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What Florida’s Population Boom Could Mean for the Economy

May 19, 2021

a moving truck outside a home in Florida

As more people relocate to Florida, the state is poised to experience significant economic growth in the coming years.

Florida’s population is expanding rapidly, and the underlying reasons make a lot of sense.

Sure, the state will always draw people because of its warm weather, the abundance of activities, and altogether attractive lifestyle. But Florida’s low tax rates, favorable business regulatory environment, and healthy economy also drive its current boom.

In fact, Florida is the largest recipient of out-of-state movers in the country. This trend should continue, especially if specific provisions from the Tax Cuts and Jobs Act remain in effect. 

Here’s a look at how Florida’s population is growing and what this will mean for the state moving forward.

What the numbers say

The Tax Cuts and Jobs Act brought many changes to the U.S. tax code, including a $10,000 cap on state and local tax deductions that makes living in a low-tax state like Florida even more attractive. So, while Florida was always a draw because of its lack of state income tax, this benefit has gained appeal for those living in high-tax states.

How many people could end up moving to Florida?

From 2015 to 2020, Florida had between 307,814 and 387,479 net arrivals yearly. The number of new residents has grown significantly, even during the pandemic-ravaged 2020. In contrast, California had a net loss in population “the first time in more than a century,” a statistical event that followed “a decades-long pattern of slow growth.”

Estimates suggest that Florida could see a net of more than 300,000 new residents arriving every year until 2024, when the number could drop to about 297,000. Still, it’s expected that these new inhabitants will remain over the 200,000 mark every year until 2030. 

Overall, this could lead to nearly five million new Florida residents arriving from other states between 2015 and 2030.

The effect on the state’s economy

Although Florida’s tax rates are far lower than in many states, the influx of residents, particularly the wealthy, is helping increase tax revenue and driving new business activity. In 2016, Florida was the single largest beneficiary from relocations out of all 50 states—and it really wasn’t even close. 

That year saw Florida draw a net influx of nearly $18 billion in gross income, while the 19 other states with a positive net inflow of gross income combined for just over $19 billion. By comparison, migration cost New York nearly $9 billion in adjusted gross income, while Connecticut, New Jersey, Illinois, and Pennsylvania all saw significant losses, as well.

It’s also worth noting that in 2016 alone, 63,772 people moved from New York to Florida, primarily because of the tax savings.

Florida’s job market

Of course, one concern with a growing population is whether there are enough jobs to keep everyone employed. A failure to provide employment puts additional strain on the state’s resources, but that doesn’t seem to be a problem in Florida—yet.

Before the COVID-related shutdowns across the country, Florida had one of the nation’s lowest unemployment rates at 3.3%. The jobs were spread through multiple sectors and cities, too, a sign of a healthy economy. In addition, Florida added jobs every month between 2011 and 2019 except for September 2017, when Hurricane Irma caused a state-wide economic shutdown.

Post-COVID, the numbers aren’t quite as strong, but Florida still sees its employment numbers rebounding fast compared to other parts of the country. While the unemployment rate jumped to 7.7% in 2020, it’s back down to just 4.7% as of March 2021, compared to the national unemployment rate of 6%. And starting in late May 2021, those receiving unemployment benefits have to prove they’re searching for work, which should cause unemployment to drop even further.

Another factor that could cause an uptick in Florida’s economy is the growing number of financial institutions and tech companies moving their headquarters to the state, particularly South Florida. Companies like Blackstone, Goldman Sachs, Deutsche Bank, and Microsoft have offices in Florida, bringing high-paying jobs and attracting talent.

Investing in Florida’s future

Florida’s population boom could mean many different things for commercial real estate investors. 

As more businesses establish themselves throughout the state to keep up with demand, there should be plenty of investment opportunities in the buildings these companies require.

At the same time, it’s crucial to weigh the risks because we don’t know how employment will shake out in a post-COVID world, especially since many businesses in the state’s huge service economy can’t find workers right now. In addition, Florida was graded as a “C” for its infrastructure by the American Society of Civil Engineers (ASCE) in 2017. This assessment beats the national “D+” average, but rapid population growth will stress this infrastructure—and roads, bridges, public transit, water supplies, and other elements play a role in successful CRE.

Overall, Florida’s significant population growth is good news for the economy and CRE. As with all trends, we’ll be keeping an eye on it and the implications.

For more information or help with CRE investing, property management, or leasing, give Morris Southeast Group a call at 954.474.1776. You can also call 954.240.4400 or email kenmorris@morrissegroup.com to speak with Ken Morris directly.

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