Retaining University of Central Florida graduates in the region, accommodating higher demand for health-care space and responding to expected office-based job growth remain areas where Orlando has opportunity, a national economist told members of NAIOP Central Florida on Thursday.
"Leverage off of your strengths -- and your strengths are healthcare and UCF," Spencer Levy, CBRE Americas Head of Research and Senior Economic Advisor, told GrowthSpotter after his presentation. "And then you need to figure out what Charlotte did to attract people to attract people from the university into their market."
Charlotte, Levy said, has created high-value jobs by successfully targeting graduates of universities in outside its metro region -- including Duke, North Carolina and North Carolina State.
"They leveraged the Research Triangle," he said.
Orlando, conversely, has a net loss of University of Central Florida graduates who enter the workplace each year, Levy said. Phoenix, Boston and Washington, D.C., also draw college graduates as growth drivers.
Health-care ranks as the No. 3 user of office space in the U.S., Levy said, and pointed to forecasts that it will become the top user in coming years. And office-based job growth creates high-value jobs, he said.
"Move up the value chain by leveraging more off of universities ... UCF is a bigger high-end job driver than Disney," he said. "... If you don't move up the value chain, you can be automated out of it." Creative industries also can drive quality jobs leading to development, he said.
- Attract more foreign capital: Just 4.7 percent of capital in Orlando comes from foreign sources, Levy said, keeping it out of top U.S. markets. “Drawing foreign money is really as simple as where do people own condos, where do people send their kids to schools, where do they have retail areas where they want to shop?” he said. “And that’s why foreign money creates a virtuous cycle that benefits the entire market.”
- Repurpose flex-industrial spaces for retail: The top disruptor of retail is generational, rather than ecommerce. “There are incentives to be had in redevelopment zones, but people wanting to be there is the No. 1 reason to do it,” Levy said. Using large flex-industrial spaces to create short-term lease opportunities for local retail, such as successful projects in Milwaukee and Pittsburgh, show consumers will respond. “Putting aside the environmental and historic side of it, [repurposing is] also faster in many instances than going vertical in most markets.”
- Build up, not out: While Houston serves as an example of how a metro area can succeed amid sprawl, most cities need “a more robust live-work-play downtown area,” in order to compete, he said. “... Moving out to Lake Nona and these other areas, that’s not a long-term winning strategy for a city that wants to compete with Atlanta or Charlotte. The long-term winning strategy is creating clusters. And building out does not create clusters. ... I would double-down downtown -- I say that not to disparage Orlando, but I've been coming here for 20 years, and downtown hasn't changed that much."
- Expect a bit of a bubble: But not like the Great Recession. “Commercial real estate is less leveraged than it had been,” which is among the reasons the next economic downcycle could be considered shallow. “Not as severe of a downturn, but it won’t be short.”