The American Dream Interrupted: 3 Ways Government Can Help

Walter Duke + PartnersNews, Real Estate

Overreaching governmental restrictions including high fees, lengthy permitting delays, and hefty down payment requirements are three very real concerns faced by the homebuilding industry right now as it struggles to deliver affordable new housing product in response to millennial household formation, boomer move-ups, and domestic empty nesters.

1. My Permit Is Not Ready Yet!

According to the Wall Street Journal, a study by Trulia reflects that the supply of new housing in the U.S. isn’t keeping up with demand in part because of the local delays in getting building permits approved.

The average permit delays in major Florida cities were reported to be 6 months in Orlando, Tampa, and West Palm Beach and 8 months in Miami and Fort Lauderdale.  To view the study table go here http://www.trulia.com/blog/trends/elasticity-2016/

Most cities are aware that permitting is an absolute priority and have taken steps to improve the situation mainly by the addition of staff.  Time adds to the cost of a residential construction project and those costs typically get passed on to the end buyer.

It may be too late during the current cycle to make major overhauls, but governmental entities should consider making plans to revamp outdated systems during the next market downturn when things slow down.  That way staff is less overburdened and modern efficient systems can be integrated into the process with the least interruption to the public it serves.

2. A $10,000 Bat Study? Holy Impact Fee Batman!

As home builders pick up the pace after a punishing downturn, they face a load of new regulations and higher fees governing everything from environmental quality and park access to requirements for a bat study to determine whether endangered bats are on the property.  The cost? $10,000 or more according to a recent Wall Street Journal article.

Further, according to the National Association of Home Builders, the average cost for builders to comply with regulations has risen nearly 30% over the past five years.  Housing research firm Zelman & Associates calculated that local “impact fees” charged to homebuilders to pay for services such as roads, sewers and parks have climbed 45% since 2005 to an average of $21,000 per home across 37 major markets.

These higher costs are passed on to prospective purchasers and as a result most builders have eschewed moderate priced entry level housing for high end luxury product that is less impacted by burdensome government fees and costs.

Impact fees and related studies are a way of life.  Most home builders understand it and build it into their costs.   Hopefully, forward thinking governmental entities will explore more ways to trade off fees and costs or provide incentives or subsidies in return for delivery of more affordable housing to a community.

No Loan for You!

In a recent article by the South Florida Business Journal, it was reported that Fannie Mae’s mortgage terms for Florida condos are more restrictive than in any other state. According to the Miami Association of Realtors, a condo buyer in Florida has to put 25 percent down; in all other states, its only 10 percent.   That means the typical millennial couple would have to come up with $45,000 more than their counterparts in any other state.  Not easy.

It is acknowledged that some of the governmental lending and underwriting safe guards borne out of the Great Recession may have helped keep the Miami condo market from getting too overheated although that is still playing itself out.  Now may be a good time for governmental leaders of all parties to revisit some of those policies to find a balance between over regulation, providing thoughtful policy that helps the market finds its natural center and provide more moderately priced housing to those who need it most.

Walter Duke + Partners is a leading provider of valuation advisory and market metrics to the commercial real estate market in Florida.   Celebrating its 40th year in business, Walter Duke + Partners has completed over 15,000 assignments in excess of a total of $30 billion in assignments from start-ups to Fortune 500 companies.    www.walterdukeandpartners.com

MIASF Adds Two New Board Members

Walter Duke + PartnersNews, Walter Duke

Marine Industries Association of South Florida president Danielle Butler announced the election of two new members to the 13-member board.

Walter B. Duke III of Walter Duke + Partners and Gail Ellis of Land ‘n’ Sea Distributing, Inc., were elected by the membership to serve a two-year term.

“Walter’s public service as a former commissioner and mayor of Dania Beach and Gail’s 30-plus years in marine sales add a high level of experience to an already dynamic board of directors,” Butler said in a statement. “We are pleased to welcome them aboard and look forward to another great year promoting and protecting the marine industry and its 136,000 jobs and $11.5 billion economic impact to the South Florida region.”

