A Bet on Florida Pays Off
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Harris Rosen at Rosen Shingle Creek hotel in Orlando. Credit Scott A. Miller for The New York Times
ORLANDO, Fla. — In 2008, when American businesses were almost universally hoarding cash in a struggle to survive the financial crisis, Harris Rosen made a different call.
Instead of pulling back, Mr. Rosen, the biggest independent hotel owner in this city built on tourism, hit the gas. He committed to spend $130 million to renovate his seven hotels, then added more international marketing staff members to sell them to tour groups from faraway places like Brazil and South Korea.
Today, Florida’s economy is on the rise again, shaking off the dead weight of a housing bust that hit Florida harder than almost any other state in the country. So far this year, Florida has led the country in job growth and it has chalked up the third-best record over the last 12 months.
The roots of the comeback can be found in decisions like Mr. Rosen’s.
In contrast to American business in general, which slashed spending after the collapse of Lehman Brothers, tourist operations all through Central Florida invested through the downturn, giving operators something new to sell to visitors when consumer spending rebounded.
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Hogsmeade, the first of two Wizarding World of Harry Potter attractions. Credit Scott A. Miller for The New York TimesUniversal opened its Harry Potter theme park in June 2010, topping a list of new attractions, including a $100 million Transformers ride and a resort with 1,800 rooms that opened this year. Merlin Entertainments of Britain opened Legoland on the site of the shuttered Cypress Gardens in late 2011, and is building a 400-foot-high knockoff of the London Eye that will dominate Orlando’s skyline.
“We did it because we knew things would get better, and we knew it would be much less costly because construction wasn’t doing well,” said Mr. Rosen, 74, the chief executive of Rosen Hotels and Resorts. “If we’d waited until construction came back, the same work would have cost us $175 million to $200 million.”
In Florida, as tourism goes, so goes the state, in part because the industry supplies one in six private sector jobs. And as tourism rebounded — Orlando reported 59 million visitors in 2013, up 27 percent from 46.6 million in 2009; visitors statewide numbered 94.7 million — other sectors have indeed followed.
The tourism surge was not the whole story, but it ignited the economic kindling the recession left behind, fueling a recovery that has now spread to construction and other businesses.
Migration from other states, which turned negative during the financial crisis, resumed in 2010, adding as many as 20,000 new consumers each quarter.
And, crucially, the financial markets bailed out Florida’s residents. As the value of existing bonds rose and the stock market took off, Floridians’ income from interest, dividends and rents rose 25 percent between 2010 and last year, with the biggest gains in 2011, according to the Bureau of Economic Analysis.
Florida, with its concentration of retirees, gets 27 percent of personal income from those sources, compared with 18 percent nationally, said Karl Kuykendall, a regional economist for IHS Global Insight.
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The Universal Orlando Resort. Universal plans to add 3,500 local jobs this year. CreditScott A. Miller for The New York Times“In the retirement centers like Naples, it’s an even larger component, up to 40 percent,” he said.
That’s the long version of Florida’s recovery. Here’s the short one, a refrain repeated by everyone from multimillionaires like Mr. Rosen to security guards at Universal: Harry Potter did it.
“What happened was Harry Potter — there’s no doubt about it,” said Anthony Crocco, Central Florida regional director of Metrostudy, a new-home industry consulting firm.
Statewide, leisure and hospitality jobs are up 16 percent, for an additional 149,300, since the Wizarding World of Harry Potter opened, almost double the rate of job growth generally. Leisure and hospitality companies have added 54,500 workers in the last year, including 14,800 in Orlando. Universal alone plans to add 3,500 local jobs this year, according to John Sprouls, chief administrative officer of Universal Parks and Resorts Orlando.
And Florida’s unemployment rate, which topped out at 11.4 percent in early 2010 — well above the national peak of 10 percent — fell to 6.2 percent in April, below the national rate of 6.3 percent.
“You have to give all the credit to the private sector,” said Gov. Rick Scott, who faces a tough re-election campaign this fall in which the economy is the most important issue. “We in government can do all the right things, but the private sector has to show up.”
The state’s sharpest jump has come in construction employment, up 12.1 percent over the last 12 months, to 401,800 jobs, according to the Bureau of Labor Statistics. That is still about 300,000 below the mid-2006 peak, but the improvement is expected to continue. According to Kwame Donaldson, an economist at Moody’s Analytics, residential building permits rose 40 percent last year and are expected to rise again at a similar pace this year.
