Seis Continentes / November 2002
By Larry Luxner
Flags of more than 100 countries flutter proudly along Ponce de León Boulevard in downtown Coral Gables. But the flags aren't there just to add color to an already impressive cityscape; they represent all the countries where Coral Gables companies do business.
Lettie J. Bien, president and CEO of the Coral Gables Chamber of Commerce, said 170 multinationals now have a presence in the city -- about twice the number of companies here 10 years ago. In most cases, these corporate giants run their Latin American operations from Coral Gables, and their offices can range in size from Bennetton -- which has four people in its Latin headquarters -- to Exxon-Mobil Interamerica, with 300 employees.
Other big multinationals currently in Coral Gables include Banco Mercantil de Venezuela (250 employees); Del Monte Fresh Produce (250); HBO Latin America (200); American Airlines (150); BankBoston International (150); IBM Latin America (150); Club Med North America (125); Phelps Dodge Wire & Cable (105); Walt Disney TV International (102) and Chevron-Texaco (100).
Apple Computer Inc., Eastman Chemical, PanAmSat, Watson Wyatt, Westvaco Latin America & Africa and Yahoo! Latin America also have operations here.
Kathy Swanson, development director for the city of Coral Gables, says the multinationals represent 6,000 direct jobs and another 21,000 indirect ones.
"These are all white-collar employees," she said. "When they come here, they require a significant amount of professional and international services, and they secure those locally."
And why do such companies choose Coral Gables in the first place?
"Our location is critical," says Bien, a lawyer who took over the chamber in April. "Most of these people want to live close to where they work, and the location can't be beat. It's a straight shot to the airport, and the quality of life in Coral Gables is second to none."
Coral Gables, incorporated in 1925, is famous for its Mediterranean Revival architecture, terra cotta colors and tree-lined streets. It's also the home of the elegant Biltmore Hotel, a National Historic Landmark that's owned by the city and is considered a tourist attraction in itself. Coral Gables has 22 parks within its 14.2 square miles including Matheson Hammock, the Venetian Pool and Fairchild Tropical Gardens.
And on the first Friday of every month, the streets of Coral Gables come alive with color as the city's 32 private art galleries open their doors late into the evening -- generating business for the city's 120 or so restaurants.
"There's certainly an economic benefit associated with being here," says Bien. "The University of Miami is not located in Miami, it's located in Coral Gables. The Collection is not in Miami, it's in Coral Gables. When you have prestigious names such as these, it just increases the overall reputation of our city."
Coral Gables is about to win even more prestige on Sept. 27, when city officials inaugurate the Village of Merrick Park -- a multi-purpose development located on the city's former equipment yard, just west of Ponce de León Boulevard near U.S. 1. The Rouse Company purchased the eight-acre tract of land as well as an adjacent 12 acres, then gave the land back to the city and is leasing the entire 20 acres on a long-term lease.
"The Village of Merrick Park promises to be an aesthetic and commercial enhancement to the immediate area, as well as an economic boon to Coral Gables overall," says Jerome D. Smalley, Rouse's executive vice-president of development.
When complete, the $275 million complex will boast 850,000 square feet of retail space in 115 shops including Nordstrom and Neiman-Marcus. The development also includes 110,000 square feet of Class A office space, 120 apartments and 3,390 parking spaces.
And the 43,000 residents of Coral Gables won't have any trouble affording the merchandise sold in these fancy shops. According to official statistics, 12% of the city's households enjoy incomes of $150,000 or more -- exceeding the percentage for Key Biscayne or Aventura. By comparison, only 2% of Miami-Dade County's households have incomes that high.
Interestingly, Coral Gables is the fifth-largest municipality in Miami-Dade County after Miami, Hialeah, Miami Beach and North Miami. The city boasts $5.5 billion in taxable assessed valuation, and its downtown shops generate more than $1.4 billion in retail sales annually.