Also, re-elected for another term are Bert Fowles of IGY Marinas, Dean Du Toit of National Marine Suppliers, and Larry Acheson of TowBoatUS Ft. Lauderdale.

The 2016-2017 MIASF executive officers and board of directors:

  • President, Danielle Butler of Luxury Law Group
  • Vice President, David Reed of The Triton
  • Secretary/Treasurer, Jim Naugle of Jim Naugle & Co.
  • Immediate past president, Kristy Hebert of Ward’s Marine Electric
  • Larry Acheson of TowBoatUS Ft. Lauderdale
  • James Brewer of Derecktor Shipyards
  • Dean Du Toit of National Marine Suppliers
  • Walter B. Duke III of Walter Duke + Partners
  • Gail Ellis of Land ‘n’ Sea Distributing
  • Paul Engle of Bradford Marine
  • Bert Fowles of  IGY Marinas
  • Jimmie Harrison of Frank & Jimmie’s Propeller Shop
  • John Terrill of Lauderdale Marine Center

7 Surprising Ways Millennials Drive The Real Estate Market

Walter Duke + PartnersNews, Real Estate

Millennials are the coveted demographic segment with more of their earning and spending years ahead of them. The way millennials think and act are watched closely by the real estate industry.

Below are seven examples of how millennials are driving the real estate bus.

Hold the Pampers

Studies show that millennials are putting off having children than their boomer counterparts did. In response, developers are delivering housing communities that have less playgrounds and smaller units.

Craft Brew for All

Millennials like local restaurants that feature locally grown fare and organic ingredients. In response, national chains like Olive Garden, TGIF are suffering. Some, like Bonefish, are looking for creative ways to localize their menu while keeping costs down. Not an easy task.

Side Hustle

Millennials like open collaborative office platforms so they can brainstorm and collaborate. Studies also show that millennials are seeking side opportunities to supplement their income. As a result, companies like WeWork are expanding globally to provide interesting open collaborative office spaces with perks like free beer and networking opportunities.

Natural Light

No, it is not more beer millennials demand but rather more natural sun light and cleaner air in contemporary workplaces. More office developer/operators are seeking LEED certified buildings and a lesser “carbon footprint” that have better air circulation and filtering, better water quality and even built with recycled materials.

Say Hello to Corporate!

Millennials have embraced telecommuting and remote workplaces. As a result, there has been a decrease in typical bricks and mortar office space and an evolution of more collaborative and an increase in public spaces where business can be conducted outside “corporate.” Some banks have even started to roll-out new style café-bank hybrids with retail hours that are more like Starbucks than they are banks. One example is Capital One 360 which is rolling new locations nationwide.

Home Sweet Home…NOT!

Buying a home has become more difficult for millennials. Between stricter underwriting, difficulty in saving a down payment, increasing home prices and lack of new product, millennials are having trouble buying homes. As a result, there have been a proliferation of rental housing being developed over the past three years. Nationally, multi-family housing starts have nearly quadrupled to 384,400 starts since 2010 when only 104,300 starts were noted.

They Like to Walk

Recognizing the desire of millennials for walkable communities, developers have begun to seek new ways to develop in urban areas near shopping and central business districts. They have also incorporated more local parks, particularly linear parks and included senses of place with local historical significance.

Walter Duke + Partners is a 40-year old full service commercial real estate advisory company based on Fort Lauderdale, Florida. Since 1975, the firm has completed over 15,000 assignments totaling nearly $30 billion.

Duke Named to Marine Industry Board

Walter Duke + PartnersNews, Walter Duke

Walter Duke Named to Marine Industry Board

Walter Duke, President of Walter Duke + Partners and former Mayor of marine-centric Dania Beach was named to the 2016-17 Board of Directors by the Marine Industries Association of South Florida (MIASF) Saturday night at their annual meeting in Fort Lauderdale. Duke, the 2014 recipient of the prestigious Golden Anchor award for a lifetime of industry contribution and achievement looks forward to the opportunity to give back to an industry that is so vital to the Florida economy.

Pictured:

Former Mayor of Fort Lauderdale Jim Naugle, Senator Joseph Abruzzo, MIASF President Danielle Butler, Fort Lauderdale Commissioner Bruce Roberts, Former Dania Beach Mayor Walter B. Duke, III + MIASF Director Phil Purcell.

