In South Florida, a central question helped frame some of 2013’s business news: Have we seen this story before?
Housing prices zoomed skyward in 2013, largely driven by Latin American investors scooping up condo contracts along the Miami waterfront. High-rise cranes, which crept back onto the landscape in 2011, increasingly populated development sites. Enough new projects are being sold that one brokerage this month announced a weekly bus tour to familiarize Realtors with the latest development sites.
If the frenzy harkened back to the boom days of South Florida real estate in the middle of the last decade, so too did the scattered warnings of a pricing bubble. With the economy still shuffling at a slow pace and local buyers largely steering clear of the condo projects, can the market really sustain the higher prices? Or will an expanding job market, looser credit and rising rents push enough local buyers into housing-buying mode to let the growth continue, or even stabilize?
Those are questions 2014 may answer. For now, we’re left with a real estate boom that was front and center in business news for 2013.
Each year at this time, Business Monday culls the archives to rank the Top 10 business stories of the year for South Florida. In scoring our list, we judge the business stories based on three criteria:
How important is the story to South Florida?
How local is the story? That is, does it bring outsized impact or importance to South Florida’s economy?
Finally, does the story really belong to 2013? We see many trends and forces shaping our economy through the years, but this list wants to isolate the ones that burst onto the scene in 2013.
Those are the rules. On to the list.
10. Hugo Chávez dies
Local real estate agents like to joke that the Venezuelan strong man has been good for business over the years. So strong are South Florida’s ties to Venezuela that crackdowns by the Chávez administration would send enough flight capital to Miami to impact the housing market.
No surprise, then, that the March 5 death of Chávez after 14 years in power was seen as a significant economic event 1,400 miles away in South Florida. New president Nicolás Maduro hasn’t seemed to change the dynamic. Seats on the Caracas-to-Miami route have been extremely hard to find this year, and Venezuelans now account for the most international searches of online South Florida real estate listings.
9. Frank Nero out at the Beacon Council
When Frank Nero first became Miami-Dade’s top economic-development official in 1996, Bill Clinton was president and Carlos Gimenez was the county’s fire chief. So Nero’s March ouster as CEO of the Beacon Council after 17 years on the job marked a major new chapter for the county’s economic-development agency, which has come under fire for its commitment to helping Miami-Dade’s small businesses.
Nero’s forced resignation on March 8 came after a series of public tussles with county commissioners, though he blamed his dismissal on his opposition to bringing a large casino to downtown Miami. Nero’s battle with the board and County Hall threw into question the future of the non-profit’s $4 million yearly subsidy from Miami-Dade; smoothing over political relations is consider new CEO Larry Williams’ No. 1 priority for 2014.
8. Burn Notice airs its final episode
The breezy spy drama never garnered much pop-culture cred, but the USA cable network’s durable hit finished up its seven-year run as the most successful South Florida series since Miami Vice. Filmed in make-shift studios in the Coconut Grove Convention Center, Burn Notice aired its 111th and final episode on Sept. 12, tying Vice’s output. No other series filmed in South Florida came close to approaching Vice’s longevity since it wrapped for good in 1989. Thanks to state cash outlays, Burn Notice also ended its run ranked as the most subsidized program in Florida history.
Burn Notice’s exit came at a grim time for South Florida’s production industry. While Spanish-language programming continues to grow, South Florida lost two other series in 2013 (A&E’s The Glades and Starz’ Magic City), though Miami is funding a new studio near Overtown in hope of attracting more productions.
7. Sun Life Stadium plan fails
Miami Dolphins owner Stephen Ross predicted that South Florida needed a renovated Sun Life Stadium to land Super Bowls, and he was right.
Ross made the prediction during the five-month campaign to win public backing of tax-subsidies for about half of a $350 million stadium renovation at the Dolphins’ home base. The NFL had pitted Miami Gardens against a new stadium in San Francisco for the 50th Super Bowl in 2016. Miami-Dade commissioners agreed to an emergency May referendum to let voters endorse the plan before the milestone game was awarded.
Ross needed state approval too for the plan, but the Legislature came to a close May 3 before giving the required law change. That killed the stadium plan, and canceled the vote. It also set up the NFL’s Super Bowl selection committee to give San Francisco the 2016 game three weeks later, which awarded Houston the 2017 game on the same day.
Will South Florida get another Super Bowl without a renovated stadium? Doing so would water down the NFL’s warning to other cities that stadiums do matter in competitions for the big game, and the spending that comes with it.
Beyond football, the Dolphins’ loss is sure to help color the debate in 2014 as Miami-Dade considers both bringing professional soccer to Miami and a new lease deal with the Miami Heat at its county-owned arena.
6. Micky Arison steps down as Carnival CEO
After 34 years, Carnival Corp. has a new CEO. Micky Arison handed off that job July 3 to his designated successor, Arnold Donald, a long-time Carnival board member. Arison remains as chairman, so it’s not clear yet how significant the change will be for the world’s largest cruise company.
For sure, Carnival faced pressure for a change at the top. Still reeling from the 2012 deadly shipwreck of the Costa Concordia off Italy, the company faced national ridicule over a “Poop Cruise” when a Feb. 10 fire on the Carnival Triumph left it disabled off the Gulf Coast for five days.
Arison, 64, said the job change came from a natural desire to devote more time outside the company -- including with the Miami Heat, which he owns. His late father, Ted Arison, founded Carnival in 1972, and turned it over to Micky Arison in 1979. The son oversaw Carnival’s growth to a global powerhouse, most notably with its merger with P&O Princess Cruises in 2003.
5. Fusion launches
This was a strong year for Univision, which in July managed to top all English-language networks in the ratings for adults under 50. Not just Spanish-speaking adults, but all English-speakers, too.
