Real Gross State Product (RGSP), the state-level analogue to Real GDP, will expand 2.4% in 2011 and accelerate to 3.3% in 2012, 3.6% in 2013 and 4.0% in 2014. Nominal Gross State Product is expected to reach $918.9 billion in 2014, as Florida moves towards becoming a trillion-dollar economy.

Governor Scott's 7-7-7 campaign includes the creation of 700,000 new jobs to go some way to replacing the 850,000 jobs which were lost during the worst of the recession.

Despite the recession, the Orlando area of Florida has remained strong for employment. The top employers are currently (with number of employees): Walt Disney Co.(62,200); Orange County Public Schools (23,228); Florida State Government (19,500); Florida Hospital / Adventist Health System (16,002); Publix Super Markets Inc. (15,606); Universal Orlando (13,000); Federal Government (12,700); University of Central Florida (10,152); Orlando Regional Healthcare System (10,000); Seminole County Public Schools (9,984).

Payroll job growth, year-over-year, is expected to average 0.4% in 2011, 2.3% in 2012, 2.9% in 2013 and 3.0% in 2014. Real personal income growth, which started to rise in 2010, is also pushing up. From 2011 - 2014, personal income growth will average 3.3% and will peak at 4.7% in 2014.

Strong average growth in a number of business sectors is also projected. Professional and business services leads the pack at 4.8%; followed by trade, transportation and utilities at 3.8%; manufacturing at 2.3%; and leisure and hospitality at 2.0%.

Florida's population growth will also continue, driven by the area's economic recovery. By 2014, the growth rate could hit 1.9% as the baby boomer retiree influx starts to swell again.

One man's albatross is an investor's advantage

Housing starts are also predicted to start to climb again in 2011 and are projected at 56,800 thousand in Q4 2011, rising to a little over 168,000 thousand in Q4 2014. However, this is still nowhere near the 100,000 plus housing starts at the peak of the property boom.

Snaith writes: "While there are many more reasons to be optimistic about Florida's recovery in this quarter's forecast, the reality is that the damage inflicted by the Great Recession, financial and housing crises will linger for many years."

He estimates that over $1 trillion has been lost in the housing bust and "will not be recovered quickly. This lost wealth will be an albatross around the necks of Florida's homeowners for years."

For investors, all these factors combined mean an increasingly financially-stable and ready-made tenant market.

Orlando "the new breadbasket for the state"

The Orlando-Kissimmee MSA is located in the southern centre of the state and is home to numerous tourist attractions, sports teams, places of higher education and booming healthcare and technology industries. The metro population stands at around over 2 million (making it the 4^th most populous in the USA), with an unemployment rate of just 10.8%.

Snaith refers to Orlando as "the new breadbasket for the state" and explains: "It's the location in the state [of Florida] that's going to have the most growth in the next decade or two."

Dr. Snaith is certainly not alone in his opinion either. William Fruth, president of independent economic research firm POLICOM Corporation, conducted a study of 23 economic measurements across 366 metro areas and Orlando came in at 27.

Fruth comments: "Orlando is the strongest economy, which is the long-term tendency for an area to consistently grow in size and quality."

Mark Vitner, senior economist specialising in regional economies for Wells Fargo Securities LLC, agrees: "People think I'm gushing about Orlando, but I've got to believe the city will be one of the fastest growing cities in the country over the next 25 years."

Vitner continues that Orlando appeals to relocating companies because of its "screaming bargain real estate prices" and "economical, direct flights to almost anywhere in the world."

He adds: "Orlando seems to be very much one of those cities of the future that's still very young at heart and has a lot of growth ahead."

Howard Wial, regional economist at Brookings Institute, concurs: "There is a shift slowly underway as far as jobs go and there is a shift as far as income and output goes. Orlando is growing a lot faster than Miami."

Healthcare adds lifeblood to Orlando's economy

Led by the healthcare and education industries, Orlando had added 23,000 new jobs (a 2.3% increase) in the last year.

Henry Fishkind, founder of economic and financial consulting firm Fishkind and associates, explains: "The synergies at Medical City have the potential to change the structure of Orlando's economy."

Medical City at Lake Nona is one of Florida's two main, burgeoning biomedical complexes (the other being Port St Lucie on the Atlantic Coast). It was only a little more than 3 years ago that the Sanford-Burnham Medical Research Institute set up in the 600 acre Lake Nona pasture, starting a precedence for other life science establishments.

Now having been given the moniker of a science and technology park, the Lake Nona Medical City today includes: University of Central Florida's College of Medicine; M.D. Anderson-Orlando Cancer Research Centre; Nemours Children's Hospital; Orlando Veterans Administration Medical Centre; and the University of Florida Research and Academic Centre.

Fishkind comments: "You drive around Lake Nona and there are cranes everywhere."

With the development and growth of Medical City still underway, this cluster of life sciences establishments is expected to have an impact of $8 billion by 2020.

Snaith remarks: "Typically we think of economic development and evolution as being more glacial in nature, but this has occurred at a pace that is really astounding."

Investor note: Axis has selected Medical City, Lake Nona area for our new Florida single family homes (SFH) strategy. This is a bespoke property search and selection service, purchasing directly from the bank and with (up to) a 70% finance option (subject to status and availability). We are about to release an investment report about this new strategy, but if you can't wait to find out more then call us on +44(0)1273 447 300 today for a no obligation chat about the entire process and how we can help you buy your dream investment property in Florida today.

Kissimmee's quick to bloom

Lake Nona's Medical City regeneration does not stand alone. A $65 million housing project has begun on Alafaya Trail, just north of the University of Central Florida. The development is set to open August 2012 and will house around 1,000 students in a 10 acre luxury complex.

Kissimmee has also received $28.5 million in funding to redevelop a 25 acres lake-front park. The park will have water, sewers, electricity and other infrastructure to create and attract opportunities in the directly-surrounding area. $7.3 million has been spent on this initial stage (to finish July 2011) and the next phase is set to include playgrounds, a seawall, picnic shelters and a public pier with a marina.

Get the Axis advantage today

So, we can see how Florida's economy continues to strengthen throughout 2011 and why Orlando, in particular, is the place to invest today. We will publish data from future quarterly reports from the Institute for Economic Competitiveness at UCF as they land on our desk and welcome you to call us today on +44(0)1273 447 300 to find out what we have available for you in Orlando right away.

Posted in Property in Florida