| What is the biggest economic challenge to Northeast Florida? | Who is responsible for overcoming that challenge – and why? | Will the real estate markets in Northeast Florida reach the boom times of the mid-decade? | How do you sum up the lessons learned for the real estate industry survivors? | |
| Jerry Mallot Executive Vice President, JAX Chamber President, JAXUSA Partnership | Increasing our employment in order to return to a “normal” level of unemployment in the 5-6 percent range. Being unemployed is not only a terrible hardship on the individual, it is a very large drag on economic growth when a high level of consumer spending is taken out of our economy through lack of jobs. The ripple effect also impacts real estate development and housing vacancy rates. | Our economy is more likely to recover when businesses across the board, large and small, begin increasing their employment collectively. Our unemployment became most dramatic as virtually all companies began to cut back in response to the economic crisis. It will take more than a few large projects to get back to full employment and that’s why a return of confidence and broad- based hiring must be the answer. | We always seem to return to a level of high prosperity at some point, although it will probably take five years or more to do so. A healthy growing market should be our goal. Substantial booms (or busts) are not good for the economy and booms tend to be followed by an unhealthy retraction. Our U.S. history shows a lack of “memory” on these issues after a period of time. | Moderation is an important element of success. Whether it is in lending practices, matching supply and demand, and limiting speculation, we need to recognize when our economy is stretching beyond normal, reasonable growth and pricing in order to not see a return of the boom mentality. |
| Charles Carlisle Jr., Bristol Development Group LLC, Franklin, Tenn. | As with most of the U.S., the biggest challenge in reviving the local economy is rebuilding the employment base. Jacksonville currently employs about 30,000 fewer people than the pre-recession peak of 2008. That’s a lot of lost income for the Jacksonville area. The good news is that Jacksonville’s employment is slowly recovering. Trailing 12-month average employment shows steady growth. Another big challenge is working through the single family and commercial distressed debt hangover. Florida in general and Jacksonville in particular were harder hit than most of the U.S. and it is going to take a long time to completely recover from the levels of unsustainable debt that were built up pre-recession. | I think everyone in the Jacksonville area is responsible for overcoming the challenges. Certainly local government is responsible for ensuring that infrastructure and policies are in place to encourage economic recovery and growth. But private and public entities and citizens must assist government in identifying those needs and ensuring success. Everyone must take responsibility for helping the region grow for it to really flourish. Every major metropolitan area is in competition with peer cities for keeping or attracting good quality economic growth. Only those areas with true civic leadership and civic pride will outperform. | If you mean reaching the same level of activity and growth, most certainly. It is just a question of when. If you mean reaching overbuilding and overleveraging, unfortunately that will probably occur as well, as soon as participants have forgotten this era. Recall it was only a little more than 20 years ago that there was another such period in commercial real estate. | • Never believe the mantra “this time is different.” It never is. • Manage risk carefully. • Think critically and objectively. • Don’t assume the future is going to look like the recent past. It rarely does, though we seem hard-wired to think otherwise. |
| Eric Zimmermann Managing Director, Eastdil Secured, Atlanta office | Job growth is the engine for capital. Like much of the southeast, Jacksonville’s unemployment remains above the national average and needs to decline before significant real estate recovery occurs. Momentum is as important as nominal measures, thus capital will return as employment shows signs of steady recovery. | Government needs to get out of the way and lower the hurdles it has created. The U.S. economy is resilient, but it needs to know the long-term rules of the game. The unknown future rates in our tax code are problematic for investors as are the increased regulatory environment in which we find ourselves. Both contribute to reduced investment which ultimately stagnates the recovery. | Values are broadly not expected to reach those attained in the runup during the last decade. That said, real estate is a locationally driven investment, therefore, ideally located properties with high quality tenancy continue to price well – even to levels seen in the prior cycle. | Capital is generally more cautious than in recent history. Pension fund advisers are primarily pursuing the highest quality assets, as their value-added investments performed poorly during the downturn. There are fewer midsized investors of subcore quality assets. Those that remain are using debt more judiciously and are demanding higher returns. Property operations are a more significant focus, as value needs to be created at the property level rather than hoping for capital market advancement. |