COVID one year later: Pandemic rocked Southwest Florida's economy, but some businesses boomed
- The gig economy isn't going away: Trends the pandemic brought may be here to stay
- Tourism statistics are worse than the impact from 9/11, the Great Recession or red tide
- Businesses are hiring and industries continue to thrive through the economic upheaval
Southwest Florida's economy may never look the same.
You can blame the coronavirus virus for that. There's no question the pandemic has rocked the region's economy.
Early on, it led to a flurry of furloughs and layoffs — and business closures, affecting thousands of workers.
After Gov. Ron DeSantis took steps to limit the spread of COVID-19 by temporarily shutting down what he deemed as 'nonessential" businesses across the state, many of those businesses took it on the chin in Southwest Florida, especially restaurants and retail shops.
A few months into the pandemic, Hertz, one of the area's most visible companies and larger employers, filed for Chapter 11 bankruptcy protection after travel and tourism came to a virtual halt — crushing the demand for its rental cars. The company is still fighting to reorganize.
Dozens of hotels temporarily shut down for weeks across Southwest Florida due to the scare.
Although hotels fell into the category of "essential" businesses for the state's purposes, many hotel managers and owners didn't see the point of staying open, when the demand for rooms had dropped to near zero.
Still other hotels and resorts heeded local orders that restricted visitation in such tourism hot spots as Fort Myers Beach and Sanibel, forcing them to stop taking reservations and close up shop.
Unemployment quickly surged in the region, hitting nearly 15% by April — coming off historic lows at the start of 2020.
Since the spring, the local economy has come a long way, helped in a big way by the state's reopening. By late September, all COVID-related business restrictions had been lifted in a phased approach.
The magnitude of the economy's improvement can be seen in the unemployment rate: State data shows the region's jobless rate stood at 4.8% in December.
Economists consider an unemployment rate of 4% to 5% "full employment," as there are always workers between jobs and businesses in flux.
In case you missed it:Unemployment rates fell across Southwest Florida as 2020 came to an end
Southwest Florida in recovery
The low unemployment rate doesn't mean Southwest Florida's economy is out of the woods just yet. It's still in recovery mode, leaving the crystal ball fuzzier than usual about the future.
"What's the new norm? That's a good question," said Jim Wall, communications director at CareerSource Southwest Florida, which matches local employers with local workers.
Experts, such as Wall, struggle to answer the question, as the pandemic has brought about changes to the economy that may be here to stay, from an increase in automation to a spike in remote work.
"We are all not 100% sure of what the workforce of tomorrow would look like," he said.
Virtual career fairs and hiring, prompted by COVID-19 concerns, may be here to stay.
The gig economy? Well, it's not going anywhere either.
Grocery delivery services through such online platforms as Amazon, DoorDash, Instacart and Shipt have thrived amid the pandemic, creating hundreds of thousands of jobs across the country, including ones in Southwest Florida.
That trend — along with other factors — is likely contributing to one of the biggest challenges traditional employers now face as they look to recover. They're struggling to find enough workers to fill critical positions, especially those that are high-touch and customer-facing.
"Employers are willing to hire, but job seekers are leery to go back to work, where individuals are balancing financial stability with health concerns," Wall said.
In that way, the recovery from this recession may look a bit different. In his 30-plus-year career in the employment and training arena, Wall said he's never seen this kind of reluctance to return to work at more conventional jobs.
State data shows the labor force — defined as those who either have a job or want one — has shrunk in the five-county region of Collier, Lee, Charlotte, Hendry and Glades since the start of the pandemic roughly a year ago. That's not a good sign.
In December 2020, the size of Southwest Florida's workforce stood at 619,898, down by 12,207, or 1.9%, over the year. If the downward trend persists, it could stunt business growth, expansion and attraction.
Out of work
As a tumultuous 2020 drew to a close, the region still had nearly 30,000 unemployed workers, not including those who may have dropped out of the workforce to retire early, or taken a pause.
As of March 1, the Florida Department of Economic Opportunity had paid nearly 2.3 million COVID-related claimants more than $23.2 billion in unemployment benefits.
In those numbers, there are more than 90,000 claimants from Lee County, representing 26% of its total labor force.
There are nearly 42,000 claimants in Collier, which account for about 23% of its smaller workforce.
Statewide, the highest number of claimants — more than 439,000 — reported that they lost work or jobs in the accommodation and food services sector.
While there's no solid data on the makeup of the affected workers in Southwest Florida, it's easy to see that the crisis has impacted women and minorities the most, as it has around the country, because so many of them work in service industries, such as hospitality and retail, said Amir Borges Ferreira Neto, an economics professor and interim director of the Regional Economic Research Institute at Florida Gulf Coast University.