Some 48% of its residents are of Hispanic origin, and more than half of these are Cubans. Evidence of Coral Gables' international character is the fact that it has four "sister cities:" Antigua, Guatemala; Cartagena, Colombia; Aix-en-Provence, France, and Granada, Spain.
Ronald A. Shuffield is president of Esslinger Wooten Maxwell Inc., one of the city's largest real-estate companies.
"If you bring in a company with even 10 employees, these employees will be the more affluent families in our community," said Shuffield. "They buy nice homes, eat at our nice restaurants, shop in our nice stores, serve as PTA officers in our schools and contribute to charitable organizations. They create a lot of value not only in the money they spend but in the value they bring to the community."
By far, the largest multinational with world headquarters in Coral Gables is Fresh Del Monte Produce Inc. A world leader in the growing and marketing of fruits and vegetables, Del Monte had 2001 revenues of $1.95 billion and expects sales this year to hit $2.1 billion.
Del Monte has been headquartered in Coral Gables since 1987, first at Douglas Entrance, and since this July at 241 Seville Avenue. The company now occupies 7,000 square feet not including outside tenants, who will remain until 2003. Then Del Monte will take over the entire building, which has around 56,000 square feet of office space.
"We decided to stay in Coral Gables when our lease expired because we were extremely happy with Coral Gables and wanted to stick with it," said Hani El-Naffy, president and chief operating officer of Del Monte. "To tell you the truth, it's becoming the Beverly Hills of Miami-Dade. It's expensive, but you get what you pay for."
Del Monte, with 248 employees in Coral Gables, produces and markets a variety of fresh and packaged fresh-cut fruits and vegetables ranging from pineapples in Costa Rica to bananas in Ecuador, and is present in nearly 60 countries in Europe, Africa and the Far East.
"We get no real financial incentives" for being in Coral Gables, said the Lebanese-born El-Naffy. "I decided from Day One that either we'd renew the lease or we'd buy a building in Coral Gables."
In the end, he said, Del Monte spent "well in excess of $5 million" to renovate the building at 241 Seville Avenue and bring it up to the company's standards.
Coral Gables is also home to the Latin American operations of the world's largest computer company, International Business Machines Corp.
Donn B. Atkins, general manager of IBM Latin America, says one key advantage of being in Coral Gables is the company's e-business briefing center, located in the Biltmore Hotel's Conference Center of the Americas.
"A second advantage is proximity to Miami International Airport, where easy flight connections have cut down on travel time to the 11 countries where IBM does business in Latin America," said Atkins. "A third is the fact that many of our customers and business partners are also based in South Florida, in addition to those who travel through Miami to and from their operations in Latin America, so it's easier to do business."
Shuffield says new Class A office space in Coral Gables now goes for $34-36 per square foot, "and the cheapest space we have now is $22-25 a square foot." The purchase price for office space is now $300 per square foot.
In the residential market, prices have shot up even more. The median price for a single-family home in Coral Gables -- meaning the price at which half the homes were cheaper and half were more expensive -- was $503,000 in May, $455,000 in June and $597,000 in July. Average prices were even higher: $761,000 in May, $804,000 in June and $954,000 in July. Expressed in dollars per square foot, aveage single-family home prices have risen from $224 per square foot in April to $299 in July.
One reason for the skyrocketing prices is economic uncertainty in Latin America. As wealthy Latins flee shaky South American economies for the relative stability of South Florida, local real-estate prices are driven up.
"A country like Brazil is extraordinarily poor. But when extremely wealthy Brazilians start buying property here, it doesn't take many of them for that to have an impact on us," he says, adding that "what keeps our economy moving are the amenities and the culture in Coral Gables, which has helped us tremendously."
Shuffield -- whose company says it sells one out of every three homes in Coral Gables -- said interest in the city on the part of multinationals is nothing new.
"Esso has the distinction of being the first multinational headquartered in Coral Gables, back in the 50s," he said. "We had a pretty rapid increase through the early 70s, and then as we got into the early 80s, a lot of South American economies were struggling, and we retrenched. But for the last 10 years, there's been steady growth."
