The state’s economy relies heavily on six industries to keep it thriving
With a GDP of nearly $1.1 trillion in 2020, Florida had the fourth-largest state economy in the United States, trailing only California, Texas, and New York. It also had the 15th-largest economy globally, putting it ahead of wealthy countries like Switzerland, Sweden, The Netherlands, and Denmark.
Although Florida saw a slight pandemic-related downturn from 2019 to 2020, the economy exploded in 2021, with estimates suggesting its GDP passed the $1.2 trillion mark. Much of this growth results from the state’s comparatively strong recovery after the initial pandemic, which saw its most vital industries rebound quickly and even thrive relative to other parts of the country.
Here’s a look at the six biggest industries that drive Florida’s economy and how CRE investors may take advantage of this growth.
1. Tourism
It should come as no surprise that tourism is a massive part of Florida’s economy. The state has some of the country’s most scenic beaches, fantastic weather, and an active nightlife scene, helping it draw visitors nationally and globally year-round.
Tourism took a significant hit in 2020, as travel willingness and ability declined. However, the second quarter of 2021 was a completely different story, as the number of visitors to the state was 223.4% higher than the same period in 2020 and only 2.2% below 2019 levels. Approximately 31.7 million people visited Florida between April 1 and June 30 in 2021, 30.6 million of them from other states. Domestic visitors were up 6% over 2019, but the state saw 57.9% fewer international travelers.
From a CRE perspective, everything involved in tourism — hotels, restaurants, recreational facilities, transportation — stands to benefit as the industry continues to bounce back and expand, ideally with a full resumption of international tourism.
2. International trade
Florida’s location and long coastline make it an important international trade hub, particularly with Latin America and the Caribbean. About 33% of all U.S. exports to those regions go through the state, and it’s becoming increasingly common for companies to purchase or lease warehouse space or distribution centers near the busiest shipping ports.
In South Florida, over 21 million tons of cargo passed through Port Everglades in 2020 alone, and the area generates more than $29 billion of business activity annually. About $45.4 billion worth of freight enters the Port of Miami every year, including significant fruit, vegetable, and apparel exports and iron, steel, and aluminum imports. The Port of Palm Beach also averages about 2.3 million tons of cargo annually, mainly in the form of shipping containers carrying consumer goods.
Businesses aren’t slowing their use of these shipping ports, and Florida Governor Ron DeSantis pledged to “help resolve the country’s ongoing U.S. supply chain problems” last October. One early government initiative was investing $6 million “to build a new workforce training center” housing Lake Technical College’s “transportation training programs, including training for diesel and auto mechanics, forklift operators and collision specialists.”
Florida is prioritizing its shipping infrastructure, and its trade hubs continue to experience massive demand. Thus, commercial warehouse space and other CRE elements of the supply chain near these bustling facilities may present opportunities.
3. Life sciences
Biotech is an expanding industry in Florida that already involves about 6,700 businesses with 94,000 employees. Many of these companies specialize in biomedical research and medical device manufacturing, and the state is home to over 200 pharmaceutical companies.
With the pandemic highlighting our vulnerability to novel viruses and public health crises, medical manufacturing, research, and development firms should experience growth, partially enabled by a push for government “incentives, direct & leveraged investment funds and tax policies that support growth of Florida’s bioscience industry.”
4. Financial services
Florida isn’t necessarily a hotspot for banks’ headquarters, but it’s quickly becoming a prominent player in the financial services industry overall.
For example, hedge fund Elliott Management is moving its headquarters to West Palm Beach, Goldman Sachs is relocating part of its asset-management unit to South Florida, and Blackstone purchased two office buildings in Miami. Both Blackstone and Goldman Sachs plan to move a significant portion of their teams to the region.
Even before this movement into South Florida, the financial services industry contributed $214 billion to the state’s GDP through avenues like finance, real estate, insurance, rentals, and leasing. The financial services industry is rapidly growing in South Florida, and investors should note what these firms are looking for as they establish offices in the area.
5. Aerospace
Florida’s aerospace and aviation industry is massive, as over 2,300 companies employ more than 105,000 people and contribute an estimated $175 billion to the economy.
Many of these jobs are at research and development, testing, and educational firms that hire engineers, pilots, rocket scientists, and machinists. There are 21 large military bases in Florida employing 60,000 active duty military, too. No other state comes close to matching Florida’s influence on the aerospace and aviation industry, but it remains to be seen how much room for expansion remains in the sector.
6. Agriculture
Florida’s agriculture industry brought $8.8 billion to its economy in 2020, and the state has the 15th-most farms in the entire country. It makes sense that agriculture is a major industry in Florida, given that our state’s growing season is as much as 200 days longer than other parts of the country. The area’s significant average annual rainfall also creates favorable conditions for many fruits and vegetables.
Florida is responsible for yielding 87% of the country’s oranges and 70% of citruses overall. About 90% of the country’s orange juice is produced in Florida, too.
CRE investors don’t have to buy farmland to participate in this growth. The entire supply chain, including employee accommodations, cold storage facilities, and other logistics elements, requires commercial space to support agriculture.
Learning what drives Florida and applying that knowledge to CRE
Keeping an eye on which industries are growing, thriving, and experiencing increased CRE needs can help investors make smart long-term investments. Morris Southeast Group can assist you in evaluating trends, conducting due diligence, and finding the right properties to expand your portfolio.
Contact Morris Southeast Group at 954.474.1776 today to learn more. Ken Morris is also available directly at 954.240.4400 or kenmorris@morrissegroup.com.