In some ways, the coronavirus has shifted the composition of the local economy, but some of those changes could be temporary, including a bump in manufacturing that can be linked directly to local companies that temporarily shifted gears to make COVID-related products, such as masks and hand sanitizers, he said.
With small businesses driving so much of the local economy, Neto said he's glad to see most of them survive. He attributes that in large part to pandemic-related federal aid.
In case you missed it:Local banks helping local businesses secure federal money to stay afloat
Looking ahead at the recovery, this much is clear: Some industries will take longer than others to heal from the unprecedented crisis in Southwest Florida.
Case in point? The hard-hit tourism industry continues to suffer, with the demand for travel still low, due to fears tied to COVID-19.
For safety reasons, government restrictions on travel remain in effect in some parts of the country — and world. Foreign visitation is so small, it's hard to calculate — and the once-lucrative meetings and groups business remains at a crawl in Southwest Florida.
Although it's picking up, flying on airplanes remains a big fear for many Americans, as well as foreigners.
Tourism statistics tell the tale of a year like no other.
In Collier alone, the count of visitors staying in hotels and other short-term paid rentals fell by more than 26 percent from 2019 to 2020.
Over the year, Lee saw a more than 31% drop in visitation of all kinds, including people staying in hotels and with family and friends.
"Almost a third of our business is missing," said Tamara Pigott, executive director for the county's Visitor and Convention Bureau.
That's hard to overcome. It's worse than the impact from 9/11, the Great Recession or red tide.
"2020 definitely was an enormously challenging year for the tourism industry. No question," Pigott said.
She recalls a low point in mid-April of last year, when hotel occupancy in Lee sat at 16.9% — and revenue per available room registered at just $12.95.
"At that point, you are wondering, 'How long does this last?' 'When do we get out of this whole situation?'" she recalled.
Fortunately, the industry has seen better days since April.
"Honestly we had a surprisingly good summer," Pigott said. "And that's a little bit reassuring that when things go back to normal, the desirability of the area hasn't changed. People still look to this as a place they can come and take a respite, and have this natural outdoor experience — and they feel safe outdoors."
The bounce back for hotels, has largely depended on location.
The better the location, the better and faster the comeback, said Lois Croft, regional director of the Florida Restaurant & Lodging Association.
"It's improving all the time, every week seems to be a little better," she said.
However, she noted area hotels and resorts will not see the kind of business they usually do from spring break this year, as many colleges and universities have canceled it due to COVID-related safety concerns.
Amid the pandemic, the demand for vacation rentals has surged, including single-family homes and condos, because they allow travelers to limit close contact with others. There are hundreds of such rentals advertised in Southwest Florida.
Other shifts in tourism include shorter booking windows — meaning less time between planning a trip and taking one — and a heavier-than-usual stream of drive-in visitors, especially from other parts of Florida, but also from nearby states, such as Georgia and Alabama.
Some pandemic-related changes in the tourism and hospitality industry may not go away any time soon, keeping operating costs higher and operating procedures more difficult.
"The safety protocols that we are following in public spaces, such as hotels and restaurants, will be with us in some degree for a few years," said Jack Wert, Collier County's tourism director.
Domestic leisure travel is driving a rebound in the local tourism industry. As for international and business travel they'll likely take a year or more to recover, Wert said.
"I do think that the way we conduct group meetings will change in the future to seeing attendance both in person and by remote access," he said.
Looking into the future, Wert also sees a bright light — the continued benefits that could come from the pandemic, with a change in attitudes that could lure more visitors to Southwest Florida for years to come.
"The biggest change I feel will be that people will consider a number of factors as to where they travel. They will consider the size of the destination, the reputation for safety and the ability to find open spaces, versus crowed urban centers," Wert said.
A bright spot for area hoteliers has been their ability to hold room rates relatively steady — and strong — after the initial shock of the pandemic passed.
After the 9/11 terrorist attacks, it took five years for the average hotel room rate to recover in Fort Myers, and even longer for it to rebound after the Great Recession, said Michael Collins, a professor in the hospitality department at Florida Gulf Coast University.
"I think that the industry recognized that the drop in demand was due to a situation that was out of their control and that no amount of discounting was going to restart demand," he said.
Another bit of good news? The university's hospitality students are in high demand these days for internships and permanent jobs, due to the industry's struggles to bring back or replace the employees they furloughed or laid off early on in the pandemic.
