| The new Conquistadors: Central Florida is a magnet for local companies, professionals
For nearly 500 years, Puerto Rico and Florida have had a symbiotic relationship.
History books record that it was Puerto Rico’s first governor, Juan Ponce de Leon, who was the first European to explore the land and give Florida its name.
While Ponce de Leon’s first attempts to settle Florida were unsuccessful, his successors from Puerto Rico nearly 500 years later ave now firmly entrenched themselves.
Today, almost half a million Puerto Ricans make Florida their home and, particularly in the midsection of the state known as Central Florida, are playing an increasingly prominent role in the development of what has become the nation’s fastest-growing economic area.
Compelling reasons
As Victor Galan, R&G Financial Corp. chairman and chief executive officer, told it, there are four major reasons why Puerto Rico’s second largest mortgage bank sought a presence in Central Florida.
"In Central Florida you have a combination of strong demographics, a lower cost of deposits than in Puerto Rico, and a lot of real estate & construction development. On top of that, the largest Hispanic population in the area is from Puerto Rico," Galan said to CARIBBEAN BUSINESS on the day he met with more than 200 of his new colleagues in Central Florida to celebrate R&G’s acquisition of Crown Bank, a 15-branch commercial bank with more than $700 million in assets serving the Orlando and Central Florida area.
Through its acquisition of Crown Bank–the biggest continental U.S. bank acquisition ever by a Puerto Rico-based financial institution--R&G is moving to replicate its successful Puerto Rico mortgage and commercial banking model in Central Florida, said Galan.
To that end, R&G is integrating its previously acquired Continental Capital Corp., a New York-based mortgage banking subsidiary, into the Crown Bank operation. Since the Crown Bank acquisition, Galan said he and Continental Capital Corp. President Mike McHugh have been spending most of their time in Orlando, shifting the expanding mortgage loan operation into high gear.
A field ripe for harvest
Galan recalled that when he was exploring the possible acquisition, Crown Bank President John "Jack" Koegel took him out one day to see area housing and commercial construction developments. "We put more than 250 miles on the car driving around that day, and I could see Victor’s eyes light up when he saw the extent of what’s going on here," Koegel remembered.
According to the East Central Florida Regional Planning Council, over the next 10 years more than $57 billion in commercial & residential development is scheduled for metro Orlando.
To give some perspective on the size of the Central Florida residential mortgage market, Galan compared it with that of Puerto Rico, where he said approximately 12,000 new housing units are developed each year throughout the island. Meanwhile, in the Orlando area alone, there are more than 16,000 units of new housing constructed a year. Crown Bank also has branches in the Tampa/St. Petersburg and Lake Worth, Sarasota, and Fort Myers areas, where another 16,000 and 20,000 new housing units, respectively, are developed each year.
"Altogether, we have about 50,000 housing units of new construction in the Florida markets in which we do business," Galan said. Without revealing figures, he said the new Crown/Continental combo operation successfully met its production target for July, its first full month since the acquisition. Continental’s McHugh said he’s hired about two dozen new loan officers in the last two months to staff up the operation.
Though R&G Financial still ranks second to Doral Financial among Puerto Rico mortgage banks in terms of assets, R&G Financial’s acquisition of Crown as well as its recent performance on the island have led it to edge out Doral as the local institution with the largest loan-servicing portfolio. As of second-quarter 2002, R&G Financial’s loan-servicing portfolio topped $10.71 billion, whereas Doral Financial’s stood at $10.67 billion for the same period.
Context of transaction
The acquisition of Crown was also a coup of sorts for R&G in that it beat out a major Canadian bank (Royal Bank of Canada) that had also been actively bidding for the institution. Though Royal Bank bid more than R&G, Koegel said R&G’s proposal won because of its commitment to grow and build upon the existing operation, rather than just swallow it up.
R&G’s acquisition of Crown, which is the fourth largest commercial bank in its Central Florida service area, has also suddenly given R&G an edge over Banco Popular in terms of presence in that region.
Banco Popular
Banco Popular began its Central Florida operation in 1997, with the purchase of the one-branch Seminole National Bank in Sanford, Fla. Today it has nine braches in the area. Banco Popular region executive Mercedes McCall told CARIBBEAN BUSINESS that Popular plans to open another Central Florida branch next year and is also looking to grow through possible acquisitions in the region.