Is The Condo Market Keeping You Up At Night?

Walter Duke + PartnersNews, Real Estate

As we enter the sixth year of the current credit and development cycle, one question I am asked a lot is “When is this South Florida condo market going to go bust?” That is a reasonable question given the “boom-bust” history of the South Florida condo market and its reputation for real estate overbuilding. However, many are also asking, “Does there have to be a bust? Or is a soft landing or gradual correction possible with only minor to moderate pain incurred by a few late to the game developers and lenders?”

First, by “bust” I am referring to a total halt to new development and a shutdown of available debt and equity investment. In other words, you would know it when it happens. Certainly, the cumulative weight of a global recession, a natural disaster or even a terrorist act could dramatically negatively impact the South Florida condo market like any market; however, left to its own devices there are indications that a soft landing or gradual correction may be possible.

Let’s explore some of the reasons why.

Things are different now, I promise!

This cycle is different from the hyper-hot run up that led up to the Great Recession. There is much less speculation, more skin in the game by buyers, and bank lenders have been much more prudent this time around. Many still stinging from losses taken during the last run up and struggling to exist in a sea of stifling federal regulation and bureaucracy. Rising construction costs, a persistently strong dollar and ailing South American and European economies are just a few of the headwinds facing the Miami condo market. However, it is these same headwinds, along with intense competition, that have kept many projects on the sidelines and help keep a lid on price increases, which is a good thing.

According to a recent study by ISG World in Miami, more than 13,000 newly built units have sold in South Florida since mid-2011, the starting point of the current recovery. This represents more than three-quarters of the total units built or currently in the pipeline. However, sales have slowed for all of the above reasons. Since September, only 302 units have sold, down from 537 sales recorded in the third quarter and 800 units in the second quarter.

Cranespotters.com reports that there are nearly 15,000 units under construction in South Florida and 12,000 more are approved and planned. However, according to a study recently completed by IRR Miami for the Miami DDA, approximately 75% of the inventory under construction is pre-contracted, and 85% of the 2016 deliveries are pre-contracted. They also forecasted that in the Miami market, under construction pipeline would not grow for the balance of 2016. This is key since Miami dominates the South Florida market with approximately 70% of the overall market.

Show Me the Money!!!

Even in the face of a market slowdown for non-waterfront Miami condo markets, the affluent markets continued to shine until recently. Areas like Miami Beach, Coconut Grove, Bal Harbour, Sunny Isles and Surfside had recently been performing well reflecting pricing between $1,500 and $2,500 per square foot with some of the best units exceeding $3,000 per square foot. However, the United States Treasury’s recent policy change that requires buyers to disclose the original source of their funds has hampered sales according to top agents we interviewed. Therefore, for now, it looks like even the affluent market is taking a breather. Again, another organic tapping of the brakes that may help keep unneeded additional product on the drawing boards.

There is more good news in that we will likely see less new or inexperienced developers or lenders entering the market in the next year – only existing developers that have a stronghold in the market will move forward. We are also seeing signs of increased competition in the form of bigger sales commissions being offered by developers and less down payments required by buyers. Whereas most of the initial wave of Miami condo development was fully financed with buyer equity and 50% deposits, the trend has been toward more construction loans from banks and less down payment required. Typically, when the cycle is getting overheated, we tend to see less experienced out of state lenders seeking to provide construction funds for second-string developers on “B” sites. I have not seen as much of that yet. I do see loan participations that include unfamiliar out of market lenders; however, these deals are typically led by bank lenders with extensive market experience who are dealing with the best developers on the best sites.

“Affordable” Housing on the Way.

