Ocala, Gainesville Worlds Apart

Ocala, Gainesville worlds apart

Ocala and Gainesville have shown striking differences while weathering the recession

Published: Sunday, October 17, 2010 at 10:54 p.m.

File Photos
At left, the Century Tower at the University of Florida in Gainesville. At right, a “Horses in Motion” statue in 2006 near the downtown Ocala gazebo.

Geographically, Alachua and Marion counties have a lot in common, sharing a border, an interstate and a lake. Both are inland and rural with mid-sized cities at their centers.

Economically, however, they are worlds apart.
The recession brought out just how far apart.
Ocala, like other housing boom areas, was on the leading edge of a recession that cut deep — taking with it jobs, businesses, home prices and household wealth — and is only recently showing signs of starting the slow climb out of a deep pit, according to Moody’s Economy.com. The area had an abundance of jobs in home construction and manufacturing, industries that were particularly hard hit, dragging down related industries such as finance and spreading to retail and other sectors.
Compared to the state as a whole, the recession came to the Gainesville metro area later, dipped less and was over sooner, according to an analysis provided by Moody’s. The area was buffeted from deeper pain by relatively stable employment at one of the nation’s largest universities and a healthcare industry that combined account for nearly two-fifths of local jobs.
Moody’s economic outlook for Gainesville and Ocala also takes different shapes.
Led by health care, job gains in Gainesville are expected to accelerate late this year with full recovery by the end of 2011, ahead of the state and the U.S. The outlook improves with the state granting the University of Florida a 5.4 percent increase in funding in 2011 and a 15 percent increase in tuition. Home prices will rise faster than national averages after 2011. Long term, Gainesville’s economy will outperform the national average.
Ocala has to look more long term for good economic news but once the population starts moving again stands to outperform the national economy from migration gains.
In the meantime, Moody’s reports that it will take years to rebound from job losses and undo the damage to home prices. Jobs will gradually edge up this year and accelerate in 2011, but will not fully recover to prerecession levels until 2015. Home prices will continue to decline, though at a slower pace, before gaining any momentum perhaps in 2012.
Gainesville’s economic makeup is pleasantly boring, never experiencing the volatile highs and lows of the nation’s boom and bust cycles thanks to its dominance by state government – namely the university – and health care – stable industries that provide above-average wages.
Though susceptible to state budget woes, colleges tend to cut capital projects before cutting jobs, Moody’s reports. And despite an ongoing plan to cut 4,000 students over four years, UF will continue expanding research, boosting graduate enrollment and faculty and research jobs.
Health care, the only growth sector in the state during the recession, continued to add jobs in Gainesville.
Commercial Realtor Beau Beery of AMJ Inc. said local government regulatory approvals are more difficult here, which helped avert the overbuilding by national builders that Ocala faced.
With that backdrop, Gainesville’s gross metro product fully recovered in late 2009 and is reaching new highs while the economy has added a significant number of jobs after hitting bottom in August 2009, Moody’s reports. The area shed 6 percent of its jobs from peak to trough compared to 11 percent nationwide and the near 8 percent unemployment rate is below U.S. and state averages. However, many of the job gains are in low paying fields such as hospitality.
Ocala’s economy is more a function of its location.
Pete Tesch, president and CEO of the Ocala/Marion County Economic Development Corporation, said railroads built before the Civil War, phosphate mines and citrus helped establish the area’s manufacturing credentials.
Natural beauty brought visitors to areas like Silver Springs and helped establish the horse farm industry.
A large retiree population has also fueled a health care industry that boasts two hospitals and numerous clinics.
As a central Florida locale with cheap land and housing, it provided a retirement and second-home destination for people from the North and from South Florida, and a bedroom community for workers from higher priced surrounding areas, making it one of the fastest growing communities in the U.S.
But home builders got ahead of the growth and the subsequent crash brought construction to all-time lows for an extended period, eliminating hundreds of construction jobs. The ripple effects spread to home products manufacturers and the financial industry, with mortgage lender Taylor, Bean & Whitaker Corp. with 1,000 employees and Ocala National Bank forced to close. Lower consumer demand cut into other manufacturing companies, with the exception of defense contractor Lockheed Martin. Lower property taxes led to government cuts, with several hundred teachers laid off last year.
Over two years, the area shed 18,000 jobs, a drop of 17 percent, with the unemployment rate among the highest in the state at more than 14 percent.
In recent months, commercial Realtor Bartow McDonald IV said activity – whether looking, buying or leasing – is up for all types of businesses in Ocala. For the first time in two years, he said, properties are getting interest from multiple buyers as businesses and investors compete for deals.
McDonald, managing director of Sperry Van Ness / Sky Commercial Real Estate, said they were recently hired by a number of national restaurant chains to find sites in Gainesville and Ocala.
“They’re anticipating disposable income in those markets,” he said. “That’s encouraging.”
For the near term, business leaders are focused on the November election, Tesch said, delaying decisions until they can get a clear picture of economic policy and job creation directions.
McDonald said even Ocala companies with money to invest on expansion are waiting and hoping for a change in leadership.
Beery said a lot of future growth will depend on whether Florida voters approve Amendment 4 to the state Constitution, which would put many land use decisions to a voter referendum.
In the short term, it would help fill the existing inventory of vacant office and retail space, he said, but would eventually keep companies from expanding “because they don’t want to go through the hell of a vote.”
Looking ahead, Gainesville and Ocala stand to make significant gains in the health-care industry from an aging baby boomer population.
Gainesville’s economic development efforts are focused on nurturing companies formed from the many medical therapies, medical devices, information technology and other high-tech inventions to come out of university research with hopes of retaining graduates.
The high quality of life and low cost of doing business are important factors in luring professionals and technology firms, Moody’s reports.
Ocala’s inevitable recovery hinges on the same volatile factors that led to its prior boom and bust – population growth, Moody’s reports. As the national economy recovers and people are able to sell their homes and move, the area is again poised for rapid growth from in-migration.
Major highway and rail links that helped spur expansion in transportation and distribution centers before the bust will help a return to job gains in those areas.
Tesch said the industries with the greatest losses such as finance and manufacturing also provide recruitment opportunities with an available and experienced workforce. They have been preparing business parks, including a 200-acre site at Ocala International Airport.
“In economic development, I have to look optimistically at 14.9 percent unemployment,” he said. “We translate that into a deep labor pool of hardworking individuals with specific skills in that industry sector.”