Bill Penney addressed the Treasure Coast Builders Association
during the November 21st Indian River Chapter meeting at
CJ Cannons on Vero Beach. Penney’s presentation focused on
the economic outlook for the Treasure Coast and highlighted
the area’s robust growth despite the Great Recession, hurricane
damage, citrus greening, trading uncertainty and slowing global economic growth.
Growth in construction, manufacturing, technology and healthcare industries in the area has diversified local economies that were traditionally concentrated in agriculture and tourism. This expansion has caused the labor market to tighten with unemployment rates in Indian River, St. Lucie and Brevard Counties ending 3Q19 at 3.7%, 3.7% and 3.0%, respectively. Employers now need to recruit from out of the area increasing net population growth.
Indian River and St. Lucie Counties have seen strong growth in healthcare jobs as Cleveland Clinic has moved into the area over
the past few years.
The growth of the manufacturing industry in Brevard County accelerated at a record pace when the space industry switched from being government driven to a public/private partnership. From 2015 to 2018, manufacturing jobs grew 2.9% in the US, 8.5% in Florida and 29.3% in Brevard County to 25.6k workers.
This economic strength has caused a boom in residential and commercial construction. The number of single family units permitted in IRC during 2018 increased 25.5% year-over-year to 1,229 units, the largest annual increase since the Great
Recession. Commercial construction in IRC continues to
be robust as permits were issued for 561,579 SF of building construction in 2018 and a strong pipeline of commercial development is currently in process of being permitted.
Who is going to fill the residential units and occupy the commercial space coming on the market? Residents near at or near retirement age from high-tax states who were already considering moving and job-seekers moving to Florida after having been recruited by expanding local businesses.
When The Tax Cuts and Jobs Act capped the deductibility of state
taxes, local taxes and mortgage interest, it effectively increased
the cost of housing for many residents in high-tax states such as the Northeast and California. This will further increase the migration to Florida. Retirees are an important part of the local economy, they appreciate the safe communities, proximity to good health care, reasonable cost of living, warm climate, cultural and recreational amenities, low taxes and nearby airports.
The tight labor markets will force companies to recruit new employees from out of the area. This will bring working age residents to the area, further increasing the demand for affordable housing and local spending. At the local level, there is a strong pipeline of new projects either underway or starting in the short- to medium-term. IRC has the development of the Oslo Rd. I95 interchange and the redevelopment of the riverfront Vero Power Plant and Water Treatment Facility.
Brevard will continue to benefit from growth in the manufacturing sector. SLC will benefit from the development of the Amazon distribution center and Derecktor Yacht facility. The $4 billion proposed expansion of the Virgin Train platform, including 170 miles of new tracks from WPB to Orlando,
will drive growth across the region.
We are expecting the economies of Indian River and the neighboring counties to remain strong through 2020. Beyond 2020, a national or global economic slowdown could cool the market for a couple of years. However, when considering the changes in tax laws, the number of people retiring to the area should increase. The local pro-business environment and upcoming development projects will continue to attract employers and job-seekers. These factors will all contribute
to strengthening the local economy and increase demand
for housing in the area for years to come.
Sources: St. Louis Fed, IRC Community Development Report,
Wells Fargo, Brevard Business News, Bureau of Economic and
Business Research and the US Census Bureau
About the Treasure Coast Builders Association
Treasure Coast Builders Association is a professional association that represents and protects the interests of the building industry in Martin, St. Lucie, Okeechobee and Indian River counties. Membership is comprised of builders, developers, sub-contractors, suppliers, lenders, architects, realtors, and manufacturers who are dedicated to “Building a Better Tomorrow” by serving our members and the community through leadership, advocacy and education. For more information, visit www.treasurecoastba.com.