Good morning, class and welcome to Local Economics 101. 🧑🏫 Before we get started, we’d like to introduce you to two special guests, Ashley Cheek (AC) from the Lakeland Economic Development Council (LEDC) + Sean Malott (SM) from the Central Florida Development Council (CFDC). 👏
Now, we all know 2020 brought a lot of uncertainties, both globally and closer to home – one of them being what the state of the local economy will look like going into 2021.
Rather than trying to squeeze NPR’s full collection of Planet Money into our brains in a few sittings, we turned to Ashley + Sean – our two local experts – for insight on what Lakeland (and Polk County as a whole) could economically expect in the coming years.
#ProTip: Trickle-down this local economic update to your extra Slack(er) coworkers. 💸
Future growth
Q: What types of business do the Lakeland Economic Development and the Central Florida Development Council see Lakeland + Polk County growing in in 2021? And what businesses did the area grow in, in 2021?
AC: Lakeland experienced exponential growth in 2020. In downtown, we saw the groundbreaking of Summit Consulting, Bonnet Springs Park, and Mirrorton. We also saw the opening of Catapult’s new 40,000 SF entrepreneurial space. In addition, Publix completed and moved into their expanded Corporate Headquarters office, Amazon completed and opened their newest air cargo facility located at Lakeland Linder International Airport, HCA Healthcare signed a 712,000 SF lease, and the list continues. Overall, we saw 3M SF+ of new buildings, over 1,700+ new jobs and over $300M in capital investment.
2020 was a hard and difficult year for small businesses, many of whom are still getting back up on their feet. We believe 2021 will be a year of resilient growth for small and local business, and continued growth for large industry.
SM: We foresee 2021 will be another strong year for the construction industry in Polk County. The Lakeland Winter Haven MSA had the third-fastest annual job growth rate of all areas in the state for mining, logging, and construction. This past year we also saw the growth of food and beverage industry manufacturers such as Florida Can Manufacturing, Farmer Jon’s Popcorn, and major expansions of Peace River Citrus Products and Dispenser Packaging Inc. Additionally, the e-commerce industry continues to grow in Polk as Amazon expands its footprint to nearly 3.5M SF county-wide and multiple Prime Air flights a day into LAL.
Economic threats
Q: What economic threats or challenges do you think Lakeland faces + do you know of ways we can combat them?
AC: The Lakeland/Winter Haven MSA is considered the most diverse economy in the state of Florida. This gives us a unique advantage because we are able to combat economic threats with diversified opportunities. We think that the vaccine rollout will allow our larger companies to return to normal operations, which is exciting and encouraging news. However, we are unsure how long it may take to rollout. Lastly, let’s continue to support our local businesses during this time! Lakeland is in a strong position as we head into 2021. We are looking forward to another year full of new projects, continued construction, and job growth.
SM: It’s an opportunity, but also a threat. Polk is popular. Polk is No. 1 in Florida’s net migration – people moving here from other places. Of all the states, Polk County ranked No. 8 in net migration, drawing more than 17,000 people in a year. The county has grown 20% in the last decade, from roughly 600,000 when the U.S. Census was taken in 2010 to about 725,000 in July 2019, the latest data available.
Infrastructure investment is going to be important to attempt to keep up. What we have isn’t enough to meet the growing demands. That’s why we must continue to improve our infrastructure now, including roads, water, sewer and electric systems, and our schools.
Real Estate
Q: For the commercial real estate industry (who may face issues due to rents not being paid by businesses) do you think this has any impact/repercussions on the industry locally?
AC: We have not heard from any Landlords who are concerned about this. The industrial, office and commercial landlords we work with currently all have low vacancy rates, which is a positive sign. As far as we are aware, this is not an issue for any major industries in Lakeland.
SM: According to real estate expert and CFDC Investor Gary Ralston, SVN Saunders Ralston Dantzler Realty, national rent collection in commercial real estate was in the 90% range. The exception was enclosed malls and properties that were closed by executive order. Rent collection for those properties was in the 50% range.
Gary stated that office rent collections were higher than most anticipated. Many office leases are longer duration and most tenants worked hard to keep somewhat current. Many businesses used PPP to help cover rent payments, which made a big impact locally. Most landlords have been able to deal with the situation of reduced rent payments by utilizing reserves, and some in distress have been able to work out a degree of relief with their lenders. The second round of PPP should help businesses that are still struggling to make rent payments until the recovery starts to kick in.
Recession
Q: Do you predict Florida/Lakeland/Polk to face any sort of recession this year?
AC: At this time, we do not expect any sort of recession. With the vaccine rollout underway, we believe many industries will continue growing and those affected by shutdowns last year will return to business as usual.
SM: CFDC Economist Jim Farrell, Ph.D., CFA with Florida Southern College predicts a reasonable recovery in the 2nd half of the year, but continued slow growth for the first 2 quarters throughout the state with Lakeland and Polk County being more heavily impacted than the state (due to the outsized impact of hospitality on the local economy). Dr. Farrell expects Polk to be slower to recover initially, then faster towards the end of the year when travel and hospitality ramp up again. Dr. Farrell does not anticipate a recession overall, just slow growth.