Counting the Lexuses, BMWs and Mercedes on U.S. 41? This might save you time. One out of eight of the people keeping you company at the stoplights have a household net worth of $1 million or more, not counting their main home. If you think that is a good thing, stick around. By the year 2009, the ratio is going to be one out of six. Millionaires will account for 54,267 households, an increase of 58 percent from the present level, projections made available to the Herald-Tribune by U.S. Trust Co. show.
Financial firms like U.S. Trust — soon to become part of Bank of America — are being drawn to the region’s abundance of fat stock, bond and real estate portfolios, not to mention a spate of high-end retailers hungrily eyeing Southwest Florida as a potential shopping mecca for the affluent. It is the kind of statistic that makes even some of the most skeptical players in the real estate game confident that Southwest Florida is going to have a healthy share of the millions of well-heeled baby boomers retiring during the next 20 years.
U.S. Trust — a firm founded in 1853 with the sole purpose of wealth management — just got around to opening a Sarasota office last year. The move put the company in direct competition with Northern Trust, the Chicago-based company that has cultivated Sarasota snowbirds’ fields of green since 1977. For both, data on wealth per household is like a thermometer, refreshing itself outside the window on a continuing basis, confirming what they already felt in their hearts — that they are in the right place.
“From St. Pete down through Sarasota is the 10th wealthiest corridor in the United States,” said Scott Merritt, U.S. Trust’s Sarasota president as he sat in the firm’s 11th floor conference room, with its picture-window view of the city by the bay. “It just shouted that Sarasota and this whole region should be a place for U.S. Trust to come and be.” The 2005 wealth per household data as well as the 2009 projections come from TNS, a global database firm whose affluent market research program is run out of Chicago by Jeanette Luhr. She does the projections when clients request them and does not like them getting out into the public view. “It is a very, very loose projection,” said Luhr, whose firm charges $45,000 just for its basic yearly report and database on wealth by household throughout the nation. On the other hand, she is quite confident about the current number of millionaire households. Her outfit also figures out half-millionaire households and penta-millionaire households (a millionaire five times over) for every single metro area in the nation.
Out of a total of 292,363 households in Sarasota-Bradenton-Venice, 51,662, or 18 percent, could be considered at least well-fixed, with net worth of $500,000 or more not counting their principal residence. Out of those, 37,108, or 13 percent, make it to the second rung of monetary success, with $1 million or more in net worth. A mere 3,283 households, or just more than 1 percent, make it to the top ranking Luhr compiles by showing a net worth of $5 million or more. To get to those numbers, Luhr buys expensive data of her own from Claritas, then massages it further, then cross-checks the results through her own 20-page survey. “And people are kind enough to answer them,” she said. “I am always quite amazed. “Where those people will be 10 years from now is harder to say.” While the number of households in the Sarasota-Bradenton metropolitan area is expected to grow 12 percent to 314,677 from 2004 to 2009, the number of million-dollar households is expected to grow 17 percent to 54,267. Even more dramatic were the TNS projections for Port Charlotte-Punta Gorda. During the same time period, the firm’s data shows the population growing by 11 percent to 77,839 while the number of million-dollar households grows 67 percent to 12,247. Luhr’s firm will soon release its 2006 study, but she will not be sharing the projections with anybody except paying customers.
Retailers see world differently
Any retailer — especially a high-end store such as Nieman Marcus or Saks or Nordstroms — would start its store site search at the same data provider TNS uses for raw data, Claritas. But the key statistics for retailers is not pure wealth. It is spendable income. Claritas calls its branded version “Effective Buying Income,” or EBI.
When you get to cities like Sarasota, where most of the wealth is imported, raw wealth and spending power are closely intertwined. “Ours is the investment of the foundational wealth that frankly creates the cash flow that the retailers are interested in,” said Merritt, the U.S. Trust official. “These people here take the earnings off their investments, whether capital gains or dividends and interest, and then they live their lives. “That is the money that the retailers are after.”
Based on per-capita spendable income, three of the top 25 markets in the nation are on the Southwest Florida coast. Naples is fourth at $29,181 per person per year. Sarasota sits at 18th with per-capita spending power of $24,649 per year. Rounding out the regional grouping is Cape Coral, with spendable income of $23,979 per person and a 21st-place ranking. For large retailing firms, effective buying income would just be the starting point in a decision-making process. These big outfits mine Internet data to determine specific buying patterns.
“Nordstrom’s, Nieman, they don’t have any accidents about where they are locating,” said Richard Hastings, an economist who specializes in studying retailers for the New York investment banking firm of Bernard Sands & Co. The prevalence of high-speed Internet usage has created new data realms for retailers and their consultants to explore, Hastings said. “What has happened is the Internet creates digital tracks that never existed before, called IP cookies. If you have have enough money, you can buy that information. “They are able to go down to the street level and the house level.” The cookie phenomenon, combined with other very specific data, “lets retailers locate very precisely and profitably,” he said.
One of the firms that markets location-picking software to retailers is the SAS Institute. “From a Nieman or Nordstrom perspective, the first thing they are going to start off with is, ‘Who are my target customers,’” said Alexi Sarnevitz, senior director of retail strategy at SAS. “Sarasota is an emerging market. There may only be market potential for one more upscale chain. So there may be an angle — who is going to get there first. “Because there just is not enough there to support two of these stores today.”
By MICHAEL POLLICK
michael.pollick@heraldtribune.com
www.heraldtribune.com
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