CED

January 2015

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>> MARKET CHECK GILES LAMBERTSON T he economic collapse that the U.S. experienced in 2008 struck Orlando one year earlier. While equipment dealers and contractors in metro Orlando feel much better today than they did seven years ago, under- lying nervousness remains. "I don't want to look a gi horse in the mouth, but I still think the economy is pretty precarious," said Steve Porteus, north Florida regional manager of Flagler Construction Equipment. "We are pretty optimistic. We have a very strong market – but we don't know what's driving it." Porteus says he is not alone in distrusting the recovering economy. "I deal with a lot of contractors who are very successful and I put a lot of stock in their opinions. ey are not buying into it. ey are very, very cautious on the sustainability of what is happening right now." e view ahead varies from conversa- tion to conversation, according to Chris Wood, general manager of Orlando's Nortrax John Deere Construction dealership. "It all depends on who you talk to," he said. "Some are very optimistic that it will continue. Others are concerned about another bubble. I'm cautiously optimistic." New Housing Concerns Yet in the second quarter of 2014, the MetroStudy research group character- ized home construction in Orlando's four-county metro area as flat. In a presentation to Orlando developers, the researchers also acknowledged that home inventory was a little high, but said the level was not "worrisome." Forgive Sunshine State businesspeople for worrying a little anyway. "Housing drove the Orlando construction market until the collapse in 2007," Porteus said. "We overbuilt the heck out of it. Today, there still seems to be an awfully large existing stock of houses, plus foreclosures and that kind of stuff, yet developers are breaking ground for new homes! It's a little bit of a dichotomy: On the one side is the housing debacle and on the other side it is full steam ahead." Orlando does not perfectly reflect Florida's demographic and economic make-up. e central Florida city is considered the "eme Park Capital of the World," with attractions rang- ing from Disney World and Universal Orlando (69,000 and 17,300 employees, respectively) to SeaWorld and LEGO- LAND. Consequently, many jobs in Orlando are in the tourism service sector, which is not a notably high- paying industry. According to the U.S. Census Bureau, the median income in Orlando is several thousand dollars less than the median for the state, with Orlando having a higher proportion of residents below the official poverty level. Just 40 percent of Orlando residents own homes versus 68 percent state- wide. is may explain why housing starts in Florida jumped beginning in 2013 – yet remained flat in Orlando as of mid-2014. Still, flat was an improve- ment over the downward trajectory of recent years. In fact, some say the severe decline in construction activity and equipment sales in Orlando in 2007 was partly because times were so good leading up to it. Wood at Nortrax has been working in central Florida for 19 years and says 2004-06 were the best years he's ever seen. In contrast, the post-2006 years were the toughest. "We experienced a housing bubble like a lot of places did. It was like a train that was hard to stop, but it did stop. Almost overnight. It was very difficult." Boom to Bust to Boom When the collapse came, McKin- non Equipment had a long way to fall. e Tampa-based JCB dealer reached bottom in 2009, says Senior Vice President Alex McKinnon, when the dealership sold 339 machines. By Recovery's Got Legs In Orlando, Some Shaky Knees, Too CED takes the pulse of equipment business conditions in the host city of AED's 2015 Summit. Major seven-year DOT project begins this year, overshadows housing doubts. 38 | www.cedmag.com | Construction Equipment Distribution | January 2015 Florida and the Southeast in general continue to experience incredible migration, which probably will continue. Photo courtesy of Linder Machinery

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