Bankers see economic muscle in real estate boom

Written by Jesse Scheckner on April 13th, 2021


Bankers see economic muscles in the real estate boom

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

According to Rob Anderson, CFO of US Century Bank, business picked up significantly in the first quarter. This was promoted by a still “booming” real estate ecosystem and resilient small and medium-sized commercial and industrial companies in the region.

“Certain types of businesses are very busy, and in our first quarter our credit was up 6% from the fourth quarter last year – an annualized growth rate of 24%,” he said. “Business in Miami-Dade and the South Florida market is recovering quite well. [and] We are only seeing a general recovery in commercial real estate lending across the board. “

As the nation nears the 12th anniversary of the Great Recession, the longest American recession since World War II, the lessons of that period are evident in how banks, corporations, and governments have responded to the current economic climate.

Because they have been less effective in responding to the pandemic, many companies have been flushed with liquidity, according to Anderson. And many operated last year, albeit most of them at a lower volume than before Covid-19.

“We have implemented government stimulus programs, and the banks are the means to achieve them [the] Money to customers. It gives us the ability to be quick and responsive and we have gained new customers, ”he said. “According to the numbers I saw on my desk, business is back in full swing and US Century Bank is likely to have one of the strongest quarters we’ve had in a while when we report the first quarter.” It’s going in the right direction. “

Not all types of property are created equal, said Agostinho Alfonso Macedo, CEO of Ocean Bank. Residential real estate is still the healthiest part of the bank’s portfolio, as the pre-pandemic trend of people moving to Miami because of the favorable weather and comparatively low taxes continued.

Likewise, warehouse and industrial properties will remain strong in a county known around the world as the Gateway to America. However, office, retail and hospitality space will return more slowly due to a huge shift from in-person to remote work, accelerating the “amazon effect” of customers who prefer to shop online rather than in person for many goods and services. and safety concerns related to the pandemic.

The recovery from business-oriented hotels is likely to be the slowest among hotel companies, Macedo said. But for recreation, the average daily rates aren’t as high as they were in 2019 and early 2020, when Miami-Dade hosted a series of events that culminated in the Super Bowl. The numbers are on the rise, however.

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

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

The pandemic dampened the economy, but not all industries equally. To what extent a combination of increased debt, an increase in demand for products and services, and some material shortages leads to inflation is unknown, he said.

“It remains to be seen whether our debt will be downgraded, but the economic calamity would have been worse, so this is the better way out,” he said. “We have learned since then [Great Depression of the 1930s] do not withdraw, but go through these great cycles. The Great Recession was a great example of dealing with massive turmoil, with the Federal Reserve adding trillions of assets to its balance sheet in the form of a bailout. “

The good news is that most American international companies, including many headquartered in Miami-Dade, are not unduly leveraged. In total, they have around $ 3 trillion in offshore balances, revenues and revenues, some of which could return if needed to further prop up the economic recovery.

“In general, our economic turmoil in the EU has been measured correctly [stimulus] Programming that’s out there, ”said Muñoz. “Of course there are some perpetrators – those who might take advantage of things they shouldn’t – but the vast majority of people who use it have been helped properly.”

Miami and its two main economic engines at Miami International Airport and Port Miami could benefit greatly from President Biden’s upcoming $ 2 trillion infrastructure as a “premier city within US cities” and as the world’s leading commercial and recreation destination , which some have compared to President Franklin Roosevelt’s New Deal, which helped get America out of the Great Depression.

“Miami and South Florida would benefit greatly from money flowing into the state that would help all 19 major airports in the state and the roads that we have continuously 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 got the latest 5G connectivity. Overall, it’s great, and while I don’t know if it’s enough money, $ 2 trillion is better than zero, and it’s a direct incentive because the money is being spent, as opposed to some of the previous incentives that are actually being held and not be issued. from people because they are still worried about the future. “

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

“This is the right moment,” he said. “In some areas we are gradually seeing bottlenecks because we cannot meet the requirements that this consumption creates. You saw how that happened [semiconductor] Chips and automakers, for example. You have affordable money and demand, so the time is right to do this project. The hardest part is finding the money to sell your product. Those conditions are right there, right now. “