"Our industry will always employ people in positions that are not able to be outsourced, so there are always long-term opportunities in our industry," Collins said.
At some area hotels and resorts, the comeback has been better and faster than expected.
That's the case at the Pink Shell Beach Resort & Marina on Fort Myers Beach, said Robert Boykin, CEO and chairman of Boykin Management Company, which oversees the property.
The resort closed for more than 10 weeks, due primarily to town restrictions on visitation, he said, but it's "operating at 98%" today.
Despite the turn around, business dropped by 40% in 2020, when compared to 2019.
Initially, the resort kept 40 employees, letting the others go temporarily, then bringing them back after receiving a forgivable loan through the federal government's Paycheck Protection Program, known for short as PPP.
Now, the resort needs more employees to get it through the busier tourist season, even if season is slower than usual. Finding them has proven "unbelievably difficult," Boykin said.
"For every five job applicants we get one to actually make it to the hotel for an interview," he said. "The government has made it so lucrative for people to pretend to look for work that until people run through the money we expect it to remain difficult."
As for the resort's business, it's looking up from here.
"We are lucky. With three outdoor pool areas and 1,500 feet of beach at the tip of the island we are the kind of environment that people feel comfortable in," Boykin said.
He added: "People are now flying in, so we are seeing the traditional snowbirds. Originally, the client was in-state."
He doesn't anticipate the resort will see a full recovery until next year "when vaccines are in your arm and business returns to whatever normal will look like."
As for Southwest Florida International Airport, it's rebounding faster than many of its competitors in Florida, especially the larger-size ones in markets such as Miami and Orlando.
In case you missed it:In the Know: New face mask factory in Fort Myers set to expand, awaits FDA approval
Long way to go
While there's optimism in the region's all-important tourism sector, there's still a long way to go in reaching the kind of employment it boasted before COVID. State data for December 2020 showed a loss of 11,700 jobs in the leisure and hospitality industry in the three metros of Lee, Collier and Charlotte — over the same month in 2019.
"That's nearly 12,000 jobs that were just gone," Wall said. "That just vanished."
Tourism is not the only sector upended by the pandemic.
The COVID outbreak hit the retail and restaurant industries hard, especially in its first months, with the exception of essential businesses such as supermarkets, hardware stores and pharmacies.
A dizzying number of national retailers and restaurants have closed bricks-and-mortar locations in Southwest Florida over the past year, including some that have gone belly up, such as the iconic Pier 1 home décor and furniture store and the popular buffet-style eatery Sweet Tomatoes, leaving behind swaths of now-vacant real estate.
Many local restaurant and shop owners have also suffered, with residents spending more time at home, staying away from crowds and saving more money — and visitors and their spending in much shorter supply over the past year.
Skip Quillen, owner of Culinary Concepts in Naples, said one of the most harmful effects of the pandemic came when Gov. DeSantis closed "nonessential businesses," then opened them back up slowly in phases, starting at 25% of capacity, which was difficult to manage.
The governor's order, he said, forced him to temporarily shutter his five fine-dining eateries around Southwest Florida, but it's had a lasting impact, making it appear restaurants in general aren't safe places to visit in a pandemic, causing angst and keeping customers away to this day.
In making his point, Quillen brought up the construction industry, deemed essential, and how its employees continued to work in many cases without masks, distancing — or the enforcement of other recommended safety protocols by the Centers for Disease Control and Prevention, such as regular handwashing.
"I don't fault them for trying," Quillen said of state officials. "They had to do something and I'm glad I didn't have to make that decision. Looking back, I hope we all learned something."
He's happy the state's business shutdown didn't drag out as long as it has in some northern states, such as New Jersey and New York. For that, he praises the governor.
"We're lucky to be in Florida, very lucky," Quillen said. "Where the governor has really helped us out."
He blames his current struggles more on the news media, which he feels has fueled fears of eating out.
It's going to take the media "to put us back together again," he said, with stories that promote the resiliency of restaurants — and their safe practices, many of which predate COVID.
The pandemic forced Quillen to temporarily let go of most of his workforce, a heart-wrenching decision, but one that made personal, professional and economic sense at the time, as his workers could make more money on unemployment, with an extra $600 per week funded by the federal government, than they could in an empty restaurant.
"It was excruciating let me tell you," he said. "It was horrible."
He's glad that's all over with and that most of his employees — whom he considers family — have returned to work, or in his eyes, home.
Some of his employees never came back, for various reasons. So, Quillen is actively looking to replace them, but he's not seen much response to his frequent job advertisements and postings.
