Here is Tampa Bay Business and Wealth’s annual Economic Outlook special report, for 2024.
The themes of 2023 were overwhelmingly similar for a lot of people, including business owners. Trepidation about interest rates, a looming recession, that never truly materialized, and a workforce problem. Most of the shifts people were experiencing were the aftereffects of a global pandemic, which seems far away in the history books, but, in fact, is still producing some ripples in how people do business.
“You can’t jump to the end without talking about the setup, which is COVID[19],” says Andrew Wright. “The outcome of COVID was $6 trillion of liquidity pumped into our system but it also kind of suppressed demand.”
Wright is chief executive officer of Ally Capital Group which owns buildings like Westshore City Center, Urban Centre One and Urban Centre Two, both in Tampa, and is an owner in Sundial, located in St. Petersburg, along with Paradise Ventures. He’s also founder and chairman of the board for Franklin Street, and is a co-founder of Next Level Brands, the hospitality group behind Boulon Brasserie and Union, both in Tampa.
“You saw tremendous price inflation and that’s been the big story,” Wright says. “We have to suck all that money out of the system so, the government raised interest rates at the fastest pace in history. If you raise rates, values go down…you make a huge adjustment, it takes time to digest it.”
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THE LOOMING CRISIS
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“Insurance is a major issue and operating costs continue to squeeze margins,” Wright says.
The result of this squeeze, with premiums rising and coverage eroding, is there will be a rise in defaults and a halt to development.
“Insurance is really in a crisis. I’ve been saying that for years in my presentations. It hasn’t gotten better. It’s gotten worse. I think the only saving grace is that it’s gotten so bad that it might actually start attracting some money into it,” Wright says. “Insurance is a massive, massive problem.”
On the real estate side, Wright cites some positive developments he’s seeing in the market but emphasizes there are some wide-ranging issues that need to be monitored, with caution.
“Rents are flattening, they’re going down, more than likely we’ve overbuilt, so we haven’t absorbed all of these units,” Wright shares. “I’m very bearish on the economy. I think the economy’s set up for serious problems that have wide-ranging impacts but on the other side of that, there’s tremendous opportunity.”
That opportunity, Wright adds, is on the acquisition side, when done right. But the pressure is still on.
“All of my operating companies are feeling the pressure of downward on the revenue and upward on the expenses. I’m not reading it in a paper, I’m living it,” Wright says.
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