NAIOP South Florida recently hosted its annual economic outlook panel, where commercial real estate industry professionals gathered to discuss the economic forecast for 2023.
Hosted by Marcus & Millichap and Risk Strategies, the panel offered insightful commentary from Marcus & Millichap Senior Vice President and National Director John Chang, Chronos Underwriters Chief Executive Officer and President John Allen, Property Tax FirstPointe Advisors Managing Partner Brian DePotter and Itasca Construction Associates Vice President Sandra Pabon. Marcus & Millichap Senior Vice President and past NAIOP President Ryan Nee served as moderator.
Panelists shared their perspectives on the hotly debated question of whether the United States will tip into recession in 2023, and the consensus was considerably more favorable than what is being predicted by many for the year ahead. Speakers also emphasized the “Florida factor,” a term used to describe the continued influx of people to the state, as a major reason for continued regional employment and economic growth.
“In 2022, Florida came in first across the United States in terms of population growth,” Chang noted. “Overall, we’ve added 4.5 million jobs, the unemployment rate is at a 50-year low, there are 10.5 million job openings, wages are up 4.6%, retail sales are up 3% and the 10-year treasury yield is at 3.5%. Those are solid numbers, and while interest rates have placed our industry into a stall, we seem to be leaning more towards ‘slowcession,’ than an actual recession, and here in South Florida, it may not even be noticed.”
Another heated topic that caught the ears of listeners was related to insurance market forecasts and rate hikes.
“The Florida insurance market is in a perfect storm right now, with carriers refusing to write business here, but the state has been doing a tremendous job getting in front of the legal issues to curb the problem,” Allen said. “We are hoping that in the absence of a major hurricane or world crisis similar to the war in Ukraine, and with a reduction in inflation, Florida’s attractiveness will improve, and prices will eventually begin to come back down.”
Understanding America’s labor shortage across all sectors, and why workforce participation remains below pre-pandemic levels, was also of particular interest to attendees.
According to Chang, “We have more than four million open jobs without employees to fill them, which is due in part to several factors including early retirement of the baby boomer generation brought on by the pandemic, dual income families opting to move out of the urban core so that one family member can stay home and care for children, continued fears of COVID and a significant drop in immigrant workers relocating to the United States. Prior to 2016, we welcomed more than 1.2 million immigrant workers each year, and by 2020 that number had dropped to 20,000 people.”
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