Happy Friday. This is The Shake 🤝: the weekly newsletter delivering unexpected stories just like your client at closing…

We got a quick one this week:

• The Godfather of Florida 🌴 

MARKET RADAR

The Godfather of Florida 🌴 

As to no one's surprise, sunbelt states have been on an economic tear since COVID. Today, Florida is the 15th largest global economy in the world with a GDP of over 1 trillion dollars.

And it all stems back to one individual’s vision: Henry Flagler.

Flagler was a tenacious businessman and a founding partner of Standard Oil. Now when people hear Standard Oil, they typically think of John Rockefeller. The truth is, Flagler was the real “brains” 🧠 behind the corporation - aggressively negotiating deals and executing strategies that made them the largest oil corporation of the late 19th century.

“When once asked if Standard Oil was his idea, Rockefeller responded: "No sir. I wish I'd had the brains to think of it."

While he made his fortune primarily in the oil industry, Flagler also had notable achievements in real estate - specifically in Florida.

Flagler's first encounter with Florida was during the winter of 1883-84. It sparked a transformative connection between the two 🤝 

During this period, Florida attracted affluent individuals from the Northeastern high society, and doctors often suggested it as a destination to alleviate pulmonary ailments. Reaching St. Augustine, where Flagler initially visited, involved a journey comprising a train, a cab, a ferry, another cab, a train, and yet another cab—a complex route that only described the Jacksonville to St. Augustine segment.

Nonetheless, Flagler recognized the enormous possibilities.

With millions in the bank (billions in today’s dollars), Flagler (at age 53) decided to take on the challenge of building out Florida’s infrastructure. He knew that access was the major key to unlocking growth.

To achieve this, Flagler bought out the Jacksonville, St. Augustine & Halifax Railroad, the first railroad in what would eventually become the Florida East Coast Railway system. This allowed him to start developing each destination city to establish tourism.

Development of St. Augustine: He constructed several grand hotels in the late 19th century, including the Ponce de Leon Hotel (now Flagler College) and the Alcazar Hotel (now the Lightner Museum). These developments helped attract wealthy visitors and put St. Augustine on the map as a desirable location.

Creation of Palm Beach: Flagler's most significant real estate endeavor was the development of Palm Beach, a barrier island off the coast of Florida. He envisioned Palm Beach as an extravagant resort community and built the Royal Poinciana Hotel (now demolished) and the Breakers Hotel, which still stands today as a luxurious resort. Flagler's investments and promotional efforts helped transform Palm Beach into a playground for the wealthy.

Extension of the Florida East Coast Railway: To facilitate the growth and accessibility of his real estate ventures, Flagler extended the Florida East Coast Railway further south. He continued the railway line from St. Augustine, all the way down the east coast of Florida, eventually reaching Miami in 1896. This expansion opened up new areas for development and allowed for increased tourism and commerce throughout the state.

Development of Miami: After completing the railway to Miami, Flagler saw the potential for growth and development in the area. He invested heavily in Miami's real estate, constructing the Royal Palm Hotel while laying out streets, building water works, and an electric light plant, as well as homes for the workers. All of which allowed the population of Miami to triple within four years of Flagler’s arrival. His efforts helped establish Miami as a major city and a hub for trade and tourism in the southeastern United States.

The Over-Sea Railroad: With the completion of the Panama Canal, Flagler saw the potential for Key West’s port to become the southern hub of international commerce. Expanding the railway from Miami to Key West took 8 years (and 3 major hurricanes) to construct. It was completed when Flagler was 83 years old. To this day, It remains one of the most ambitious engineering feats ever undertaken by a private citizen.

All of Flagler’s expenditures came out of his own pockets - sorry real estate gurus, he didn't use OPM.

The hotels collectively racked up a $12 million-dollar tab. The railroad system to Homestead tallied another cool $18 million, while the Key West extension alone bore a $20 million-dollar hole in the man’s pocket. Adding up to about $50 million dollars (at that time)!

There’s no doubt that Henry Flagler's real estate accomplishments were instrumental in shaping the landscape and economy of Florida.

His vision and investments transformed St. Augustine into a tourist destination, created Palm Beach as a luxury resort community, extended the railway to Key West, and fostered the growth of the state's real estate industry.

Florida residents continue to enjoy the sunshine due to his ambitions 😎 

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