Since July 2001, Banco Popular North America has also operated in Orlando its 60-employee national call center, which serves all 100 Banco Popular branches in the mainland U.S. All told, Popular has more than 250 employees in Central Florida.
One of the advantages Florida banking industry observers say R&G/Crown has over Banco Popular is that while both will target Central Florida’s more than 630,000-strong Hispanic market, Crown can build upon an already well-established non-Hispanic base.
At the same time, in his remarks to Crown employees, Galan said he is keen on getting the Puerto Rican community in Central Florida–as well as Puerto Ricans on the island who are contemplating either moving to or purchasing a second home in Central Florida–to bank with R&G and Crown. Already, he said three of Crown’s 15 branches are staffed with bilingual personnel and cater heavily to their surrounding Hispanic communities.
Empresas Fonalledas-UniBank
Banco Popular isn’t the only other Puerto Rico-based financial institution competing in the Central Florida market, however. Empresas Fonalledas-owned UniBank operates two of its nine Florida branches in the Central Florida region, one in Orlando and the other in St. Cloud.
According to Crown Bank President Jack Koegel, Crown’s other chief competitors in the Central Florida market include major regional and national banks such as Atlanta-based SunTrust, First Union, Bank of America, and Washington Mutual.
Florida Bankers Association statistics show that between 1996 and 2001, bank deposits in the metro Orlando market grew 28%, from $13.5 billion to $17.4 billion.
Insurance companies
Puerto Rico insurance companies have also expanded into the region. Earlier this year, for example, Cooperativa de Seguros Multiples President Rene Campos announced plans to open a $1 million Orlando branch that would employ 10 people. "I expect the branch to write about $2 million in premiums each year," Campos told CARIBBEAN BUSINESS.
Last year the Puerto Rican American Insurance Co. (Praico), the island’s fifth largest property & casualty insurance company, purchased Florida-based Consolidated Insurance for $7 million. United Surety & Indemnity Co. is another locally owned insurance provider that has revealed plans to jump into the Florida market.
Magnet for growth
"Don’t be surprised to see Atilano Cordero Badillo here next," said Luis Pastrana Silva, director of the Puerto Rico Federal Affairs Administration’s Central Florida office, referring to the president of the Puerto Rico-based Grande supermarket chain.
Pastrana Silva said that since assuming the directorship of the office last year, hardly a day has gone by that he hasn’t received both island and Orlando-based Puerto Rican entrepreneurs who are either building or expanding their businesses in the area.
The executive pointed to Orlando Sentinel statistics showing that Orlando is the nation’s fourth largest retail growth market, just behind Phoenix, Atlanta, and Denver. Between 1991 and 2001, retail sales in Orlando grew by 103%, from $11.7 billion to $23.9 billion. Orlando is projected to be the nation’s No. 2 leader (behind Phoenix) in retail sales growth between 2001 and 2011 (with a 75.6% projected growth rate).
The area is home to a more than 300-member Puerto Rican Chamber of Commerce of Central Florida; the Hispanic Chamber of Commerce of Central Florida (HCCCF) has nearly a thousand members. There are estimated to be more than 10,000 Hispanic-owned businesses in the Orlando area.
According to Pastrana Silva and other Puerto Rican community leaders, one of the distinguishing characteristics of the Puerto Rican community in Central Florida is the large number of highly educated professionals from the island–and from Puerto Rican communities elsewhere in the nation.
"In addition to doctors, lawyers, and engineers–we have a big contingent of engineers, for example, on the Space Coast [at the NASA facilities on Cape Canaveral, 60 miles away]–we’re now getting an influx of nurses," Pastrana Silva said.
Since Florida passed a new law in May waiving relicensing exams for out-of-state nurses, Pastrana Silva said, more than 1,300 Puerto Rico nurses have applied to practice in Florida, provoking a nurse shortage in Puerto Rico which he finds troubling.
"What’s impressive is the work ethic of the professionals and businesspeople from Puerto Rico that I meet," said Jorde Rodon, director of the Economic, Trade & Tourism Development Office of Orange County. "They’re making a big difference in this community."
Those interviewed by CARIBBEAN BUSINESS agreed the Central Florida area has been the prime beneficiary of Puerto Rico’s professional brain drain.
The Orlando area’s combination of higher salaries, lower housing & cost of living costs, good public school system, relative proximity to Puerto Rico, and agreeable climate are considered the major attractions for island professionals.
