The number of COVID cases in Florida is finally on the decline after a summer wave that eclipsed previous outbreaks, causing nearly 10,000 deaths in the state in August alone. And the death toll is not yet over, as deaths tend to delay the number of cases by several weeks.
But, as its death toll continues to rise, the impact of COVID on Florida’s economy and its real estate industry has been minimal to nonexistent, according to many Floridians in the industry.
“I see no change from the recent increase in COVID cases,” JC de Ona, division president for Southeast Florida at Centenary Bank, said this summer. “People already know what to expect, [and] we know our governor is not going to shut everything down.
“For better or worse, most of Florida has dealt [COVID] as if it was over since June 2020, ”said Justin Oates, vice president of an investment firm Cain International.
In fact, the summer push – fueled by the highly infectious delta variant – only intensified the same factors that had made Florida attractive to outsiders throughout the pandemic. The Sunshine State offers both the opportunity to do more outdoors, due to its weather, and the laissez-faire attitude of its policymakers, who have avoided restrictions since last summer.
“Delta does nothing more than perpetuate the decisions that were originally made,” said Todd Rosenberg, managing director of the investment firm. Pebb Capitalbecause it reinforced “the idea that it can be something that never really goes away.”
These decisions have led to a wave of activity in Florida, and South Florida in particular, in virtually every sector of real estate.
Florida hotels rebounded to pre-pandemic levels in early 2021, then surpassed that benchmark. Multi-family rents are up 20% in just one year, condominium supertalls sell out before excavators get close to the ground, new market tenants in New York and California sign office leases and retailers open unrestricted since summer 2020.
With much of this activity being fueled by factors related to the pandemic, the delta surge appears to have solidified these trends.
John Osborne, Senior Vice President of CP Group, Florida’s largest office owner, said he hadn’t seen any real impact from the summer hike. “In terms of rental speed, the amount of new activity to hit the market in South Florida continues to be staggering,” he said.
He saw reluctance from national businesses, which were looking to roll out a nationwide uniform return-to-office plan and saw their plans disrupted by the renewed COVID spread over the summer, but no reluctance from small businesses. news in the market, or locals.
“Fortunately, I think South Florida has done relatively well. People want to be here,” Osborne said. “It didn’t seem to have an impact on decision-making with the signing of leases. ”
Of course, it’s not all rainbows and roses, and COVID has certainly left its mark.
Labor shortages and supply chain issues have troubled the retail industry. Soaring rents and house prices are exacerbating existing inequalities. And while New York City businesses grab the headlines to relocate to Miami, office occupancy rates are still below pre-pandemic levels, as remote working continues to take hold.
Additionally, businesses and individuals are taking steps to protect themselves from COVID, and homeowners like CP Group have mask and distancing warrants in their buildings.
In fact, the CP Group instituted a vaccination mandate for its employees starting in June, providing educational resources on vaccines, as well as a generous schedule for obtaining one. To accommodate vaccine hesitants among its staff, the CP Group allowed employees to sign a pledge that they would be vaccinated within 10 weeks of full approval from the Food and Drug Administration, rather than the emergency approval that every COVID vaccine in circulation was last received. year.
While 50 percent were initially vaccinated, that number rose to 85 percent, said Elena Daniels, director of environment, social and governance (ESG) at CP Group, which oversaw the program. What’s more, about 15% have signed the pledge, which gives them until early November to get a vaccine – now that the FDA has indeed given full approval to the Pfizer vaccine. By mid-September, CP Group planned to lay off just five or six employees due to vaccine refusals.
CP Group may not be an outlier. Despite Florida’s reputation for complacency with COVID, the vaccination rate in South Florida is quite high and is, in fact, higher in Miami-Dade County than in New York City. As of September 23, the vaccination rate for people 12 years and older was 82% in Miami-Dade, 70% in Broward and 65% in Palm Beach, compared to 72% in New York.
The comparison only underscores the difference, however: the vaccination rate in Florida rose dramatically over the summer, following the increase in cases, as New York residents were largely vaccinated before the outbreak. delta.
Rosenberg of Pebb Capital pointed out that in Florida, protection against COVID largely depends on individual choice, which could explain why it has not affected the market more broadly.
“The people who migrate here are people who have a choice, and they choose to be more careful,” Rosenberg said. “The spread had more to do with people not paying attention at first.”
For people who feel they can protect themselves, because their job allows them to work from home, for example, Florida’s laissez-faire attitude is a godsend.
“I think the fact that Florida is keeping things open, I think it’s going to be attractive to people who don’t want to be vetted,” Centennial Bank’s Ona said.
Rosenberg is betting on these transplants and on the transition to hybrid work on a more permanent basis. His company, along with two partners, are planning to turn a historic Miami Beach hotel into a Class A office, something not very common in a city known for its spring break revelry.
The company is converting the Bancroft Hotel on famed Collins Avenue into an office building with 30,000 square feet of interior and exterior amenities, targeting tenants who turn down nine to five in a Midtown cabin.
“I’m building a product for exactly that – what desktop users across the country are really looking for in Florida, coming out of lockdowns,” Rosenberg said. “It’s a dedicated place to work, but the work has now spread to social work: having a drink, lunch or sitting on the beach with a banker from Chicago. “
It’s meant to be a place where the lines between office and hotel, between work and play, between a meeting lunch and a beach party blur. And Rosenberg chose Miami Beach for a reason: “We have a lot of condos, a lot of apartments, a lot of hotel keys, but not a lot of offices.
On the financing side, de Ona said the bank has seen uninterrupted activity in hotels, multi-family homes and even retail. Hotel deals have multiplied, as many players who were sitting on the sidelines have returned. And with the multi-family market as hot as it is, Centennial has made a number of construction deals, especially for affordable housing, the workforce, and the elderly.
And it doesn’t seem to stop.
“I anticipate that the migratory flow will continue as the fall and winter season approaches,” said Eduardo Pruna, regional sales manager for residential brokerage. ONE Sotheby International, who has worked with out-of-state homebuyers, all of whom work remotely some or all of the time.
“This COVID thing is terrible, but the upside is that real estate is booming,” he said.
And this is the pact with the devil that Florida made, a pact that is not yet finished.
“If there is another wave of COVID in the winter,” de Ona said, “at the end of the day Florida will benefit again.”