He adds: "Companies today are much more sensitive to their budgets and how much they can spend. Some are actually reducing their workforce. Therefore, they don't need as much office space."
On the other hand, professional firms such as accounting companies, banks, law firms and accounting firms are buying up office space at a faster race than before, compensating for the slowdown among big multinationals dependent on the sluggish Latin American market.
That slowdown, however, has helped the city's banking sector as wealthy Latins pull their money out of countries like Argentina and Uruguay and transfer it to South Florida. Coral Gables is already one of Miami-Dade's largest banking hubs, with more than 30 financial institutions including First Union, NationsBank and SunTrust all boasting offices here.
Recently, Union Planters Bank moved its regional headquarters to the Gables, following its takeover of Republic National Bank of Miami, and is now the 3rd-largest financial institution in Miami-Dade. Other banks here include Commercebank, Gibraltar Bank, Bank of Tokyo-Mitsubishi Ltd. and Banco Mercantil de Venezuela.
Shuffield says the city's biggest competition in the race to attract Fortune 500 companies and big banks is Blue Lagoon Drive, followed by downtown Miami and the Brickell area.
Asked to comment on the competition, Bien says "each company has its requirements and its desires. Our pricing right now is substantially higher than some of the others. Blue Lagoon is in an empowerment zone, so you get some tax benefits to locate there."
Companies thinking about setting up in Coral Gables shouldn't expect tax benefits at all.
"We do not provide cash incentives for companies to stay or to come," said Swanson. "The business development operations that have provided cash incentives are finding that companies which respond to cash investments are footloose, do not make the commitment to stay long-term and will exit once that benefit has expired." Instead, she explained, "we work to get companies that require the same location strengths that we have to offer."
City officials say instances where companies did leave are related not to Coral Gables itself but to corporate restructuring.
Lucent Technologies, which for years ran its Latin American operations out of an office building at 2121 Ponce de León Ave., moved back to corporate headquarters in Basking Ridge, N.J. in 2000. "It had nothing to do with the community, but was part of AT&T's restructuring of the company," said Shuffield. "I don't think any of the companies that left have done so because they weren't satisfied with the Gables."
When Delta Air Lines transfers its back-office operations to Miramar in Broward County next year, Coral Gables will lose its single biggest non-governmental employer after the University of Miami. At its peak, Delta was employing 850 workers in three shifts.
"They are leaving for cost reasons," said Swanson. "We have taken the position that businesses need to do what's best for them, and Delta made the real-estate decision to go to Miramar rather than operate in Coral Gables."
Adds Bien: "It's a problem for everybody across the country, not just for us. A lot of consolidation is happening, and a lot of downsizing has occurred. I feel very strongly that all these companies will come back."
Even so, she says, "we're not going to try to get companies just for the sake of having them if it's in any way contrary to the quality of life. We certainly wouldn't any kind of smokestack industry here. I can't move Mount Sinai Medical Center to Coral Gables, nor would I want to. And if IBM wanted to build a plant here, I'm not sure we'd go after it."
One thing city officials will go after is more international business. The chamber plans to lobby forcefully to have South Florida named as the permanent secretariat of the Free Trade Area of the Americas -- a hemispheric customs and trading bloc stretching from Alaska to Tierra del Fuego.
Helping Coral Gables in that effort is the $11.2 million Conference Center of the Americas -- a 74,000-square-foot facility at the Biltmore that includes modern teleconferencing facilities, simultaneous translation systems and a high-speed video and data network.
In addition, IBM, the University of Miami and Monterrey Tech University System in Mexico have developed an e-business briefing center at the site -- so that even if Miami isn't chosen as the FTAA's permanent headquarters, Coral Gables will remain very much on the radar screens of executives throughout the region.
Says IBM's Atkins: "We're excited to have the opportunity to play a leading role in establishing 'e-Miami' as the e-business gateway for Latin America."