Thursday, February 01, 2007

Florida Commercial Real Estate Positive Future

Although the home-building outlook is generally bleak nationwide and less-than-stellar statewide, commercial construction should be strong in Florida this year, a trade association economist said Tuesday.

Adding to the good news, Ken Simonson, chief economist of the Washington, D.C.-based Associated General Contractors, said material prices should not escalate as much as they did last year, at least not during the first months of this year.

A drop in demand because of declines in home-building activity and fuel prices are two reasons that material prices have moderated, Simonson told the Central Florida Chapter of the Associated General Contractors of Greater Florida during a meeting in Altamonte Springs.

But by the end of the year, worldwide demand may cause prices to spike again, perhaps by 6 percent to 8 percent as they did last year, he warned.

Simonson said Orlando is well positioned to ride out the slowdown in home construction because of ongoing population and job growth. In December, he noted, Orlando had the second-lowest metro unemployment rate in the nation: 2.9 percent.

Construction is a big factor in Florida's economy, Simonson noted. The industry accounted for 7.6 percent of all jobs in the state in December, well above the national average of 5.4 percent.

Construction jobs pay well, Simonson said. In Florida, the average construction job pays about $38,300 annually, above the $37,400 average for all jobs. In Orange County, construction jobs average $44,000 a year, well above the $37,400 county average for all jobs.

Simonson said small businesses are a big factor in the construction industry: The state had more than 50,000 construction-related businesses in 2004, and 91 percent of them employed fewer than 20 people. Courtesy of Orlando Sentinel.