According to figures supplied by the Puerto Rico Federal Affairs Administration, over 55% of Orlando Hispanics have household incomes of $40,000 or more, while another 29% or so have household incomes of $50,000 or more.
Moreover, according to the National Association of Realtors, as of April 2002 the average home price in Orlando was $124,100, considerably lower than the national average of $147,800.
Between 1991 and 2001, metro Orlando gained more than 358,000 new jobs and is expected to be the nation’s leader in employment growth through 2011, with a projected growth rate of 26.7%.
Engines of economic growth
Enrique Machado is just one example of thousands of young Puerto Rican professionals who are playing key roles in Central Florida’s economic growth. Machado, in fact, is director of international business development for the Metro Orlando Economic Development Commission.
"What we’re seeing in the region is a shift toward employment in the technology sector," Machado said. The region has become the heart of what’s known as the Florida High-Tech Corridor, with over 47,000 employers.
Machado explained that the Orlando area has effectively leveraged its global reputation as the world’s top travel destination (more than 43 million visitors in 2001) in order to promote itself as a worldwide center of technology and business innovation.
Though tourism continues to be the top employer (the Walt Disney World Co. alone employs 55,000 people) in the area, major high-tech manufacturers there now include Lockheed Martin (over 5,000 employees), Sprint (over 4,200 employees), AT&T Wireless (more than 3,900), and Siemens Corp. (3,200).
As a result, the Metro Orlando Economic Development Commission has launched a new promotional branding campaign, "Putting Imagination to Work–Orlando."
In 2000 the Orlando metro area added more than 1,000 computer software and programming jobs, with average annual salaries of $67,000.
The growth of other sectors effectively blunted the downturn in tourism last year, especially following 9/11. According to HCCCF President Mario Garcia, domestic tourism to Central Florida has since recovered to slightly below pre-9/11 levels, while international tourism remains more significantly below last year’s levels. Metro Orlando currently has more than 120,000 hotel and timeshare rooms, with an average 2001 occupancy rate of 69.8%.
Converging strengths
The stars seem to be smiling on Orlando lately, given all the top rankings it is receiving for attracting and stimulating economic growth.
For example, for calendar year 2001 Southern Business & Development magazine ranked metro Orlando No. 1 among all major markets in the South for the largest number of job announcements and the most significant amount of capital investment.
At the same time, American Demographics magazine ranked Orlando as one of the nation’s Top 10 areas for post-boomer/young adult growth in the past decade. This demographic group (20- to 34-year-olds) is reported to commonly settle in economic hot spots and often comprises skilled technology workers.
Meanwhile, the U.S. Department of Labor ranks metro Orlando fourth among all regions in the nation in terms of new job growth. In fact, four of the nation’s Top 10 job growth regions were in the state of Florida–more than in any other state.
To top it off, Entrepreneur magazine has named Orlando the best city in the country for entrepreneurs; Employment Review magazine rated it one of America’s best places to live and work; and Site Selection magazine called it the best region in the country to invest in international business.
Machado said more than 2,000 businesses in metro Orlando are currently involved in the import-export business. According to the Metro Orlando Economic Development Commission, each week an average of 24 new businesses open in metro Orlando, 321 jobs are created, and 1,085 new residents relocate there.
CHART #1:
An average week in Metro Orlando
1,085 new adult residents
451,000 out-of-state visitors
380,981 in-state visitors
479 residential building permits
488 million dollars in retail sales
321 new jobs
24 new business establishments
Source: Metro Orlando Economic Development Commission
CHART #2:
Housing boom
(New homes per year in Metro Orlando)
- 16,014
- 16,084
- 21,391
- 25,758
- 29,593
- 24.924
Source: U.S. Census Bureau, Construction Statistics Division
CHART #3:
Orlando International ranks among nation’s top airports in passenger growth*
| Houston |
42.5% |
| Atlanta |
38.9% |
| Orlando |
37.2% |
| Las Vegas |
31.5% |
| Phoenix |
28.8% |
*For 1995-2000; among 20 largest airports in 2000 passenger traffic
Source: Airports Council International |
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Central Florida’s P.R. population skyrockets
BY KEN OLIVER-MENDEZ
According to the 2000 U.S. Census, between 1990 and 2000 the Puerto Rican population in East Central Florida (metro Orlando and eastward) grew by 160% to total 162,555 of the region’s just over 2.5 million residents.