Continue reading the main storyWhere Florida’s Jobs Surge Comes FromFlorida’s jobs recovery has been sparked by tourism and housing, spilling over into business services. Even when jobs aren’t obviously related to housing or tourism, there are often
The biggest gains have been in specialty contractors, which work mostly on housing. The slowest growth has been in hiring for civil-engineering projects like public works. But employment is still well below pre-recession peaks.
Investment in new parks and attractions has driven the increase.
Hotel occupancy, which fell to 45 percent, has rebounded to 80 percent.
Professional
and business
services
Jobs described as administrative account for about three-fifths of the gains; legal services and accounting added 10,000 each.
Total Florida
private sector
Home improvement stores have added 12,300 Florida jobs since 2010 (up almost 19 percent). Car and auto parts dealers employ 14 percent more workers than in 2010, about 15,700 new jobs.
Financial
activities
Half of these were related to real estate, as banks shrank.
Total national
private sector
A big industry in Florida, but not growing especially fast despite several high-profile hospital expansions.
The state government, hoping to offset the effects of NASA cuts, has lured some companies with incentives, including Embraer, which has decided to make business jets in Melbourne. The sector remains a small part of Florida’s economy.
Nathan Cross, an Orlando home builder, said, “These are $50,000-a-year jobs — better than the tourist industry pays.” He pointed to his plumbing subcontractor, who had doubled his staff to eight.
One example of newly confident Florida consumers is Jonathan Osorio, 23, an electrician laid off from a warehouse job in mid-2012. Last fall, he landed a job helping build the Orlando Eye complex. The new job’s steady outlook has emboldened him to buy a Hyundai Accent, and he and his wife are talking about buying a single-family home.
“Everything was going down like, two years ago,” Mr. Osorio said during a recent lunch break. “Now I can see so many things going on, so many places to be able to help. I’m not concerned about losing the job.”
In one sense, things became so bad in Florida that it opened the door to bargain hunters looking to make money off the misery of others.
Both consumers and businesses are moving to exploit assets, especially land, left much cheaper by the collapse in housing prices after 2006. Merlin built Legoland at a deep discount partly because Cypress Gardens “landed in our lap in 2008,” the park’s general manager, Adrian Jones, said.
In Naples, Irwin Novack in January opened the 18th outlet of Kane’s Furniture, a midprice chain, adding 50 jobs.
“We bought a piece of land we looked at in 2005 and 2006, at a fraction of the cost,” said Mr. Novack, the chain’s chief executive. He had not opened a store since 2007.
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The Orlando Eye, a 400-foot observation wheel being built by Merlin Entertainments of Britain. Credit Scott A. Miller for The New York Times“Furniture is tied very, very closely to housing, and we see the housing market starting to turn,” Mr. Novack said.
Evan Patterson, a banker, played his own land arbitrage in moving to Odessa, near Tampa, last year. With he and his wife, Abbie, living in a Los Angeles apartment with “tandem parking” — one car parked behind the other — and with their second child coming, Mr. Patterson swapped the bright lights for a $390,000, 3,800-square-foot house with a pool, for $500 a month less.
That was possible partly because the average Tampa house price fell 53 percent from the peak by late 2011.
“We realized the quality of life we wanted was unattainable in California,” said Mr. Patterson, 37, who estimated his home would cost at least $1.5 million in Southern California.
Despite the improvement, there are still clouds hanging over the Sunshine State, economists say.
The state’s reliance on low-wage industries means personal income is lower than the national average, and Florida depends more on part-time jobs.
A slowdown in home building in recent months, caused in part by a rise in mortgage rates since last spring, may challenge Florida’s recovery as well.
But housing is still undervalued in most of the state, in part because foreclosures continue to trickle onto the market, said Jed Kolko, chief economist of Trulia.com, “leaving the median home within reach of the average family on most of the state.” Pressure on prices from old foreclosures has spared most of Florida the sharp home-price spikes cramping California builders, he said.
And the tourism openings are still coming. Walt Disney World is introducing attractions that will nearly double the size of Fantasyland. Disney says that the Fantasyland additions, some of which are open and some still forthcoming, represent the largest expansion ever of the Magic Kingdom park at Walt Disney World. Universal, exploiting its greatest asset, is unveiling another Harry Potter attraction this summer.
“We came for Harry Potter — we’re big fans,” said Jennifer Murphy of Watertown, Conn., who was taking her daughter Mackenzie, 7, around an entertainment site that had not opened when they last visited Florida. “It was time.”
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