Although most buyers and developers have invested much more equity this time around, what we need to keep an eye on are developers that may have to discount their remaining units to move them faster. This is especially true in the face of a growing supply of resale units. A recent study commissioned by Miami lender StatFunding reflects that of 3,231 condo units in the Miami market, 716 (22%) are on the resale market and only 34 have closed within the last six months. Based on this study, there appears to be over 126 months of supply of resale condos within the 14 projects surveyed that have been built since 2012. Even more troubling, the study indicated that three pre-construction buyers have sold for a loss and 14 sellers within these projects have listed their units for a price that result in a loss. It is unclear why these sellers have sold for a loss or are willing to sell for a loss but this is a trend worth following. The bottom line is that it seems for now that there are more sellers than there are buyers and prices should start to level off and in some cases come down. Are we not all clamoring for more “affordable” housing options for our local population? Maybe price reductions and tighter profits are not a bad thing. To start with, most condo developments are wildly profitable.

Domestic Buyers Stepping Up

Although there is a slowdown on mid-priced condo sales product, the devaluation of foreign currencies will not fully chase out deep-pocketed South American buyers whose goal is simply preservation of capital. There has also been recent evidence that domestic and local move-up buyers are helping to fill the void. This is particularly true in the Fort Lauderdale and Palm Beach markets. California, Texas, Georgia, New York and Virginia are the primary states of buyer origin according to the Miami Association of Realtors. Last year’s record-breaking $60 million Faena House penthouse sale in Miami Beach involved a U.S. hedge fund buyer.

Another difference between this cycle and the last is the abundance of market information and market transparency. Firms such as Cranespotters.com and many others do a great job keeping all stakeholders informed about the status of the South Florida condo market. Even the casual observer does not have to look far to get a sense of what condo product is being planned and built, what markets are saturated and what units are selling for. We even have a better sense of where the buyers are coming from and how much unsold product there is. With all of this information available, it makes it very difficult for lenders and developers to make the case to build new product, thereby effectively putting the brakes on the delivery of unnecessary condo product.

Where the Boys Are

While most acknowledge that Miami-Dade is taking a breather, the primary beneficiaries of this have been Fort Lauderdale and West Palm Beach. Seeking less expensive dirt, developers have moved up the coast and secured best in class sites at prices much less than Miami-Dade. As a result, several new projects are under way and in the pipeline in those markets at prices well below Miami-Dade. While high-end product exceeds $3000 per square foot in Miami-Dade, the highest price points in Fort Lauderdale and West Palm Beach are roughly $1,700 and just over $1,000 per square foot respectively for the best product in those markets. Fort Lauderdale is not as well known to South American buyers but developers such as Related Group and others with their international following help to expose Fort Lauderdale to a new set of buyers. Traditionally, Palm Beach buyers are primarily domestic and move-up empty nester buyers and that is currently the case as well in that market. In addition, while Miami has significant market depth, Palm Beach does not and it is truly a “first in” market where the first project on the best site will succeed but others may not. A good example of this is Bristol condominium in Palm Beach. The project is well located on a best in class site and is reporting that they are 60% pre-sold at prices exceeding $1,000 per square foot in a market where pricing rarely, if ever, exceeds that price point.

Despite the headwinds noted previously, there are potentially positive factors that may serve to improve the market. Many industry insiders are hopeful in a decrease in construction costs. Although the supply of subcontractors remains relatively tight, there are signs that increased competition from European contractors has domestic firms tightening their bidding. Additionally, there is hope that the market may find a second wind in the event of a decline in the value of the dollar. The strong dollar, as much as anything has served to hold back foreign national investment in the Miami condo market. Developers are also seeking other uses for previously planned condo sites such as office and retail The demand for office assets has been strong in South Florida. Rents are rising and many argue that South Florida needs new office product. All of these factors could help the South Florida condo market and keep it from overbuilding.

Bust Interrupted

Some real estate pundits claim that despite relatively healthy conditions in South Florida that the weight of a world recession will finally bring the good times to a halt as early as 2017. Factors such as low oil prices, falling import demand from emerging economies, volatile financial markets, deflation, possible negative interest rates and current exchange rate fluctuations give legitimate cause for concern. Given the dependence on foreign investment in South Florida, this argument has merit. However, the difference is that unlike last cycle the current run up has not been as steep or as rapid so this is much less to fall and others argue that a total collapse is unlikely because the market has been slowing down naturally on its own for the last several years.

