Despite economy, developers want to build on Florida land

TALLAHASSEE — A development boom is brewing under the radar of Floridians distracted by deteriorating real estate values and record foreclosures. The state is processing an unprecedented number of proposals for new homes and commercial development. If approved, these projects could pump more than 600,000 rooftops onto a market suffering from a surplus of product and slowdown in population growth.

Also on developers' wish lists: the right to build a half-billion square feet of nonresidential space. Such pipe dreams might seem laughable in today's depressed economy and moribund housing market. But property owners with an eye on the future are spinning plans that have the potential to unlock hundreds of thousands of agricultural and environmentally sensitive acres to residential and retail development over the coming decades.

In Gainesville, veteran economist David Denslow analyzes what has happened to Florida's real estate market in the past and tries to predict what's coming in the future. Figuring into his projections are the impacts of everything from rising property taxes to falling timber prices.

Denslow said he never considered the possibility that, in light of the current downturn, a glut of new projects would be under review at the DCA. When the department recently pulled together data on all major developments pending and approved since 2007, the totals were staggering: projects covering 410,126 acres, with a potential for 630,965 new homes and 479.5 million square feet of nonresidential space.

"This really catches me by surprise," said Denslow, who is with the University of Florida's Bureau of Economic and Business Research. "I'll have to revise my thinking." He understands developers reacting to a perceived threat like Hometown Democracy. "We saw a little bit of the same phenomenon before the growth management laws first went into effect in 1985, when there was a huge surge in permits," he said.

Also, what local public official would reject a developer who dangles promises of new tax revenues? "It's hard to find a city or county that's antigrowth these days," he said. Denslow fears that the behind-the-scenes gold rush will doom Florida to relive its past. His assessment: When migration to Florida picks up again, newcomers will find affordable housing aplenty. Existing Florida homeowners, on the other hand, can kiss goodbye any dreams of cashing out big on their homes.

"In the 1980s, Florida had a huge increase in population but house prices, adjusted for inflation, didn't rise at all because the state and counties had been very friendly to development," Denslow said. "Now nobody in their right mind, even an amateur flipper, could look and say that (housing) prices are going to double in the next 10 years. Prices just won't go up all that much when you've got that number of projects in the pipeline."

Despite economy, developers want to build on Florida land - St. Petersburg Times - April 19, 2009