Puerto Ricans thus make up a majority (52%) of East Central Florida’s more than 322,000-strong Hispanic population. The second biggest Hispanic group in the region–whose members are of Mexican origin–is far behind in numbers (13%). There is also a growing Dominican community (7%), noted Luis Pastrana Silva, director of the PRFAA Central Florida office.
A total of 41% of Puerto Ricans in East Central Florida moved there directly from Puerto Rico; the rest came from other areas of the mainland U.S.
The Hispanic population is highest in Osceola and Orange counties, where it constitutes 29.4% and 18.8%, respectively, of the overall population. In West Central Florida (the Tampa, St. Petersburg, and Clearwater areas, along the Gulf Coast), the Puerto Rican population stands at just over 85,000. The total Hispanic population of the West Central Florida region tops 312,000 and is more evenly split between Cubans (28%), Puerto Ricans (23%), and Mexicans (17%).
According to Pastrana Silva, Central Florida continues to receive a steady influx of professionals from the island. The latest wave, he said, is nurses. A nursing shortage has prompted Florida healthcare institutions to recruit heavily in Puerto Rico. In the last several months, some 1,300 island nurses have applied to practice in Florida because of a new state law that makes it easier for out-of-state nurses to be licensed in the state.
CHART #1:
East Central Florida’s Hispanic Population
| Population |
322,000* |
| Puerto Rican |
52% |
| Mexican |
13% |
| Cuban |
9% |
| Dominican |
7% |
| Colombian |
5% |
| Other countries |
14% |
* Source: U.S. Census Bureau, 2000 Census
Political empowerment is following economic empowerment
BY KEN OLIVER-MENDEZ
Central Florida is a key target for the Puerto Rico Federal Affairs Administration’s (PRFAA) massive, $6 million-dollar voter registration campaign, said Marcos Vilar, the PRFAA executive in charge of the nationwide initiative.
"Right now we estimate that only about 10% of qualified Puerto Rican voters in Central Florida are active," said Vilar during an interview with CARIBBEAN BUSINESS in PRFAA’s Orlando office. "Our goal is to register at least 9,000 new voters a year here."
Vilar said the nearly 250,000-strong Puerto Rican community in Central Florida has the potential to be a swing vote in both Florida and national elections. The outcome of the 2000 U.S. presidential election, for example, hinged on Florida’s results.
According to figures provided by PRFAA, Hispanics in Central Florida are about evenly divided between the two major parties; 26% are reported to consider themselves Republican, 24% Democrat, 15% independent, and 35% do not identify with a particular political party.
One problem the voter registration campaign must overcome, agreed both Vilar and PRFAA Central Florida office Director Luis Pastrana Silva, is the apathy–and even antipathy–that many stateside Puerto Ricans have for politics.
"The apathy is often just a result of the fact that people are so busy and so involved in getting their lives together here that they don’t pay attention to politics," Pastrana Silva said. "There’s also some antipathy toward politics in the community as well, which you see from people who have the attitude of wanting to avoid anything that has to do with politics when they leave the island behind."
The voter registration campaign is already in full force in the Orlando area. Full- and half-page ads proliferate in English- and Spanish-language newspapers there; Spanish-language billboards touting the campaign are seen on the major highways; and ads run regularly on the main Spanish-language radio stations. Pastrana Silva said the campaign is also being incorporated into the office’s community-level events and partnership activities with various local Hispanic organizations.
Puerto Ricans poised to win office
The year 2002 seems destined to be the year that Puerto Ricans win several important elected posts in Central Florida. At present, the only elected Puerto Rican official in the region is Winter Springs Commissioner Eddie Martinez (R).
Redistricting following the 2000 Census, however, created new state House and Senate districts in which several Puerto Ricans–from both parties–are vying for seats.
John Quiñones, for example, is running in the Sept. 10 Republican primary for state representative for the newly created 49th state legislative district. Juan Bruno is also running for that seat, but on the Democratic side.
Also, Republican Anthony Suarez is running for the newly created 19th state Senate district, which covers the Orlando area, and Republican Norman Quintero is running for the Orange County School Board.
Finally, San Juan native Eddie Diaz is the Democratic standard-bearer running to represent Central Florida’s 8th congressional district in the U.S. Congress. Diaz faces an uphill challenge against Republican incumbent Rick Keller. |