Given current market metrics, it is certainly possible that anyone who paid high prices for land subsequent to 2014 and cannot develop now will incur substantial holding costs and face possible financial loss. Additionally, there is the likelihood that some unit owners will end up on the losing side of their investment, but as of now, a total collapse similar to 2008 seems unlikely given what we know. I counsel my lender clients that there is still time to make sound loans in the this cycle, but to minimize risk they should stick to proven developers with excellent track records and strong sales history that have tied up the best sites in the best markets. This is not the time to experiment with new relationships or on second tier sites with no proven history given some of the looming warning signs. That is a recipe for disaster.

Walter Duke + Partners is a market leading provider of valuation advisory and market metrics to a variety of private, government, institutional and non-profit clients in the Florida market. During this cycle alone, Walter Duke + Partners has completed over 500 multi-family assignments exceeding $12 Billion in overall value. www.walterdukeandpartners.com

Top Three Reasons For An Improved Housing Market

Walter Duke + PartnersNews, Real Estate

I recently wrote that home builders are slacking by not delivering enough product thus keep inventories low and prices out of range for most buyers. However, after a decade since the housing bust began, we are finally seeing signs of improvement in the housing market.

There are some fundamental reasons why:

Off to Work We Go!

The US Labor Department reports that there are 2.8 million more people working than this month last year. Millennials alone added 421,000 jobs in the January jobs report.

More jobs equal more income.

More income equals more buying power.

Building Nests

According to a recent study by Goldman Sachs, for the first time since 2006, newly formed households eclipsed the 1 million mark . That same study projects household growth approximating 1.2 million annually for the next four years.

Times are Good

Better finances, low interest rates, and greater willingness among banks may entice more households currently renting to buy and more homeowners to trade up. The Mortgage Bankers Association reports that mortgage applications for purchasing a home was up 24% from a year earlier.

Full-fledged recovery for housing is still a while away given that we are still only at 70% of peak pricing. However, after a long time of near dormancy in many parts of the country, it looks like it is starting to stir.

Sea Level Rise: Does the Business Community Care?

Walter Duke + PartnersNews, Real Estate

Our rising sea levels

Sea level rise is a hot topic these days within the scientific community and although Florida Governor Scott’s office does not use terms such as: “Climate Change” or “Global Warming” within any official communications, a growing number of local governments are taking tangible steps to address current and potential flooding issues in coastal communities due to sea level rise. The question is, “does the business community care?”

Does the business community care?

In my commercial real estate practice, we routinely provide valuation advisory and external credit underwriting to major commercial real estate (CRE) lenders on billions of dollars of real estate loans secured by commercial and high-rise residential real estate situated along the particularly vulnerable coastal areas of Florida.

I also enjoy a unique perspective since I am also active in local government, being the former Mayor of a small coastal city in South Florida and current candidate for the Fort Lauderdale City Commission. Fort Lauderdale is currently addressing sea level rise in various ways as is Miami Beach and Monroe County. However, the question is, does the business community care about sea level rise? In short, no; but, they are starting to listen.

Businesses are starting to listen.

At a recent sea level rise meeting in Miami, approximately 100 business leaders from the real estate community got together to discuss risks and potential opportunities pertaining to climate change.

Four key takeaways

  1. Interests Are Not Aligned – Individually, developers, investors, brokers, lawyers, and others in real estate don’t have the incentive to act unilaterally.
  2. Costs Are Prohibitive – One major issue is the cost associated with protecting a building against surge waters. If a buyer or builder were to factor in the cost of putting a structure on a 10-foot podium they are likely to get outbid by their competitors who keep their focus on the short term.
  3. Global Market – The CRE industry is starting to take Climate Change seriously. That concern comes into play when comparing Miami to other major US metropolitan markets like New York and San Francisco – which compete for investment activity – and are all in the same boat when it comes to risk of water damage. Who can address it best may have a competitive advantage over the others.
  4. Climate Change Not Currently Part of the Buyer Discussion – Real estate agents note that while it is not part of the current discussion they expect that to change. Some buyers are starting to say, “Miami has a lot of characteristics we look for, but we have concerns about resilience.”

So under the assumption that taxpayers want their government officials to address sea level rise and the business community, what has to be done?

