When discussing the new year, William Wilson, Tallahassee-based Florida First Capital Finance vice president and business development officer for Southwest Florida, predicts we haven’t seen the last of both factors. Instead, the newly elected 2023 president of the Commercial Real Estate Alliance of the Realtor Association of Sarasota and Manatee, merely suggests the industry will adapt.
Before the Federal Reserve started raising interest rates, the rates were at levels that Wilson says he has ever seen. “The interest rates are more normal now," he says. He predicts there will be one or two more raises before the Fed stops raising rates this summer. Wilson expects the Fed to telegraph rate reductions around the end of the year before actual rate reductions take hold in 2024, baring economic forces.
With interest rates back in their usual range, the businesses within the commercial real estate sector will have to adjust. According to Wilson, that means businesses will need to spend more time making decisions on having a good accountant or bookkeeper . Whereas before, a small business owner could get away with doing the bookkeeping on their own, but now, to manage cash flow and keep their capital needs flexible, they need to have their books ready for when they might need them. “It’s a lot more stressful today,” Wilson says. “You have to be on top of your game.”
The increase in demand from people moving here is to blame, he says, adding that the supply-chain and labor issues may be the “new normal.” With it being such a big state, Wilson says it’s hard to move supplies fast, especially when demand is growing as it is. As a lender, Wilson has begun asking general contractors for the worst case scenario timeline rather than when the project is expected to be completed.
Despite that, he doesn’t expect these issues to deter people from living here.
“People will just deal with it,” he says. That means the industry will need to plan accordingly and be prepared. Before, one backup plan might have been acceptable, Wilson says, while now, you better have six.