Florida’s Job Market Keeps Firing on All Cylinders

Florida’s economic miracle just keeps on gathering momentum, according to the latest statistics from the U.S. Bureau of Labor Statistics.

Florida had an unemployment rate of just 3.3% in May, well below the national average of 4.0%. What’s more, the Sunshine State economy continues to churn out jobs. Florida added 222,000 jobs from May 2023 to May 2024, a 2.2% growth rate that tied Texas and topped New York, California and other large states, according to the U.S. Labor Department.

The robust job market has been driving office demand. While the rest of the nation sees an office market in the doldrums, Florida’s market is booming. That’s largely because the Sunshine State’s favorability factors — warm weather, reasonable regulations and a modest tax burden – continue to lure employers south. Financial firms from New York and Chicago and tech companies from California keep moving jobs into the state. 

In Feldman Equities’ core market of Tampa, employers are migrating in, and demand remains strong for well-positioned, recently updated buildings in the central business district. Tampa had an unemployment rate of 3.0% in May, according to state labor data. Some areas are doing even better – the Orlando and West Palm Beach metro areas showed jobless rates of just 2.9%, while Miami was at a microscopic 2.2%.

That might explain why trophy towers in Miami and West Palm Beach have been commanding rental rates north of $100 per square foot. Blue-chip office users are beginning to see the appeal of Florida’s economy – and they’re willing to pay a premium to do business here.

For the foreseeable future, Florida will enjoy what Sean Snaith, an economist at the University of Central Florida, calls “a jumbo jet economy” – although with office rates surging above $100, we might suggest it’s also “a private jet economy.”

“Florida is going to keep cruising at a higher altitude than the rest of the country,” Snaith writes in a recent forecast. “That’s because the twin engines of a robust labor market and population growth are propelling us forward.”

We’ve already looked at the labor numbers, but the population trends are worth noting, too. Florida was the nation’s fastest-growing state from mid-2021 to mid-2022, according to the U.S. Census Bureau, then cooled to second place in the year ending in mid-2023. Population growth reflects a strong job market, so the two metrics are intertwined with demand for office space.

“Population growth has long been a feature of the Florida economy, not a bug,” Snaith writes. “COVID-19 boosted in migration and shook up the historical patterns of what states people are moving from to come to Florida. California is now on the list of sources of new transplants to the state alongside traditional states like New York and New Jersey.”

While the skies are sunny now, Snaith does see gathering storm clouds. One big challenge is housing affordability.

“The housing market in Florida is challenged by the burden of high prices and rising mortgage rates,” Snaith writes.

A recent version of the National Association of Home Builders/Wells Fargo Cost of Housing Index finds Florida is home to two of the nation’s least affordable metro areas. In the Naples-Marco Island market, the typical home sold for $850,000 in the first quarter of 2024. That translates to a median-income family needing to spend 71% of its income to afford a typical home. In the Miami-Fort Lauderdale market, the ratio is 64%. (This index is a hypothetical exercise; no lender would approve a mortgage based on a debt-to-income ratio of 71%. The calculation mainly serves to illustrate just how wacky home prices have gotten in certain areas.)

Another trouble spot is homeowners insurance. CoreLogic, the real estate data firm, reports that property insurance premiums in Florida soared 68% from 2021 to 2023, highest in the nation by far.

However, we’ll also hasten to add the reality: While rising home prices and unaffordability are indeed a challenge for the state’s broader economy, they also reflect the favorable trends lifting the office market. Florida has emerged as a desirable place to live and work, and that’s why home prices have been trending upwards. 

Florida’s sunny office market

In any office market, demand is driven by population growth and by a robust job market. Florida continues to lure employers and employees, and they’re particularly gravitating to amenitized buildings in thriving urban districts. At Feldman Equities, we’re laser-focused on our mission of repositioning struggling office space and developing new space in downtown markets.

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