Four key steps

  1. Align Interests – Steps need to be taken to align development, investment, government and hospitality interests. Right now everyone is operating in a vacuum and there is no compelling reason for them to collaborate. This is done by providing more information about the risks and opportunities regarding sea level rise. Business will listen to economic opportunities and conversely they will listen to potential costly risks or if inaction places their market at a competitive disadvantage.
  2. Mess With Their Money – When the commercial real estate and hospitality space start to see tangible ways that they will lose value or a competitive edge to competing global markets, they will pay attention and possibly act. Alternatively, if you provide tangible ways to illustrate opportunities they will also listen, such as the jobs that may be created or the increase in value to their properties if properly prepared for sea level rise or storm surge.
  3. Elect Proactive Government Leaders – I am not taking a position here but progress will be limited until enough local elected official take sea level rise seriously and move their cities, county or regions into a more resilient state of mind. In Florida it may need to start form the ground up since the Governor’s office is not currently on board.
  4. Ethical Obligations and Disclosures – Right now under current law very little, if any, disclosure is required by property sellers or agents regarding the dangers of flooding. There is also very little liability to attorneys, appraisers, lenders and others in this space. However, if laws and ordinances are passed that require not only disclosure but also to measure any loss in property value, that may be the hook needed to engage the real estate community into bringing sea level rise on to the center stage.

Fiscal adaptation to sea level rise is everyone’s responsibility but until the business community takes it seriously, we are limited as to what measures are actually implemented to protect our valuable real estate and local economies for generations to come – and we are.

Unfortunately, other than select local governments, there is very little political will in Florida at this point. However, when taxes increase, property values fall, insurance costs rise and local economies are negatively impacted, you will see not only the business community but also voters pay much more attention to where candidates stand on this important issue.

Photo courtesy of Wikipedia.

FROM THE DESK OF DUKE : 9 Noteworthy Real Estate Trends You Should Know

Walter Duke + PartnersNews, Real Estate

Housing Bust Lingers for Generation X

Gen X’rs suffered more than any other age cohort from the housing bust. Compared with previous generations, Gen X went from the most successful in terms of homeownership in 2004 to the least successful by 2015. The culprit: a historic bull housing market, fueled by easy to get mortgages that resulted in mass foreclosures leaving many to ponder future housing options. Most are renting or upside down in a house. Today about 4.4 million homes still have negative equity, but by contrast, there were 12 million in 2009.

Home Builders Aren’t Pulling Their Weight

Despite low interest rates, a steady job market and rising rents, houses don’t seem to be selling like they should. Tight inventories are playing a key role in driving prices higher, making the market less appealing for buyers.

Rental markets are the beneficiaries.

Grandma is in Charge

Responding to market needs, homebuilders are delivering added rooms and areas for aging parents or recent college grads with shaky employment prospects. The rooms can even be rented out to tourists. Features include separate entrances or a small kitchenette. Cities are now addressing potential code issues.

Banks Want to Get in Your Pockets

Lenders seeking to offset weak mortgage and refinancing activity have once again started pushing home equity lines. Lenders believe now that home values have returned to 75% of peak pricing, some homeowners will tap their newfound home equity. The average line of credit extended in 2015 was just under $120,000, the highest in a decade. Home equity lines were a major driver of the condo office market during the last cycle as business owners drew upon their home equity to by a commercial condo rather than rent.

Greatest Generation Still Kicking Butt

Incomes for people over 65 and older, including government pension payments, have risen faster relative to younger generations, a trend that comes as the share of the older population grows. Younger workers are grappling with flat or falling pay, decreased job security and less affordable housing, sapping spending power. Younger workers are also faced with rising tax bills for the extra tax dollars needed to fulfill past government promises to retirees.

Millennials Finally Getting Off the Couch

The 25 to 34-year old demographic scored 421,000 new jobs in January faring better on the employment front than any other time during the economic recovery. This bodes well for not only the labor market but also consumer spending, the housing market and the overall economy.

