Bankers see the economic power of the real estate boom


Written by Jesse Scheckner on April 13, 2021


Bankers see the economic power of the real estate boom

Banking experts predict a strong recovery in Miami-Dade in 2021, boosted by the region’s strong real estate market and a diverse economy. While some industries may rebound more slowly than others, they said, the financial outlook for the county and for South Florida as a whole is encouraging.

Business has already rebounded significantly in the first quarter, said US Century Bank CFO Rob Anderson, driven by an ever-growing real estate ecosystem and resilient small and medium-sized commercial and industrial businesses in the region.

“Some types of businesses are very busy, and in the first quarter our loans were up 6% from the fourth quarter of last year – an annualized growth rate of 24%,” he said. “Business in Miami-Dade and the South Florida market is rebounding quite well, [and] we are seeing general commercial real estate loans mushrooming across the board. “

As the country approaches the 12th anniversary of the Great Recession, the longest U.S. recession since World War II, the lessons learned from this period are evident in how banks, businesses and governments have responded to the current economic climate. .

Because they have mobilized less in response to the pandemic, Anderson said, many companies are crammed with cash. And many have operated throughout the past year, although most at lower volumes than before the arrival of Covid-19.

“We have implemented government stimulus programs and the banks are the [the] money to customers. This gives us the opportunity to be quick and responsive, and we have chosen new clients, ”he said. “By all accounts, from the numbers I’ve seen on my desk, business is back, and US Century Bank is probably going to have one of the strongest quarters we’ve seen in quite some time when we will report on the first quarter. This is going in the right direction. “

Not all types of real estate are doing equally well, said Agostinho Alfonso Macedo, CEO of Ocean Bank. Residential real estate remains the healthiest part of the bank’s portfolio, he said, as the pre-pandemic tendency for people to move to Miami due to its favorable climate and relatively low taxes has grown. is continued.

Likewise, warehouses and industrial real estate will remain strong in a county known worldwide as the “Gateway to the Americas”. But office, retail and hospitality spaces will be slower to return due to a huge shift from in-person to remote work, an acceleration of the “Amazon effect” of customers preferring to shop. online rather than in person for many products and services, and pandemic security concerns persist.

The recovery by commercial hotels will likely be the slowest among hotel companies, Macedo said. But for recreation, while average daily rates have yet to return to their level in 2019 and early 2020, when Miami-Dade hosted a series of events culminating with the Super Bowl, the numbers are on the rise. .

“The good news is that they are gradually increasing, and the occupancy rate is very encouraging,” he said. “These hotels are crowded. They are full and everything is related to the huge amount of stimulus. People have a lot of money and travel more, and when they do, they don’t want to go to the Caribbean or to Europe. They want to come here to Florida, to Miami, and we are seeing the effects.

The economy remains “somewhat stressed,” but despite massive debt on the country’s balance sheet, America in general and Miami-Dade in particular are on track for a strong year, said Robert Muñoz, chief executive officer. General of The Global Financial. Group and former president of the World Trade Center Miami.

The pandemic has dampened the economy, but not all industries alike. To what extent the combination of increased debt, increased demand for goods and services, and some material shortages are driving inflation, he said.

“It remains to be seen if our debt is downgraded, but the worst would have been an economic calamity, so this is the best solution,” he said. “We have learned since [Great Depression of the 1930s] not to go back but to go through these great cycles. The Great Recession was a prime example of going through a great deal of unrest, where the Federal Reserve put billions in assets on the balance sheet in the form of a bailout.

Among the good news, he said, most American companies that operate internationally, including many headquartered in Miami-Dade, are not over-exploited. In total, they have around $ 3 trillion in offshore balances, income and income which, if necessary, could in part help further strengthen the economic recovery.

“In general, our economic crisis has been correctly measured in the [stimulus] the programming is there, ”Muñoz said. “Of course there are some abusers – the ones who maybe can take advantage of things they shouldn’t – but the overwhelming majority of people who use it have been helped properly.

As a “top city in the US city hierarchy” and a leading global commercial and recreational destination, he said, Miami and its two main economic engines of Miami International Airport and PortMiami have much to be gained from President Biden’s future $ 2 trillion infrastructure. plan for improvement, which some have compared to President Franklin Roosevelt’s New Deal that helped lift America out of the Great Depression.

“Miami and South Florida would benefit significantly from the money that would go to the state to help the state’s 19 major airports and highways, which we have constantly improved and built due to population growth.” , said Muñoz. “It would also help hire people from rural areas who can now work from home if they have the latest 5G connectivity. It’s great overall, and while I’m not sure if it’s enough money, $ 2 trillion is better than zero, and that’s a direct stimulus because the money will be spent, unlike to some of the previous stimuli that are really held, unspent, by people because they are always worried about the future. “

For those with an entrepreneurial bent, now is the time to invest in that future, Macedo said. The pandemic and the trillions of stimulus dollars spent to offset its effects present “a once-in-a-lifetime opportunity” for existing and potential businessmen as the country experiences an explosion in pent-up consumer demand.

“Now is the right time,” he said. “We are starting to see shortages in some areas because we cannot meet the demands that this consumption creates. You saw it happen with [semiconductor] chips and automakers, for example. You have the money and low cost demand, so now is a good time to take on this project. The hard part is finding the money to do it and selling your product. These conditions are there right now.

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