2015 Regional Report: The Southeast

FLORIDA | #2 | A SUNNY OUTLOOK
Florida’s economic weather report? Mostly sunny, possibly clouds later on. Real Gross State Product—the overall value of goods and services produced and sold—is slated to grow 3.2 percent this year, according to the Institute for Economic Competitiveness at the University of Central Florida. Housing prices are rebounding, and new construction starts are up. Job creation is slated to rise to 3.1 percent this year, led by gains in construction and professional & business services, as well as transportation/logistics. In the shade: Florida’s exports are down, reflecting slower growth in China and Brazil, its top trade partners, and Latin America overall. The Sunshine State’s population growth rate is also slowing, although it still slipped past New York earlier this year to become the nation’s third-largest state.

“We have paid down debt, removed 3,000 regulations and cut taxes 40 times,” says Dave Hart, executive vice president of the Florida Chamber of Commerce. “The Chamber has backed 104 pro-business” bills and “the governor has signed 104 of them,” he adds.

Gov. Scott’s aggressive use of incentives, his media-ready promotional zeal, and the state’s celebrated lack of individual income taxes helped jumpstart a mature industrial base. Recently, however, the pace of job creation has lagged. From January through May last year, Florida’s private sector job creation rate was 1.8 percent. This year so far, it’s 1.4 percent, dropping more than 4,000 new jobs a month behind last year’s pace.

Meanwhile the state legislature has gotten stingier, budgeting $67.9 million in incentives this fiscal year, down from $93 million last year. The programs also receive mixed reviews. “Their incentive programs are just not that robust,” says Cushman’s McIntosh. The Tax Foundation ranks Florida’s tax burden 20th lowest out of 50 states, and ranks its business tax climate fifth.

NORTH CAROLINA | #3 | LOSING ITS EDGE?
The North Carolina economy grew more strongly than expected last year, fostering guarded optimism in a state that has largely lost the economic mojo that elevated the Research Triangle to international prominence in the ’80s and ’90s.

Many of the programs that helped nurture and attract corporations during the go-go years have been scaled back or eliminated. Site selectors complain that state and local economic development officials lack institutional knowledge and talk a good game but miss on the follow through. “Their wounds are largely self-inflicted,” says DBO’s Stringer of the state’s competitiveness problems.

“There is a lot of debate in the state about how to become more competitive,” says Larry Gigerich, managing director of Ginovus, a site selection firm in Indianapolis. “As it stands now, North Carolina is not competitive for a lot of programs.”

The state’s workforce and training programs, however, retain their luster. “The quality of the workforce is great, there are good schools, fine community colleges and excellent universities,” says Cushman’s McIntosh.

Gov. Pat McCrory continues his legislative battle to get funding for deal closings, fighting off Senate efforts to cap awards at $15 million. The Senate would make larger incentives
available for job creation of over 2,000 positions and for investments valued at least $750 million.

Business and government leaders began the year hearing economists and top bankers predict a 4 percent growth rate. Economic development officials celebrated recent wins, including Lidl, the European grocer, which announced a $125 million regional headquarters and distribution center in Alamance County, and Dimensional Fund Advisors, which is locating its East Coast regional
headquarters in Mecklenburg County, a $106 million investment expected to create over 300 jobs in Charlotte. The Tax Foundation ranks North Carolina’s tax burden 17th highest, and ranks its business tax climate 16th. North Carolina spends over $660 million per year on incentive programs.