The milestone dove-tailed with Univision’s other big move in 2013: the Oct. 28 launch of Fusion, an English-language cable network targeting viewers 35 and under.
A joint venture with ABC, Fusion debuted from a new Doral studio it shares with Univision’s news division. Executives reported a staff of about 200 for a new venture slated to receive about $11 million in state and local tax breaks and incentives over the next several years.
So far, Fusion’s reach has been small: Time Warner, Comcast and DirecTV haven’t picked up the network, and Fusion isn’t even being rated by Nielsen. But ABC and Fusion clearly are betting big, with original programming that includes a live morning show, news programs anchored by Univision veteran Jorge Ramos and a line-up of young broadcasters, and a humor block created in Los Angeles that includes a puppet talk show and animation helmed by the former head writer of The Daily Show.
If Fusion never finds a larger audience, the experiment will eventually fold. But should 2014 bring encouraging ratings for Fusion, Miami could find itself home to one of the hottest properties in media.
4. American merges with US Airways, exits bankruptcy
American’s shaky finances have always been a source of worry in South Florida because the airline accounts for 7 out of every 10 flights at Miami International Airport. And with American’s 2011 bankruptcy filing making it vulnerable for a take-over, the last two years have only heightened the uncertainty in South Florida’s travel industry.
Those worries eased significantly Dec. 9 when American completed its merger with US Airways, a combination that let American end its stint in bankruptcy protection and emerge with its brand intact and a passenger volume that is the largest in the world.
In mapping out the future of the post-merger American, executives insisted Miami’s role as American’s key Latin American hub will not change. US Airways has only a small presence in South Florida.
3. Condo boom (and bubble warnings) 2.0
For sure, South Florida once again finds itself as one of the nation’s hottest condo markets.
Condo prices soared 27 percent in the third quarter, compared to a 13 percent increase nationwide, according to the Miami Association of Realtors. Brokers report foreign investors are driving many of the sales, and the Realtors group reported in October that more than 70 percent of all condo buyers paid in cash.
On the preconstruction front, developers once again are racing to get projects announced and sales centers opened. The Related Group, a Miami developer leading the way in the last boom-and-bust cycle, has so far proposed 29 condo towers in the South Florida area, with nearly 7,500 units, according to condovultures.com. Nearly 80 percent of those units were proposed in 2013.
If the surge in condo projects and foreign demand seems familiar, so are the concerns about prices rising too quickly -- especially in a still sluggish economy.
Developers insist their new financing model, which typically requires buyers to pay upfront about half of the purchase price, will insulate them from being caught short with canceled sales contracts if prices dip again. But some of the biggest players in real estate are voicing worries that the market may getting ahead of itself again.
The boom — and bubble worries — have gotten national attention all year, generating the same kind of stories that eventually made Miami a poster child for the housing crash. As Miami real estate attorney John Sumberg told the Wall Street Journal in a Dec. 1 story: “At some point in the cycle, the lenders may say there’s too much product and this isn’t a good bet.”
2. Voters approve higher property taxes for Jackson Health System
A resistance to raising taxes has squeezed Miami-Dade’s budget under Gimenez’s tenure. But when the county-owned Jackson hospital system sought higher property taxes for an $830 million expansion plan, voters gave overwhelming support. Jackson benefited from a special vote called for an Election Day with no other countywide issues. But the 65 percent “yes” vote on Nov. 5 surprised many local pundits who expected a tighter contest for a tax hike that would cost the owner of a $200,000 home between $10 and $50 a year for the next 40 years.
With voters authorizing $830 million in new debt for Jackson, the ballot issue caps what is at least a short-term a financial turnaround for one of Miami-Dade’s largest employers, which posted its second straight operating surplus this year.
Jackson executives plan to invest about $480 million in a new rehabilitation hospital on the Jackson campus and a dozen out-patient centers, which have been profit centers for hospitals in recent years. It also will buy $350 million in new equipment and $130 million on computer upgrades and technology.
1. Expansion plan thrown into doubt for Miami Beach Convention Center
On Sept. 19, Miami-Dade’s tourism industry seemed on the verge of achieving a long-sought goal: winning approval and financing for a major renovation of the Miami Beach Convention Center.
A development team headed by New York developer Dan Tishman had won a summer selection contest with a plan for a 800-room hotel atop a renovated center, along with retail, commercial and residential ventures in city-owned land surrounding the facility. A year earlier, city voters endorsed a higher hotel tax to fund the renovation, with a mix of property-tax dollars and Tishman’s rent from the surrounding projects subsidizing the rest.
All the tourism industry needed was for Miami Beach voters to once again endorse the project with a majority vote on Election Day for the proposed lease terms. Then, on Sept. 20, a state appeals court stepped in and eliminated that option.
The Third District Court of Appeal invalidated a November ballot question needed to approve a $1 billion expansion plan for the center and its surrounding area.
And while the ruling would have meant only a delay, it was followed by voters approving a city-charter amendment that probably means backers will need a 60 percent majority at the ballot box to win any future ballot questions about the convention center.
City Commissioner Jonah Wolfson backed both the court challenge and the higher threshold for the center lease. The two victories were combined with the election of a new mayor, Philip Levine, who favors a less extensive redo of the center.
It’s unclear if Levine’s approach would generate enough dollars to fund a hotel. Tourism officials insist the center needs an adjoining headquarters hotel to compete with other major convention destinations in Florida and beyond.
Both sides are pledging to move the project along as quickly as they can. But for the tourism industry, a political win that seemed at hand in 2013 will undoubtedly seem farther away as 2014 begins.