Office Glut Strains Suburbs

In an attempt to appeal to closer to public transportation and a younger, urban-dwelling workforce, companies are moving operations from the suburbs to the cities. Suburban building owners are left with few options in most cases. The roster of well-known companies moving back to the city is growing. Examples include General Electric, Weyerhauser, and ConAgra to name a few. In other cases corporations are moving out of the country after merging with foreign companies leaving isolated campus office locations in their wake. Cities are left to deal with what is leftover. Many owners are trying to redevelop as residential communities.

More Free Beer at the Office

As startups like UBER and Airbnb are harnessing technological change, communal office companies like We Work are growing rapidly depending largely on generational and cultural change. They are benefiting from younger workers’ gravitation to cities and communal atmosphere as well as the boom in the startup sector. We Work‘s business model is to rent space from landlords, turn it into a communal atmosphere and rent it out month-by-month at higher prices to companies and individuals. The workforce is largely young with arcade games, plush couches and beer on tap as fixtures. We Work is currently valued at about $16 Billion.

Now They’re Paying Millennials to Live Near Work

Companies in high-rent areas such as New York City and Silicon Valley are offering perks to potential employees such as free rent subsidies, house hunting services and down payment help for families willing to live close to the office. The less time spent commuting the more time spent focusing on work and with friends and family. This is giving rise to more urban communities.

Lisa Duke: Co-Chair Port Everglades Association 8th Annual Economic Engine Performance Report

Walter Duke + PartnersLisa Duke, News

Visitors, trade to Broward County continues to rise – South Florida Business Journal
by Emon Reiser

Broward County’s ports and tourism numbers continue to boom, regional leaders said Friday.

The Port Everglades Association held its eighth annual Economic Engine Performance Report with hundreds of South Florida business leaders in attendance at the Broward County Convention Center.

The port announced a 20-year plan for improvements.

Executives from the Fort Lauderdale-Hollywood International Airport, Port Everglades and the Greater Fort Lauderdale Convention and Visitors Bureau offered updates, projects and a few milestones the economic engines would soon reach:

Fort Lauderdale-Hollywood International Airport

“We will pass 29 million passengers this year,” said Kent George, outgoing director of Aviation at the Broward County Aviation Department. “We go to over 60 international destinations and we’re still growing.”

The airport reported about 26 million passengers in 2015 and is on track to grow that number, George said. He outlined multiple upgrades to FLL that will accommodate even more travelers passing through its terminals. Renovations include Delta Airlines’ Concourse A opening in mid-2017, which will add 5 new gates, and the Terminal 4 expansion, which will add eight new gates to the airport by 2018.

The airport will continue to expand its flights, including a new route to Paris starting in August.

Port Everglades

The port officially confirmed Friday that it surpassed the world record for single-day passengers for the second time in a row. In mid-March, the port recorded more than 54,700 cruise passengers, up from 53,485 passengers in December when the port broke the previous record. In 2015, Port Everglades had 3.77 million cruise passengers.

New ships, including Royal Caribbean’s Harmony of the Seas – the largest ship in the world – will begin setting sail from Port Everglades this year.

The latest numbers show the port continues to grow in import-export dollars, with $27.15 billion in trade in 2014. It marks the fourth consecutive year of trade growth for Port Everglades. It was the No. 14 seaport in the nation and its No. 1 trade partner remains Venezuela, despite the country’s economic decline.

“Our numbers are growing,” said Steven Cernak, port director of Port Everglades.

The port is expected to handle even more trade as the Panama Canal completes its expansion project. The port is already handling Post-Panamax ships, but they are not fully loaded. The port is in the midst of its own $374 million dredging project.

Tourism

Nicki Grossman, longtime president of the Greater Fort Lauderdale Convention and Visitors Bureau, bid farewell to the event’s attendees in one of the last public speeches of her career. She has 61 more days left in her position after 21 years of leading the bureau, she told attendees. Grossman then offered an outline of Broward County’s record achievements in hospitality.

The county welcomed a record 15.4 million visitors in 2014, according to the most recent numbers. Last year welcomed new, lucrative convention business such as as the National Urban League convention and its 9,000 visitors and Seatrade Cruise Global, which brought about 11,000 executives from global cruise companies and ports to Broward County.