"We want to hire," he said, "but a lot of people aren't answering those ads because they want to stay home."
Across his restaurants, Quillen needs another 25 employees or so for positions he describes as "across the board."
Restaurants across Southwest Florida have scrambled to adjust to the COVID crisis and survive. Some have been lost.
Many restaurants have added or beefed up delivery and curbside-pickup, which have swelled in popularity. For Quillen, those weren't good options, however, as an upscale restauranteur, focused not only on fine food, but a fine-dining experience.
While the hospitality, tourism, entertainment and transportation industries have borne the brunt of the COVID-19 outbreak, other sectors have taken a serious beating too, including educational and health services and government — which together have shed more than 5,000 jobs in Southwest Florida over the past year, according to the latest state data.
Businesses now hiring
Some sectors of the economy have seen little impact from the pandemic and have continued to grow, including professional and business services and manufacturing.
Among employers that have continued to hire and add jobs? Naples-based medical device manufacturer Arthrex and the Lee County Health System, which has roughly 100 openings.
Amazon, which now has a last-mile delivery center in Lee County and a newer one in Collier, continues to hire warehouse associates and drivers to meet the heightened demand for door-to-door deliveries to residents.
For the same reason, UPS and FedEx have been on the hunt for more workers too.
It's no secret grocery stores and supermarkets have performed well through the pandemic. Just ask Alfie Oakes, owner of Oakes Farms, Seed to Table and Oakes Farm Market, who said he's had a "good run" since last March.
"It was a good year for us, especially for us," he said.
While Oakes has stirred up controversy for challenging and not enforcing Collier County's mask mandate at his food stores, it appears by the flood of emails and phone calls he's getting that it's helped business more than hurt it.
After a story about his fight over the mask mandated aired on national TV in early February, showing video footage of customers and employees in close contact and not wearing masks at Seed to Table, Oakes said he immediately saw a 25% uptick in business at that store, his newest and largest off Immokalee Road.
He shared emails from happy customers, encouraging him to "keep up the great work" and to continue fighting for their "freedom."
One Oakes supporter wrote: "We left the oppressive political climate on Long Island, New York in August of 2020. Every day, we are thankful that we made the best decision of our lives. We love your store and will continue to support your efforts."
On a larger scale, grocery and supermarket chains, such as Lakeland, Florida-based Publix, have seen their sales and earnings climb, boosted by a higher demand for food, with American consumers eating at home more often, and at times hoarding essential supplies, from bread and meat to paper towels and toilet paper.
Sales in 2020 were higher than 2019
Hardware stores have done more than just weather the storm. They've benefited from a home improvement boom.
Michael Wynn, president of Sunshine Ace Hardware, with multiple locations in Southwest Florida, said: "We applied and received PPP funding but returned 100% of the monies when we were not negatively impacted by the pandemic."
Sales in 2020 were higher than in 2019.
"As people have spent more time in their homes and the low-interest environment has driven a strong real estate market, they are seeing their home as a better investment," Wynn said. "More people are cooking, entertaining and working at home. This has resulted in homeowners wanting to invest in a better grill, repaint living areas, or improve the comfort of their backyard/patio to ensure these spaces are comfortable and inviting, adding better value to their lives."
Some of the region's more unique retailers have managed to shine through the pandemic too. Take Cocoon on Fifth Avenue South in downtown Naples, for example, which sells one-of-a-kind furnishings and home décor. Owner Mitchell Siegel opened the store — his first outside of Connecticut — in January of last year, then came COVID.
After a temporary closure, Siegel said his store quickly got back on its feet. Since then it has continued to see sales growth, as word has spread about his creations, made from natural materials, with distinct designs.
While the store's foot traffic still doesn't match what Siegel saw before the pandemic, when up to 1,000 visitors were coming in on a Saturday, sales have been "outstanding," especially of late, he said.
"Our business has grown tremendously this year, which I hate saying when people are suffering so bad," Siegel said. "We are probably up 40% from last year — or more."
A few industries have thrived through the economic upheaval, including healthcare, real estate and construction.
After a brief pause, home-buying and construction have boomed in Southwest Florida. Experts attribute the trend to several factors, including a desire to escape larger, more heavily populated areas up north — and to flee states with higher taxes and bad weather.
Market watcher Denny Grimes, president of his team at Keller Williams Realty Naples, uses the acronym GOAT to describe the surge in home resales Southwest Florida has seen over the past year. The meaning of the abbreviation? Greatest of all time.
Coming off the best year seen since the home market bottomed during the Great Recession in 2009, the first quarter of last year went great, Grimes said, until COVID entered the picture.