“We accounted for 15 percent of visitors to Florida and we don’t even have a mouse,” Grossman said, alluding to Orlando’s top lure: Disney World’s Mickey Mouse.

More convention business is expected to flow into Broward County as officials hammer out plans for its convention center hotel. More new trade events will arrive in the next few years, including conventions from the National Genealogical Society, IBTM Americas and the National Speech and Debate Conference.

After Grossman said some of her final farewells, Broward College officially presented a legacy scholarship to the tourism czar to honor her career. The Nicki Englander Grossman Endowed Hospitality and Tourism Management Scholarship will be awarded annually to students who study hospitality-related fields at Broward College’s campuses, with the first one going out this fall, said Nancy Botero, executive director of the Broward College Foundation.

“What this scholarship will do is carry on a legacy,” Botero told the Business Journal. She credits Margaret Kempel, executive director of the Port Everglades Association, with initiating the scholarship. “She wanted a suitable way to honor Nicki and thankfully she thought of Broward College.”

Broward College students preparing for careers as marketing specialists, cruise industry managers and event planners can apply for the scholarship through the college’s financial aid office.

“We have long admired Nicki and her contributions to the tourism and hospitality industry,” said Broward College President David Armstrong. “There’s no better way to continue her legacy than through a scholarship.”

Grossman took the helm in 1995 when travelers generated $3.2 billion for the local economy. This year’s visitors had an economic impact of $14.2 billion.

“She has elevated everything for our county and made tourism the No. 1 industry here,” said Heiko Dobrikow, general manager of the Riverside Hotel. “I can also say bravo and we were so blessed having her here for over two decades.”

Emon Reiser covers retail, restaurants, tourism and hospitality. Get the latest retail news with our free daily newsletter. Click here to subscribe.

FROM THE DESK OF DUKE: SHIP and SAIL Big Winners!

Walter Duke + PartnersLIHTC, News

A few months back I wrote an article on the importance of Low Income Housing Tax Credit “LIHTC” housing and how it is one government program that actually works. Affordable housing in general is a constant and pressing issue in the State of Florida given rising construction costs and lack of wage growth. Therefore, it is great news in Florida that the legislature recently earmarked significant dollars to affordable housing. Winners include families and seniors in our communities who are in need of good quality, clean affordable housing.

Nothing to Sneeze At!

Since the financial crisis, the legislature had been sweeping funds earmarked for affordable housing into other areas. But this year, the Florida Legislature wisely appropriated more than $200 million for the Sadowski Affordable Housing Trust funds — the highest level in nine years.

Last year’s total was $175 million.

We can do much better, but $200 million is nothing to sneeze at.

The Sadowski Housing Coalition is a collection of 30 statewide organizations that came together in 1991 to secure a dedicated revenue source for Florida’s affordable housing programs.

Home Run for Home Rule

The big winners here are local governments. Of the $200 million made available, $135.5 million will fund State Housing Initiatives Partnership, or SHIP which goes directly to local governments. Lawmakers also made a direct appropriation of $42.3 million. An extra $75 million was also made available for the State Apartment Incentive Loan (SAIL), program, which funds apartment construction and rehabilitation. Developers must compete for these funds.

Have Your Cake and Eat It Too!

Not only will our needy families and seniors have more housing options the affordable housing industry is a huge job creator. The National Association of Home Builders “NAHB” estimates that building 100 new LIHTC units for families leads to the creation of 80 jobs from the direct and indirect effects of construction and 42 jobs supported by the induced effects of the spending.

In addition to these “real-time” jobs and economic activity, building 100 LIHTC family units also leads to the long-term creation of 30 new jobs that support the ongoing consumer activity of these homes’ new residents. NAHB also estimates that new residents would generate earnings for local business owners and employees in excess of $2 million annually.

That is some good cake!

About Walter Duke + Partners

Walter Duke + Partners is an industry leader in the valuation and evaluation of LIHTC assets in the Florida market. Since 1994 we have completed over 6,000 valuation advisory assignments and market studies in excess of $4 Billion for a variety of clients including governmental agencies, developers, investors and lenders.