In April and May, existing home sales — or resales — dropped by 40% over the year.
Then the unexpected happened. The market returned — and then some.
"The demand is real, however, it is not sustainable," Grimes said.
Heavy demand has resulted in triple-digit increases in home sales through the multiple listing service, or MLS, and the high-end market has done particularly well, as the wealthy clamor for a slice of paradise before it's all gone, with inventory so tight.
"The strongest market is in the most expensive areas of town," Grimes said. "Naples, for example, doubled the growth of Lee County, and the No. 1 growing market in Naples was the filet mignon, the Boardwalk and Park Place locations, Gulf Shore Boulevard, up to Pelican Bay, around the water, in Port Royal."
In 2020, 135 homes sold for more than $5 million in Southwest Florida, "the best year ever," he said.
This year, the uber-luxury market started off with a bang. Grimes offered up this as a good example: Naples Realtor Bill Earls, who specializes in the top-end of the market, has booked more than $300 million in sales since the start of 2021.
One of the homes Earls recently sold — a stately family compound at 2700 Gordon Drive in Port Royal — fetched $52 million, a new all-time record price for Naples.
"What that is saying is that people from the expensive urban markets are coming down, they are leaving closed states to go to an open state, Florida" Grimes said. "And our price point is so much better than they are used to, our comps are so much better."
These urbanites, he said, are "buying homes faster than we can put for-sale signs in the ground."
"The challenge we are now facing is we don't have enough inventory," Grimes said. "So that is going to slow our market down. There is just not enough gas to keep the fire burning."
Soaring demand and low inventory has pushed home prices higher.
In February, the median home price in Lee County hit $335,000. In Collier, it rose to $570,000.
The median is the price at which half the homes sell for more and half for less.
Later this year, Grimes expects home prices to reach their peak, but he stresses Southwest Florida is not in a housing bubble, like the one seen in the mid-2000s, so there's no reason to fear a bust — or a repeat of the Great Recession.
Excess demand and low interest rates continue to drive new home construction in the region.
New home permit activity dropped sharply after the COVID-19 outbreak rose to pandemic status in the first quarter of last year, but it didn't last long, said market expert Randy Thibaut, founder, owner and CEO of LSI Cos. in Fort Myers.
By the third quarter, permits surged.
"I would call it an epic surge in permits pulled in Southwest Florida for new homes. That has continued through right up to the date," Thibaut said.
While he describes the surge as "epic," it's not the kind seen at the peak of the housing bubble in 2005, when builders pulled roughly 44,000 single- and multi-family permits in Collier, Lee and Charlotte counties.
"We ended up at around 18,000 in 2020. Not a boom," Thibaut said.
He attributes the rise in permits in the three counties primarily to fear of COVID and a herd mentality that's pushing Americans out of larger cities and metros into smaller ones, where they can feel safer and live happier. Southwest Florida is one of the big recipients of those trends, Thibaut said.
Like the buyers of home resales, some new home buyers are also fleeing higher taxes and seeking more bang for their buck.
There's a growing urgency among buyers, who want to make sure they don't miss out on their chance to get the home of their dreams while they still can for a more reasonable price, Thibaut said.
"The biggest problem is the supply chain," he said. "We don't have any inventory, standing inventory for new homes."
How long the frenzy will last will depend on several factors and the answer should surface by the third or fourth quarter of this year. By then, more Americans will be vaccinated and the effects of the new Biden-Harris Administration's policies and influence on real estate, interest rates and taxes should be more clearly understood, Thibaut said.
"They likely are not going to be to the benefit of the real estate business," he said.
A new beginning
While construction has showed strength through the crisis, the industry hasn't gone unscathed.
In fact, the pandemic has led to to some cancelled commercial contracts. It's for that reason that Fort Myers resident Victoria Garrett, a single mom, lost her job as an administrative assistant for a mom-and-pop drywall contractor in October.
After turning to CareerSource for help finding a new job, she landed a temporary stint at its Fort Myers office, where she screens customers before they can get past the entrance, checking their temperatures and asking them a series of COVID-related questions before clearing them.
She's also gone back to school, taking classes at Florida SouthWestern State College in pursuit of a business management degree. While she doesn't have the degree yet, she's landed a permanent full-time job with CareerSource that will involve helping unemployed workers find jobs.
She couldn't be happier about where she's ended up after falling on hard financial times, forcing her to seek outside help to pay rent and buy groceries, while out of work.
"I'm very fortunate," she said. "I definitely think it's all God. He's definitely made everything work out OK. I haven't had to lack for anything."